Sales Tax Changes

Since the founding of our republic, sales of products and services that took place across state lines have been exempt from state sales tax as long as the seller did not have a physical presence in the state in which the the product was delivered. This is about to change and we can expect the change to occur later this year or next. The pervasiveness of on-line purchasing has so deprived states of revenue that they are cutting private deals with merchants like Amazon to collect tax. And without the Amazons of the interstate world lobbying Congress to keep this sales tax exemption for out-of -state sales it is only a matter of time that Congress sets up a plan to force smaller mail order merchants to collect sales tax. This should happen in the next year or two.
This change will have profound impact on stamp collecting and the stamp business and so collectors and dealers should be prepared. First, almost all stamp purchases are essentially sales tax free under current conditions as almost no one buys stamps in the state where they live and pays the tax. Thus, a 5% or 6% tax is going to operate as a kind of sticker shock and reduce stamp sales quite a bit for a while when it is introduced. When Germany added a VAT tax to stamps many years ago it threw a damp rug over the stamp market for quite some time and that was in a market that was considerably stronger than the one we have now. The 5% tax is added to the sales price but in the collector’s budget it becomes part of the price and so less money will be chasing our product. Dealers who buy from other dealers for resale will continue to get the tax deduction but they will have to file forms and because they will be selling into a reduced market their not paying sales tax will be a Pyrrhic victory. Sales should boom a bit in the months after the new tax announcement but before it takes place as collectors “front run” their purchases. But don’t be fooled by the boom this produces. It will be short lived.
Share on:
Shopping Cart
Scroll to Top