Consignment rip-off or legit practice?

[AuntieDiluvian]

What state charges tax on used items?

[619TF]

Originally Posted by AuntieDiluvian

What state charges tax on used items?

Many, if not most actually. It has to do with the "business" status of the seller. That's why the once a year garage sale is exempt from tax but that guy selling on eBay really isn't (again, depending upon the State). Here it's clear that this is a retail location so yes, tax. That being said there should be NO commission charges on the tax as that's not part of the sale itself. That's just "extra" money that is required to be sent to the State. ALL of it so yes, that part was clearly a ripoff.

I also agree with ToneGopher's post here (#12) in that if they won't fix this for you then you need to report them. Eithger way I'd post a review somewhere to warn others of this practice and the fact that they didn't notify you of the sale for months(?!).

[JayBee1404]

I’m an ex-accountant, retired seven years now so my memory of sales tax (VAT is the closest thing we have in the UK) isn’t perhaps as good as it was, and I’ve never worked in the retail industry, but I’m sure that the transaction chain here, using your percentages, would have been:-

Sale of guitar to customer = $2,000

Commission charge to owner 25% = $500
Tax on commission 10% of $500. = $50
Total charge to seller. = $550

Net proceeds to seller. = $1,450

There would be no tax on the sale of the guitar because it wasn’t owned by the store and it wasn’t on their inventory - they were merely acting as a middle-man, and the $2,000 was not their own earnings, it was simply received on your behalf.

The 25% commission, $500, was the store’s earnings, and they would charge 10% tax - $50 - to the seller. Net cash to the seller would be $2,000-500-50= $1,450.

I’m betting that’s the figure you received? If so, it’s correct. But that’s assuming US sales tax rules work the same way as UK VAT rules, and it’s possible, even probable, they’re different. But the result is the same either way.

I don’t think it was you who got ripped off, I think it was the guy who bought the guitar and who paid $220 tax on a private sale.

If I’m wrong, I’d be interested to hear - my knowledge of US sales tax is limited to the small amounts I’ve been charged when I’ve been over there in Houston TX.

[DanR]

Taking commission on the sales tax seems like a rip off to me. I would not do business with them again. 25% seems a bit high, as well. I sold two guitars on consignment this year at a local store and the commission was 15%.

[kiva238]

Assuming that there isn't written contract that spells out that there is commission on the gross amount including tax, I would:

1, Talk to the shop and clearly explain your position and understanding of the deal.

2. Tell them exactly what it is that you want them to do to remedy the situation and satisfy you.

If that doesn't move the shop to refund the money based on the tax, I would then:

1. Tell them that this is now a point of discussion on the AGF, and since they are standing by their position and believe it to be a correct one, they should have no issue with you disclosing the shop name on the AGF.

2. I would tell them that you intend to contact the BBB in your area as well as the Consumer Fraud Division in your state.

Telling them that you'll never use their shop again is worthless and a given. . . .

[vintageom]

Even if the shop took into account the credit card fee, if a credit card was used for the purchase, it does not amount to the percentage of the tax that was charged to you.

Sounds like "revenue enhancement" to me. Perhaps the shop owner can show you the contract language where this is prescribed, and where you signed for paying commission on sales tax?

The commission charged should have been for the amount it was sold for. His do you know what it actually sold for, 3 months previous?? The shop's "word" on it?

I would be skeptical.

[roylor4]

I would out them with google and yahoo reviews and let their reputation take the hit. It'll cost them a LOT more than $50. Then I'd never do business with them again.

In short, I pretty much agree w/Kiva. Bad Juju on these guys part IMO.

[Rev Roy]

You were already paying a high consignment fee (I usually pay 20%), then weren’t informed the guitar was sold months ago...and on top of that he includes the tax in the consignment fee? I would NOT be a happy camper...

[lowrider]

Yes, you got ripped. It's too late to do much about it but you could turn them in the stated sales tax authority for charging a commission on sales tax. Let them audit the books. I'll bet that would cost the owner more than the $50 he ripped you off for.

[RustyAxe]

Originally Posted by AuntieDiluvian

What state charges tax on used items?

Most do, if sold at retail. Private sales are usually excluded form sales tax.

[Rockysdad]

"Word of mouth advertising, the best & worst a business can receive"

[rmp]

yea,, I think... not cool..

IMHO.. 25% is bad enough, then the tax fiasco?

So there's a first time for everything. and a last.. I think you see where I'm going here..

[BrunoBlack]

That seems wrong to me. I’ve sold on consignment and paid 20% of the sale price - not including tax.

[PorkPieGuy]

I tell my guy that "I need $XXX from this instrument. Mark it up however much you want to make it worth your while."

It's worked well so far.

I've never heard of this tax mess.

[Bridgepin]

That goes without saying that was a real low ball move on their part. I if you don't have your arrangement in writing I can't see what other recourse you might have. Other than a very bad report on social media sites they are connected to.