Is the buyer's premium subject to sales tax? What six state tax agencies say

What six state tax agencies say

• California: CDTFA's law guide annotation on auctions says the gross receipts include the buyer's premium, using a $100 bid and a 10% premium. (CDTFA Annotation 115.0010, 3/16/88; CDTFA counsel letter, Mar 16, 1988) “Tax applies to the entire $110 paid by the buyer to the auctioneer.”
• The rule behind it: California treats auctioneers as retailers, even when they sell other people's goods, and taxes them on their gross receipts. (California Regulation 1565) “are retailers, and are, therefore, required to hold sellers' permits and pay tax measured by the gross receipts from such sales.”
• Nebraska: the Department of Revenue's auction guide says it in four words, and calls the premium part of the gross purchase price (sometimes it is called a "transaction fee"). (Nebraska Information Guide 6-361, Taxable Receipts, Buyer's Premium) “Buyer’s premiums are taxable.”
• Missouri: a January 2024 letter ruling for an online auctioneer charging a 10% buyer's premium found the premium is part of the sales price, because there can be no sale without it. (Missouri LR 8285, Response 1) “Applicant does have to collect and remit applicable state and local sales tax on the "buyer's premium" for sales of tangible personal property inside the state of Missouri.”
• New York: an October 2024 advisory opinion reached the same answer for an auction house whose premium ran from 12% to 25% of the hammer price. (NY TSB-A-24(48)S, Opinion) “the buyer’s premium (commission) is part of the sales price of the tangible personal property being auctioned and, as such, is part of the receipt subject to sales tax.”
• Wisconsin: the Department of Revenue's auctioneer publication works an example: an auctioneer that adds a 1% buyer's fee to a $10,000 sale is taxed on $10,100. For online auctions it says the taxable sales price includes shipping, handling and any buyer's fee. (Wisconsin Publication 217, Buyer's fees charged on taxable sales; Internet auctions, Note 1) “"Sales price" includes any shipping and handling charges and any "buyer's fee" that are charged by the auctioneer and/or owner in addition to the amount of the winning bid.”
• Idaho: the State Tax Commission's guide for auctioneers says most charge a buyer's fee of generally 10% to 15% of the sale, which buyers pay to get what they bought, and that the fee is taxed. (Idaho guide: Auctioneers, opening section) “Buyer’s fees are taxable.”
• How much weight each carries: the Missouri ruling binds the department only for the business that asked, for three years; the New York opinion binds the department only for the petitioner; the Nebraska guide is advisory but binding on the department until amended; the California annotation summarizes a 1988 counsel letter; Wisconsin's publication and Idaho's guide are general guidance, and Idaho's says it may not fit every situation. (Missouri LR 8285, closing paragraph; NY TSB-A-24(48)S, Note; Nebraska Information Guide 6-361, Overview; CDTFA Annotation 115.0010; Wisconsin Publication 217; Idaho guide: Auctioneers)

What the auction sites say about tax

• A 2016 GovDeals information sheet published by the City of Berea, Kentucky, says the premium is usually taxed, at the rate for where the item is. (Berea GovDeals sheet, Fees) “In most cases, the buyer's premium is considered a taxable amount”
• Oklahoma's GovDeals terms charge tax by the auction's advertised location, and take exemptions through Liquidity Services' forms on GovDeals. (Oklahoma OMES auction terms, Sales tax)
• PropertyRoom taxes each item's total selling price, which generally includes that item's shipping and handling, in the states on its list. (Do I Have To Pay Sales Tax?) “the total selling price of an item will generally include item-level shipping and handling charges”
• ShopGoodwill charges tax by item and ship-to address, and in some states the shipping or handling is taxed too. (ShopGoodwill: Why am I being charged tax?) “In some states, shipping and/or handling is taxable.”
• HiBid's glossary says tax depends on local laws and where the buyer and seller are; the auctioneer's invoice shows it. (HiBid: Auction Terminology, Settlement & Fees)

Resale certificates and other exceptions

• Buying to resell: Nebraska lets the auctioneer or clerk skip the tax on a sale for resale when you give it a completed Nebraska Resale or Exempt Sale Certificate, Form 13, Section A, and the guide uses antiques dealers as its example. (Nebraska Information Guide 6-361, Non-Taxable Receipts, Sales for Resale Purposes)
• File it before the sale closes. PropertyRoom's exemption starts the day you are enrolled in its Reseller Program, ShopGoodwill wants a certificate dated in the current year, and Oklahoma recommends filing GovDeals exemption forms before the close or before payment. (What if I have a Resale Certificate?; ShopGoodwill: tax exempt status, Reseller Documentation; Oklahoma OMES auction terms, Sales tax)
• Vehicles, trailers, boats and other titled property are different. In Missouri the auctioneer does not collect tax on the premium for titled property, but the premium is part of the purchase price on the title. In Nebraska the auctioneer collects no tax on motor vehicles, trailers, motorboats, ATVs or UTVs; the buyer pays the county treasurer within 30 days. (Missouri LR 8285, Responses 2 and 3; Nebraska Information Guide 6-361, Motor Vehicles; Motorboats; ATVs and UTVs)
• A government seller doesn't make the sale tax-free. Nebraska's guide says governmental entities selling at auction are subject to sales tax unless a specific exemption applies, and Idaho's guide gives the example of an auctioneer selling a federal government vehicle: the auctioneer still collects the tax, because the auctioneer is making the sale. (Idaho guide: Auctioneers, opening section; Nebraska Information Guide 6-361, Auctions for Governmental Entities)
• Picking it up yourself can change the answer. Idaho taxes a sale you collect in Idaho, or pay someone to collect there, even if it then leaves the state, because title passes in Idaho; New Jersey has the auctioneer collect tax when an out-of-state buyer picks up in New Jersey. When the seller delivers it out of state for you (in Nebraska, as a condition of the sale), Idaho, Nebraska and New Jersey don't tax it, though your own state's use tax can apply (Idaho's guide says so for its residents). (Idaho guide: Auctioneers, Out-of-state sales; Out-of-state purchases; New Jersey ANJ-3, Out-of-State Delivery; Nebraska Information Guide 6-361, Delivery Out of State)

What to do

1. Assume tax is on the bid plus the premium when you set your maximum bid, unless your certificate is already on file with that seller.
2. Check the listing or invoice for what is taxed: PropertyRoom includes item-level shipping and handling, and ShopGoodwill says some states tax shipping or handling.
3. Get your resale certificate accepted before you win: PropertyRoom's exemption, for one, applies only from the day you're enrolled.
4. For a vehicle, trailer or boat, the auctioneer may not collect the tax at all: in Nebraska you pay the county treasurer within 30 days, and in Missouri the premium goes on the title as part of the price. Keep the invoice.
5. Driving to collect a lot in another state? Expect that state to tax it (Idaho and New Jersey say so); when the seller ships it out of state, its tax may not apply, but your home state's use tax can.
6. Rulings like these answer one business’s question in one state; ask your own state revenue department or a tax professional before relying on them.

Price the whole lot before you bid with the landed cost per item calculator.