Recently eBay has expanded their sales-tax collection program to a number of states including mine. I’ve been eyeing a large purchase, and don’t know the sellers contact info off of eBay. The taxes for this item alone would be over a thousand dollars.
I’ve created an LLC in Delaware and in Maryland before (not to avoid tax, for genuine business purposes). It’s pretty easy and cheap. I’ve never even been to Delaware, I just use a registered agent address which is quite common.
A frequent more extreme example of this is people from out-of-state registering shell companies to buy luxury cars in Montana, which does not charge a car sales tax. However, states have been cracking down, especially when buyers bring their cars back to their home state, claiming if they’re using it in their home state it should be taxed as such.
With Pokemon, especially high value, easy to store items, one could hypothetically create an LLC in one of the currently 13 states that does not charge eBay sales tax, and have their item stored and shipped from there if they resell. I know plenty of people in some of the 13 states who would happily ship something off for me.
For the big shots on this forum who conduct private, cash-only deals and have the personal network for this, creating an LLC may seem pretty funny. But for lower and middle-end collectors who don’t want to pay $5k a year in eBay taxes it could make sense.
Any lawyers want to chime in here? Also to anyone in the IRS – this is a hypothetical thought exercise only.
If it’s only for one or a few deals, maybe try getting their contact info first before creating an LLC to avoid paying taxes. You can legit just send them a picture on eBay with your email if you really want to do a deal outside of eBay
Your Best bet for a water tight answer to your question is to procure the services of a bonafide tax attorney in your home state and seek out one in the state of Delaware to ensure you are within compliance.
Best solution is to spend a few hundred bucks to sit down with a tax attorney to check your options. It’s worth the price considering the amount you think you will save in the long run.
If the IRS targets you later on, the attorney fees at that point would probably exceed your estimated tax savings.