The Showroom Finder Shopping Guide

Estate Sales Tax and the Occassional Sale

Are you the Executor or a court appointed Administrator of an Estate who has been left with the task of selling all the personal property? I have clients telling me, “I haven’t a clue what this stuff is worth or how to get rid of it”… That’s not all they don’t know… Selling an Estate can be extremely complicated if you do not have the proper direction to follow and, more importantly, if you do not have a professional guiding you through the process.

Are you aware that a Seller’s Permit is required of a person engaged in the “business of selling tangible personal property” whether the sales are retail or for purposes of resale or include both retail and/or resale activity?. Sales Tax applies to all retail sales of tangible personal property including capital assets whether it’s sold in one transaction or in a series of sales.

Generally speaking, any person who makes three or more sales for substantial amounts or relatively small amounts within a 12 month period is required to hold a Seller’s Permit issued by the State Board of Equalization regardless of whether the sales are retail to the general public or for purposes of resale to dealers. “Each” sale during the 12 month period requires the “Seller of Goods” to hold a valid Seller’s Permit if the sales were conducted in the State of California. A sale occurring outside the State of California is included even though, because of the intra-state law exclusion, it would not be subject to California sales tax. Also, any activity requiring the holding of a Sales Permit includes, but is not limited to, the “acquisition and sale of tangible personal property” whether the sales are retail, resale or include both. “Acquisition” includes the obtaining of the property in any manner whatsoever.

“Well then, how will I know if I need a Seller’s Permit or not”, you ask? It’s really very simple…if you’re “in the business of making continual sales” it’s mandatory that you have a Seller’s Permit; that you charge sales tax and that you report it under your Seller’s Permit number i.e., either quarterly or on an annual basis as determined by the Board. The only exemption would be if you sell for purposes of resale. More specifically, if you sell to anyone holding a valid Seller’s Permit no tax is charged. They are exempt until they sell it; however, you should require an identity statement and a copy of the permit itself for your records showing their permit number and signature.

Now, it’s easy if you have a retail storefront… I think that’s been clarified; however if you’re an Executor or an Administrator of an Estate and it’s a one-time event, that’s another story… you would qualify under the criteria of an “occasional sale basis”. You must comply with the terms delineated in Regulatioin 1595 of the Sales and Use Tax Regulations . Tax would not apply to the sale of tangible property because you’re not required to hold a Seller’s Permit. But, if you hire an Estate Liquidation Service then they must have a Seller’s Permit because they’re in the business of continual sales transactions.. Are you thoroughly confused? I’m not surprised.

Many Estate Liquidators and/or those who represent themselves as such do NOT have Seller’s Permits! SOME do NOT have business licenses – neither of which have the capability of reporting Sales & Use Taxes. If the Estate Seller fails to collect and report sales tax, it could cause the Estate to be audited… The Estate would then have the option to enjoin the Seller of Goods in any action brought against the Estate. Remember… anyone collecting sales tax must have a permit and must report all gross sales, applicable sales tax charged and/or any “all-inclusive sales”, i.e.. the sales tax is not specifically defined. Avoidance or blatant failure to collect Sales Tax is subject to penalty.

About the author

Florence Quinn, G.C.A., Cum Laude is a Graduate Certified Appraiser as well as a retired member of the legal profession having worked in the Wills & Trusts Department of a major law firm. Her experience in the antiques and personal property industry spans over 50 years. Ms. Quinn owns and operates BackStreet Antiques & Appraisal Company in the heart of the San Dimas Historic District.