This article summarizes the sales tax process for purchases made in events using atgPay.
For information on taxes for payments methods outside of atgPay, see Taxes, Fees and Premiums.
This article contains the following sections:
Internet Sales Tax Laws
Over the past couple of years, states have been introducing new tax laws affecting businesses that sell online, including auction houses. Previously, most sellers were required to collect sales tax only in states where they had a physical presence. This is called physical nexus. However, as more purchases continue to be made online, states have passed legislation to expand nexus beyond a physical presence in their state to include internet sales.
On June 21, 2018, the United States Supreme Court ruled in a 5-4 decision in South Dakota v. Wayfair, Inc., et al, that states can require out-of-state sellers to collect and remit sales tax on sales that reach a certain revenue and/or transaction threshold. Called economic nexus, this requirement has been incorporated into how most states determine taxable sales. While many states define economic nexus as $100,000 or 200 or more separate transactions, others have thresholds as high as $500,000, and these thresholds are changing regularly. Referred to as internet sales tax laws, these rules apply to anyone who sells online, regardless of the platform or website solution they’re using. Proxibid's atgPay tax services make it easier for sellers to comply with this legislation.
When and How Taxes are Calculated
When sending your invoices on an atgPay event, atgPay will populate (or exempt) the correct sales tax factoring in the inventory, status of the buyer, state laws, and shipping method. The checkout process will collect the tax and Proxibid will remit it to the authorities on the auction house's behalf.
Sales tax is calculated based on the hammer price and any shipping and handling fees. Processing fees and buyer’s premium may also be taxable, depending on the state.
When taxes are calculated on an atgPay event, auction companies will not be able to edit the tax rates on events using atgPay.
Click here for a full list of ATG/Proxibid state by state Tax ID information.
Tax Exempt Sales
Since taxes are automatically calculated based on the winning bidder's zip code, and potentially the type of item purchased, there is not a way to make an atgPay event tax exempt.
If all of the items sold in an event happen to be in tax-exempt categories or all of the winning bidders in an event happen to be tax exempt, or in a state that does not impose sales tax, then taxes would not be applied. In all other cases, taxes would be calculated automatically.
Additional Tax Information and Resources
- Lot Categorization: Applying the appropriate (sub) categorization to an events lots ensures the proper tax classification(s) or exemptions are assigned. Lots not categorized will default as taxable merchandise.
- Vehicle Sales
- Tax Exempt Bidders
- Sales Tax Refunds
- Reporting: While Proxibid provides reports with bidder locations and sales tax breakdowns for all invoices paid via atgPay, we are unable to provide the same information on invoices paid outside of our platform.
Please always refer to your tax adviser and specific state tax laws, regulations, and rulings. If you are required to file a sales tax return in qualifying states for your auction house, you do not need to report sales revenue collected through atgPay. All that is required of you for those states is to report that the sales were made through Proxibid with payment collected through atgPay.
Year-End Tax Documentation
ATG collects, submits, and reports sales tax for all transactions paid via atgPay. Whether you also have a requirement to report these transactions depends on which state(s) you file in currently. You should consult your tax advisor to determine if you also need to report these sales.
If you have been filing sales tax returns in certain states prior to using atgPay, as long as you have a sales tax permit in that state, you need to continue to file sales tax returns in those states. The only change will be what you report on those returns. You should consult your tax advisor to make that determination.
1099-K's will be mailed/postmarked by 1/31/2024 and will come directly from Payrix. The 1099-K from Payrix should reflect all the payments disbursed to your Payrix merchant account. If you have not received your 1099-K by 2/10/2024, please send an email to payments@proxibid.com.
For payments taken outside atgPay, you can use your Winning Bidder information for your current and archived auctions.