Texas Sales Tax on Used Kayaks, Canoes, and SUPs
Last month, an interesting question emerged regarding sales tax. I may have been naïve, but I found the following information enlightening. I’m also interested in learning more from HASK members.
Every four years or so, I find that I need to turn a few of my demo kayaks to make room and to keep stock fresh. I do this rarely and without fanfare as regularly replenishing used boats with new is a good way to go out of business. This time, I am selling an NDK Romany Surf, an Explorer, and my personal kayak (now sold) a Romany Classic.
Since the Classic was my personal kayak, I wondered if I needed to charge sales tax. Before retiring from healthcare and starting up RiverCoast, I occasionally bought or sold a personal kayak or canoe without sales tax. Yes, collecting sales tax is a civic responsibility and failure to do so shifts the tax burden on others. Still, the 8.25% sales tax can add up, so is it fair to the buyer?
Since the kayak was listed in RiverCoast inventory, then charging sales tax “on behalf of the buyer” provided a clear answer. I also know that my invoices need to clearly delineate sales tax and that I proudly list my sales tax permit number. But, then I learned more.
Buyer Responsibilities. An Excerpt from Sales Tax Institute:
I Bought a Taxable Item and the Seller Didn’t Charge Sales Tax. Do I Have to Pay the Tax Anyway?
- If you purchase a taxable item and the seller did not charge sales tax, you are obligated to pay use tax to the state where the item is used. If sales tax is not charged on the sale of a taxable item, then use tax is due. Use tax is complementary to sales tax. If sales tax is charged, then use tax is not due. The use tax is a tax on the use or consumption of a taxable item or service where no sales tax was paid on its purchase. Use taxes owed in this context are often referred to as “consumer’s use” taxes….
Wow. It looks to me that unless there’s an exemption (as briefly discussed below), then the seller is not only breaking the law but putting the buyer in jeopardy. I bet that the State would spend its limited resources on going after flagrant sellers rather than on the occasional buyer. Plus, businesses are more likely to be turned in to an anonymous tip line.
Exemptions. From the Texas Comptroller (with the webpage providing examples, exemption chart, and non-profit exemptions):
If you occasionally sell personal items, you may qualify for the “occasional sales” exemption if you meet either of these requirements:
- You only sell one or two taxable items during any 12-month period (not just January-December) – the price of the items does not matter …. [However, you must get a sales tax permit and collect and pay sales tax on the third and any additional sales - of anything including boats, lawn mowers, garage sales - during the 12-month period.]
- You sell in a calendar year (January-December) items originally both for you and your family member for personal use, and you don’t make more than $3,000 on those sales during the calendar year. You can sell as many items as you want as long as your sales are $3,000 or less during a calendar year….
You do not qualify for the occasional sales exemption if any of these conditions apply:
- You have, or are required to have, a Texas Sales and Use Tax Permit (or similar permit from another state).
- You are engaged in business selling taxable items (including artists or craftsmen who make items for sale).
- You buy, barter or trade taxable items to resell.
For clarification, I could ask my brother who is a retired Lawyer and CPA, but his due diligence would require a lot more unbillable time than I want to ask of him. But, I still want to know more. Insights? - Lynne