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In the US you cannot run that company: if you accept money in exchange for goods (or even sometimes services), and are not a registered non-profit, you need to

In the US you cannot run that company: if you accept money in exchange for goods (or even sometimes services), and are not a registered non-profit, you need to pay sales taxes on the sales, must declare any residual as income, and the people giving you the money cannot claim it as a write off. The sales tax issue is a red herring. Regretsy was (presumably) buying the toys at a rate that included sales tax, and if the operation was not-for-profit then there was no financial value added, and no need to charge the "donors" any additional sales tax.

saurik 15y ago
I believe this is only true if the sales tax as purchased is less greater than or equal to the sales tax as sold, and even in that case I believe still requires a business registration and declaration of the non-taxed receipts. I am not yet, however, an expert at this stuff, and would love to be given more information to learn more about how sales tax works in these situations (I am unfortunately starting to sell physical products, but luckily am not currently reselling anything I purchased at retail, so this specific detail isn't the kind of thing that would burn me ;P).
- einhverfr 15y ago
  There are plenty of cases where the sales tax may not apply. For example, if I replace a warranty part, I do so without collecting or remitting sales tax because the transaction had no monetary value. Assuming shipping and handling is not taxable in the jurisdiction, and assuming that the company uses all the money gained for either shipping or purchasing the toys, then even assuming it's taxable it's already covered. The sales tax is a red herring. The issue is probably one of a computerized algorithm being tripped somewhere.
  - saurik 15y ago
    Just because they don't make a profit doesn't mean they don't have to collect sales tax. When Walmart sells AA batteries as a loss leader, they don't get to not collect sales tax for it just because they used "all the money gained [(and then some, out of their own pockets!)] for either shipping or purchasing the batteries". It gets really complex, in fact: the warranty replacement is only tax free if the warranty was a taxed line item during the original sale. If you make repairs to something, and you pass through the costs of the object to the person hiring you, you are generally considered to be a "retailer" and are responsible for collecting sales tax (which explains why you see wholesale discounts being given to large classes of professionals, from plumbers and carpenters to interior decorators). That said, I am not claiming that the sales tax is the issue here: I'm claiming that this is a complex situation with a lot of intermingled laws and service terms, and that it is not at all clear that these people are running something that was entirely kosher and should de facto be supported. People seem to have a thirst for PayPal's blood, and are totally ignoring (or, more favorably, simply not realizing due to lack of knowledge) that this was a somewhat sketchy, certainly risky (from a credit fraud perspective), and probably even illegal operation; and it makes no matter whether it involved feeding children or sick cats, or whether this is a computerized algorithm that flagged it or a person: the reason for the flagging, and for the blocks, actually makes a lot more sense when you examine the whole issue.
    - einhverfr 15y ago
      If they are paying tax at the outset and only spending that money on product purchase and shipping, then they would have paid all the tax that they are required to. Walmart doesn't pay sales tax to their suppliers. As for wanting Paypal's blood. No. I was a victim of similar freezes and for really convoluted reasons according to Paypal. I don't want their blood. I just don't want there to be any more victims.

saurik 15y ago

I believe this is only true if the sales tax as purchased is less greater than or equal to the sales tax as sold, and even in that case I believe still requires a business registration and declaration of the non-taxed receipts. I am not yet, however, an expert at this stuff, and would love to be given more information to learn more about how sales tax works in these situations (I am unfortunately starting to sell physical products, but luckily am not currently reselling anything I purchased at retail, so this specific detail isn't the kind of thing that would burn me ;P).

einhverfr 15y ago
There are plenty of cases where the sales tax may not apply. For example, if I replace a warranty part, I do so without collecting or remitting sales tax because the transaction had no monetary value. Assuming shipping and handling is not taxable in the jurisdiction, and assuming that the company uses all the money gained for either shipping or purchasing the toys, then even assuming it's taxable it's already covered. The sales tax is a red herring. The issue is probably one of a computerized algorithm being tripped somewhere.
- saurik 15y ago
  Just because they don't make a profit doesn't mean they don't have to collect sales tax. When Walmart sells AA batteries as a loss leader, they don't get to not collect sales tax for it just because they used "all the money gained [(and then some, out of their own pockets!)] for either shipping or purchasing the batteries". It gets really complex, in fact: the warranty replacement is only tax free if the warranty was a taxed line item during the original sale. If you make repairs to something, and you pass through the costs of the object to the person hiring you, you are generally considered to be a "retailer" and are responsible for collecting sales tax (which explains why you see wholesale discounts being given to large classes of professionals, from plumbers and carpenters to interior decorators). That said, I am not claiming that the sales tax is the issue here: I'm claiming that this is a complex situation with a lot of intermingled laws and service terms, and that it is not at all clear that these people are running something that was entirely kosher and should de facto be supported. People seem to have a thirst for PayPal's blood, and are totally ignoring (or, more favorably, simply not realizing due to lack of knowledge) that this was a somewhat sketchy, certainly risky (from a credit fraud perspective), and probably even illegal operation; and it makes no matter whether it involved feeding children or sick cats, or whether this is a computerized algorithm that flagged it or a person: the reason for the flagging, and for the blocks, actually makes a lot more sense when you examine the whole issue.
  - einhverfr 15y ago
    If they are paying tax at the outset and only spending that money on product purchase and shipping, then they would have paid all the tax that they are required to. Walmart doesn't pay sales tax to their suppliers. As for wanting Paypal's blood. No. I was a victim of similar freezes and for really convoluted reasons according to Paypal. I don't want their blood. I just don't want there to be any more victims.