Well Spent: Do I need to collect state sales tax at my yard sale?

Turn to the classifieds section of this paper and you'll see American commerce at its most fundamental level. Every day, people are buying and selling consumer goods, through the paper, on the Internet and on bulletin boards at the local PCC.

"I've been buying and selling on eBay for a couple years now," Greg Kramer writes in an e-mail. "Nothing major: games I no longer play, books I have no intention of finishing, some collectible cards. Only a couple of these transactions have been in-state."

Questions: Should eBay sellers collect 8.8 percent sales tax on those in-state sales? Whom would they turn the tax money over to, anyway?

Answer: According to the tax code, "casual and isolated sales" are exempt from sales tax. Sellers getting rid of their skis or roller skates need not charge buyers a tax.

But some people are running side businesses selling through eBay, in the classifieds or through recurrent garage sales. And if people are buying goods just to resell them, that constitutes retailing, and state agents are watchful of violators who don't pay sales or business taxes.

These rules apply to both in-state and out-of-state sales, on the Internet or otherwise.

However (there's always a however), buyers are required to pay the state the money themselves, in the form of a "use tax."

In most of King County, the local sales tax and use tax rate, excluding prepared food and beverage items, is 8.8 percent.

Because it's reliant on buyers' knowledge of the law and willingness to self-police, the state's use-tax law is not always followed and is rarely investigated, leading to lost revenue that state accountants have estimated will be $1.3 billion this year.

The state Department of Revenue gets about 5,000 returns a year from consumers paying their use taxes, department spokesman Mike Gowrylow said. Most of those returns are for expensive purchases or valuable out-of-state gifts.

Many people likely do not realize that they are responsible for taxes on casual purchases or some gifts, Gowrylow said, adding that there are not enough revenue officials to police eBay and similar sales, although some in the department have discussed it.

Technically, the "use" tax is a levy on anything that is, well, used. For example, a boy who gets a mountain bike from his grandma in Virginia is supposed to pay a tax based on the value of the bike and his local rate.

An exhaustive list of exemptions can be found under Revised Code of Washington Chapter 82.12, which can be found online. This includes the exception made for consumers who already paid sales tax on the item or whose donor paid sales tax on the item. So don't worry about tallying those birthday gifts bought in Washington.

It's not likely the state will come after you for not paying in any event.

"Of course, we would like people to pay their uses taxes," Gowrylow said. "It's just not cost-effective right now for us to enforce."

CONTACT US

EDITOR'S NOTE: Time pressures? Money pressures? Don't know where to get answers to your consumer questions? Seattle Post-Intelligencer consumer reporter Candace Heckman's here, with the information you need and the recommendations you're seeking. We've launched "Well Spent," our new question-and-answer column that's meant to help you find the right businesses, know the law and learn how to protect yourself financially and otherwise. Let us know what you think.

QUESTIONS: If you've got a consumer question, the P-I will try to get it answered. Call us at 206-448-8348 or e-mail consumeralert@seattlepi.com.

ANSWERS: Well Spent runs every Wednesday. For past answers online: seattlepi.com/consumer.