Agree it's iffy that they're trying to collect sales tax on the trade in value. A trade is like a gift in kind, with 2 parties simultaneously. Last time I checked, there is a tax exemption on in kind gifts.

 

Like with a car deal - you only pay tax on the remaining value after the trade value is considered against the item you're buying.

 

that's not how it works. you pay tax which is assessed on the full sale price.

*edit, this seems to vary by state perhaps?

 

You may want to give that seller a highlighted copy of the sales tax rules. Were you dealing with someone new and inexperienced? If not could they have been trying to pull a fast one?

 

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Only time I've ever done a trade in was for vehicle purchases, and the tax was on the amount exchanged (price of item purchased - value of trade in). Not sure if GA handles this differently.

 

Definitely not right. My understanding is that you only pay tax on the difference

 

OK thanks for the confirmation.

I dont think it was a fast one by a salesperson. I challenged them on it and sent a link to the website above. They stuck to their interpretation.

If Crown and Caliber doesn't want my business then so be it. Weird thing is they are offering this trade-in service to other dealers so you'd think they'd want to get it right.

 

They’re just trying to add to their net profit, IMO. Collect sales tax on the full retail price, pay the state sales tax on the difference only, then pocket the difference.

Sounds shady to me and glad you called them out on it.

 

Could they be treating it as 2 separate transactions - trade in as one; purchase as second? If so, their interpretation technically* is correct.

* I say technically because I have seen that before in different scenarios (although not in GA).

That said, in the wake of the Wayfair case, many big retailers have been put under the microscope when they weren’t previously having to collect sales tax in many states (because they did not have a physical presence/nexus to that state) so unfamiliarity with sales tax rules isn’t uncommon. However, a big retailer w/ that kind of online presence doing business in (presumably) all 50 states should be on top of that - that kind of annual revenue would make them a big target for a sales tax audit.

EDIT: also, is OP in Georgia as well? I’m assuming he/she is not, hence why doing the transaction online - and if that’s the case, you need to look to your state’s sales tax rules as the retailer has to collect and remit the out of state sales tax to your state of residence. GA sales tax rules would not control here; instead your state of residence would control.

 

In california you pay the sales tax on the full amount, no allowance is done for any trade in value. That has been the case for all my cars, and a Rolex datejust that I traded in (back in 2007) towards a Sub.

* edit: after double checking that was not the case for the Rolex. I only paid tax on the difference.

 

In california you pay the sales tax on the full amount, no allowance is done for any trade in value. That has been the case for all my cars, and a Rolex datejust that I traded in (back in 2007) towards a Sub.

Thats true for vehicles in CA, but I just read CA law and should not be true for like exchange trade-ins, such as the case with your Rolex.

Might want to double check that.

 

Fair point on which state controls for an out of state sale. I'm in Missouri but they never asked. In Missouri its definitely only the difference law quoted below-

"the tax imposed by sections 144.020 and 144.440 shall be computed only on that portion of the purchase price which exceeds the actual allowance made for the article traded in or exchanged, if there is a bill of sale or other record showing the actual allowance made for the article traded in or exchanged."

In regards to the 2 separate transaction theory, I actually believe that's how they look at it based on our conversation. By treating it that way, they screw customers and dissuade potential customers.

 

Being an internet sale may throw a wrench in the whole thing and is probably why they want to tax the whole thing, not the difference.

 

either way, wouldn't one generally fare better just selling their trade in item outright?

 

They have a pretty good trade-in allowance and black friday sale. So all told within a couple hundred $ with less work involved and trusted dealer assurance.

But yeah, now I'll sell outright and buy from whomever.

 

It's either a trade-in or it's a sale and purchase. And it's either the law or it's not.
Collecting sales tax and remitting it are extremely strict and well-described procedures. The store staff would be wise not to admit to "interpreting" anything. Incorrectly collecting sales tax is basically tax fraud in most states.

 

The wayfair decision really messed everything up with e-commerce. I think that when you buy something across state lines the sales tax is supposed to go to your state's government, not their state's government so really what the rules are in Georgia would be irrelevant here.

If I had to hazard a guess I would say that they they don't want to get in trouble with the IRS and aren't keen on making any kind of "interpretations" of tax law that could come back to bite them in the ass. They'll just collect the full value and call it a day. eBay seems to do this as well, as a lot of places have exemptions for things like clothing that eBay just chooses to completely ignore.

At the end of the day the sales tax rate in Missouri is only 4%, if it was me I would probably just suck it up and pay it if you want the watch. If you really want to get pissed off about taxes you should go to California where they charge nearly 10% in sales tax.

 

At the end of the day the sales tax rate in Missouri is only 4%, if it was me I would probably just suck it up and pay it if you want the watch. If you really want to get pissed off about taxes you should go to California where they charge nearly 10% in sales tax.

While MO is only 4.225% that does not include the county and local add ons. When those are included, its usually around 9%.

So in this scenario its about $500 difference. Enough for me to look elsewhere or continue on the wait list at my AD.

 

And note how only 13 years ago bluesy sold for a cool $7825 plus tax.


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Sounds like what other have already said; they are treating it like two separate transaction. They are buying your watch and selling another one. I understand that $500 is significant! Ask them to come up on the "trade" to make it a little more appealing or walk away.