Changes to sales tax laws

Important Information About US Sales Tax Changes For Discogs Sellers

In June 2018, a US Supreme Court decision ruled that physical presence in a state was no longer required for a state to impose sales tax obligations on retailers. Simply put, if a company does business in a state via an online business, it can be required to collect taxes.

With this ruling, Marketplace Facilitator and Remote Seller laws are rapidly becoming more common across the United States and are imposing changes in how taxes work online. We know that tax changes can be confusing, so we’d like to outline what we’re doing to handle tax collection on Discogs. As always, our goal is to make it as easy as possible for you to run your business.

How Does The New Tax Law Affect You?

Starting July 1, Discogs is implementing a sales tax calculation on transactions where the buyer is located in the US. In states governed by Marketplace Facilitator (MPF) laws that apply to Discogs, this sales tax will be required, and Discogs will be responsible for collection and remittance. In other states, sellers who qualify under the Remote Seller laws, will need to make their own determination of whether or not to apply sales tax to transactions. Please consult a tax advisor to better understand your specific tax situation.

To help sellers with managing US state sales taxes, Discogs is launching a new feature where you can view MPF states as well as toggle on/off additional states where you determine it is necessary to add sales tax. You will be able to find the new tool in your seller settings starting July 1.

How can I learn more?

For more information on these new tax requirements, please reference our help article and consult with your tax advisor.

Thank you for being an important part of the Discogs community!

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  • Jul 1,2019 at 17:56

    In the third line below, it is supposed to read Owner of the marketplace.

  • Jul 1,2019 at 17:55

    Just a few quick things for those who don’t understand what this means.
    First some states (currently 23 states) have a marketplace facilitator law. This means the only of the marketplace, AKA in this case the Discogs site has to collect tax if the buyer lives in a state that has the law. Where the seller lives has no impact on this. So if a buyer from one of those states buys an item from you Discogs will collect and remit the tax. You don’t have to do anything, and this applies to everyone whether you sell 5 bucks or 10 million dollars worth of stuff Discogs is collecting the tax.

    Second, 27 states do not currently have the above law, although each month new ones are joining in. When the supreme court said that you do not have to have a physical presence in a state they did say that a state must have a reasonable minimum sales per state must be achieved in order to be responsible for collecting tax. South Dakota was the state trying to collect tax from Wayfair the online retailer (The case was South Dakota v. Wayfair), South Dakota had established a minimum of 200 orders or $10,000.00. The court said this was a reasonable minimum, meaning people who sold 199 items or $9,999 just to South Dakota did not have to collect the tax and remit it to the government. This is the excepted standard now.

    Therefore, if you are a hobby seller who sells less than 200 items to any given state, or less than $9,999 to any given state, you don’t have to collect tax. Ergo if this is a hobby, it is a hobby. If this is a business for you, you need to be up on the tax laws.

    As a buyer if you live in a marketplace facilitator state you will now have to pay tax on everything you buy on Discogs, but you will not have to pay the “Use Tax” you were supposed to pay on your state taxes for buying things out of state.

    I sell on Amazon for a living and it has taken some time to figure out, but it is nothing to worry about for hobby sellers.

  • Jun 26,2019 at 12:58

    I don’t get it either… It seems that the ones who are in this topic simply seem to forget the simple questions… The complete info text and sites are bla bla tax law bla – sorry…
    Please explain how this works for non us-residents selling small numbers of items here. Thx

  • Jun 25,2019 at 23:07

    Many sellers on Discogs do so as a hobby and don’t operate as businesses. It would be helpful to understand whether these new rules apply to individuals who simply sell a few records online. Secondly, it isn’t clear whose is liable to pay the sales tax – the seller or customer – and whether it is added to or subtracted from the sale price. Presumably these rules apply to sellers outside the United States. Discogs could improve the quality of its communications by addressing these points.

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