In New York, every business that buys and sells goods must be registered to collect and pay State sales taxes. The State considers the entity that collects and remits these taxes as “sales tax vendors”, and they must document the receipt of taxes due or receive a valid resale certificate, exempt use certificate, or bill of lading that the goods were shipped out of the State of New York in order not to incur a sales tax liability.
With that qualification, I would ask any dealer who has ever consigned an item to an auctioneer, if they ever received a resale certificate from the auctioneer? If not, how could you prove that the funds were received from an entity that is reselling them? Putting it in a different way, if the auctioneer has resold your goods, and if bought by another dealer at the sale, that dealer would be required to submit his resale certificate to the auctioneer, in order not to be charged the sales tax.
The conundrum of this situation is why the auctioneer as a valid sales tax vendor gets away with only one side of the requirement. They can collect the tax, but they don’t have to give you, the consigner their resale certificate, as proof to state authorities that they resold your items. My experience with Christies was to be vehemently stone walled and given a letter to the effect that all sales taxes due would be collected. If I wrote the same letter in lieu of giving my resale certificate to the same auctioneer, or for that matter another dealer, it would be totally unacceptable.
I pressed my case with the sales tax authorities, and all I got was an opinion that yes I am correct to request their resale certificate, and “Christie’s is aware of it”. The State went further in its opinion and said that I should receive from Christie’s information as to WHO they sold it too. Yea, right, they’ll tell me that! This is another example of how Christie’s and Sotheby’s have set the tone for sales tax compliance, and how they can bully enforcement by sales tax authorities.
I truly find it hard to believe that I have to accept such a result from my attempt to properly protect myself from a sales tax liability, but I think all dealers should be aware of their exposure when dealing with auctioneers. Ironically, I have received resale certificates from small auctioneers when requested. So my point is, SELLERS, beware of your sales tax liability when dealing with these firms.