Retailers must charge tax on sales of new and used taxable items. When a retailer acts as a broker (selling property for an individual and receiving a fee or commission for doing so), sales tax does not apply if all of the following conditions are met:
- The property is not business equipment.
- The buyer and owner of the property directly exchange money and (if applicable) title for the sale. (The money does not pass through any of the broker’s accounts.)
- The broker does not take title to the property, does not carry insurance on the property, and does not have control over the property, except for leasing or storage arrangements.
- The broker’s only function is to advertise the property for sale, obtain offers to purchase, and inform the owner of potential buyers. The owner must have rights to accept or reject any offer.
Examples
- A boat marina sells a boat on behalf of an individual. The marina advertises the boat for sale and obtains purchase offers. The marina informs the individual, who can accept or reject the offers. Title to the boat passes directly from the individual to the buyer. Payment is made directly to the individual. The marina receives a commission from the seller. The sale is exempt from tax.
- A boat marina sells a boat on behalf of an individual. The boat owner has no involvement in the sale. Payment for the boat is deposited in the marina’s account. The sale is subject to tax.
For more information, see Isolated and Occasional Sales.
