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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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Was called for a sales tax audit.. 1person with no invoice

Customer Question

was called for a sales tax audit.. 1person with no invoice to show..sell on ebay what should I do
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: State wants to see invoices and I have none all my purchases are from garage sales and tag sales never knew I had to file fo a tax number
JA: Is there anything else important you think the Accountant should know?
Customer: just want some direction or consultation...rec'd letter on Jan1 and have 30 days to respond
Submitted: 13 days ago.
Category: Tax
Expert:  Mark Taylor replied 13 days ago.

Hi, my name is Mark. I will be happy to help you with your questions. What state do you live in? Approximately how much in sales did you have?

Customer: replied 13 days ago.
new York state..never kept records small time seller never knew I had too ..many people online and never collect sales tax...I just file my federal and state in april and the w99 I get from paypal thats it
Expert:  Mark Taylor replied 13 days ago.

I would assume that you received a lot of your payments from Paypal. Are you able to download any information from Ebay or Paypal?

Customer: replied 13 days ago.
just need direction dont need to talk
Expert:  Mark Taylor replied 13 days ago.

That is fine. Chat messages are more than acceptable. The solicitation for a phone call is from the website and not me.

Customer: replied 13 days ago.
I tried, but to no avail....just the monthly sales reports that i get from ebay
Customer: replied 13 days ago.
paypal probably was the party that gave my name to the state audit department
Expert:  Mark Taylor replied 13 days ago.

You should have collected sales tax on your sales to customers within New York.

Expert:  Mark Taylor replied 13 days ago.

What year is the state auditing?

Customer: replied 13 days ago.
Some type of law from 2010 thats how far they want to see records, but again I never kept records on sales from Ny to ny
Customer: replied 13 days ago.
Also, I never get invoices since all my purchases are from garage sales , tag sales and flea market.
Customer: replied 13 days ago.
are you still there
Expert:  Mark Taylor replied 13 days ago.

For your sales tax audit your purchase price is not a problem. I am trying to see if there is any way to get the historical information from Paypal. Please give me a few moments.

Expert:  Mark Taylor replied 13 days ago.

If you go to Paypal and select the reports tab at the top of the page. The next page will give you the option to select activity download. Once you select the activity download there is the following disclaimer near the top of the page: "The following changes are now available in the activity download experience: The "shopping cart details" will now show as a single row by default; "quantity" field has been added. Can't find something else? You can still use the older version of the activity download tool by switching back.​"

If you select the switching back option it will take you to another page where you can download the information from prior years.

Customer: replied 13 days ago.
dont know where you got the info from, but for me its not working
Expert:  Mark Taylor replied 13 days ago.

I just tried it on the Paypal site.

Expert:  Mark Taylor replied 13 days ago.

Do you see the activity tab at the top of the page when you log into your account in Paypal?

Customer: replied 13 days ago.
Got into the Activiity page, but that page is for all my sales not just for new york
Customer: replied 13 days ago.
for each transaction in paypal I would have to open up each one to see where the sale is from
Expert:  Mark Taylor replied 13 days ago.

There should be an activity download tab that gives you the option to switch back to the old format. This will give you the option to change the time period of the report.

I understand that you would need to open each transaction. I was hoping that paypal would produce a historical report with this information. I tried to download a report for 2010 to see what kind of information would be on it. I am still waiting for the report to be produced.

Customer: replied 13 days ago.
The info only goes back to 2014 and it would be a hassle in it self just to open up each one
Expert:  Mark Taylor replied 13 days ago.

I know it will be a hassle but you are going to need to show the state where the product was shipping. I would assume that a large portion of your items were shipped to customers outside of New York. These items would not be subject to sales tax. Without providing documentation the state will assume that all of the sales were to New York residents.

Customer: replied 13 days ago.
thats not right....the state knows ebay is a world wide market and I only do about 60 sales a month and a small number of those sales maybe 10 or 15 go to the new York area
Customer: replied 13 days ago.
I guess you cant help me with the sales tax laws of new York..thanks
Expert:  Mark Taylor replied 13 days ago.

I know that it is not right. That is why that you need to show the state where your sales are being generated. There is no sales tax on items shipped outside of New York.

Customer: replied 13 days ago.
I understand that that there are no sales tax outside of new York , but Unfortunately I dont have the records to prove which sales went where..never knew I had to keep such records, but now I have to file for a tax i.d. according to their letter.millions of people sell on ebay and they have to pick a small casual seller ..like me
Customer: replied 13 days ago.
thanks again.
Expert:  Mark Taylor replied 13 days ago.

I am sure that the auditor is familiar with Ebay. It is possible if you can shows that only a small percentage of sales occur in Ebay during the period that you have access to information, then this percentage could be applied to past years. I am sure that you are not the first person that is in this situation.

Customer: replied 13 days ago.
I'm sure I'm not the only one that will be audited .. their going to have a field day with this
Expert:  Mark Taylor replied 13 days ago.

The auditor is likely going to require that you document the sales activity for the information that you have. So you may need to create a spreadsheet of your sales and where they were sent. If you have 60 sales a month you are looking at a long project.

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