Collection of US State Sales Tax
Helpful link: List of states where we collect sales tax
1. Why is it necessary for BrickLink to start collecting sales tax in the United States?
This is foremost a compliance issue. Due to recent Marketplace Facilitator legislation, many states have started requiring that marketplace facilitators such as BrickLink collect sales tax directly from buyers.
2. Will prices go up because sales tax is now being collected?
In states where sales tax is being collected, the final price to the buyer may be higher than what was being paid before, depending on whether or not the seller they are purchasing from was already adding sales tax to their orders before this transition.
3. How is sales tax going to be collected?
When an order is placed, payment for the order itself will be sent to the seller and BrickLink will receive payment for the sales tax. This will be considered a single transaction by the payment facilitator (PayPal or Stripe).
4. What payment methods are accepted for transactions involving US sales tax?
There are two accepted payment methods - onsite PayPal and onsite Stripe.
5. Will sales tax collection eventually expand to more US states?
Yes. Within a few months we plan to be collecting tax in several additional states.
6. I am a seller who currently collects state sales tax. Will I still need to collect tax, or will BrickLink do this for me?
In states that BrickLink begins collecting sales tax, BrickLink will collect sales tax on all orders shipped to those states, and the self-collecting sales tax feature for sellers will be disabled.
7. How does BrickLink know how much sales tax to collect on each order?
Sales tax can be very complicated to calculate correctly as there are literally thousands of tax jurisdictions throughout the United States. We are partnering with a third party that specializes in sales tax and they will calculate the correct amount of tax for every order based on the “Ship To” address of the order.
8. What about refunds?
Refunds are possible, and the tax will be refunded to the buyer accordingly on a “percentage-of-order” basis.
9. Aren’t certain products taxed at different rates?
Yes, they are, and we are accounting for that. There are currently four Gear categories that may have different tax rates depending on the state and the time of year. They are:
Even though BrickLink is receiving part of the payment, the fee for the whole transaction will be the responsibility of the seller. We feel this is balanced out by BrickLink paying for the service of calculating the tax.
11. As a US buyer, why do I have to pay sales tax on an order coming from outside of the United States?
This is now the law in many states, including California. The tax due is based on the buyer’s location, and the tax must be paid for that order even if the seller is in another state or another country.
12. Has BrickLink considered that buyers may opt to go to other marketplaces where sales taxes are not being charged?
We believe better compliance will protect and strengthen the BrickLink community and marketplace in the long run.
13. Might this change encourage sellers to circumvent the order placement system on BrickLink and complete their orders offsite?
We believe sellers will welcome this new service we provide of collecting tax. It means sellers will have more time and energy to spend running their store.
14. Where can buyers and sellers see the tax that is added to an order?
On the order detail page there will be a line in the upper section where US sales tax is shown. Tax amounts will be shown several other places as well, including on the invoice.
15. Will shipping and other charges be taxed, or just the items in the order?
There is some slight variance in this regard, but for most states, tax is charged on the full order amount, which includes shipping and all other fees.
16. Is this another effort by BrickLink to get everybody to use onsite payment methods only?
No, this is about our obligation to collect sales tax directly from buyers. Due to the flexibility required to be a worldwide marketplace, we will likely be offering offsite payment methods for a long time to come.
17. Where will the money go?
We will collect the tax directly from the buyer at the time the order is paid and remit it to the correct tax authority.
Charging VAT on seller fees
18. Why doesn’t BrickLink just absorb these charges instead of passing them on to sellers?|
VAT is a multi-stage transaction tax and is ultimately borne by the end consumer. By charging VAT to our sellers, not only are we complying with the applicable tax legislation, but we are putting ourselves on a level playing field with our competitors.
19. Which country will VAT on seller fees be paid to?
The VAT will be paid to the Danish tax authorities who will subsequently pass the correct amount of VAT for each EU country to the applicable local tax authorities.
20. Which VAT rate will be used?
The VAT rate used will be the VAT rate of the country associated with the seller’s verified account. An exception to this would be if we have two other pieces of evidence which supports that the seller is actually located in a different country. In that case, the VAT rate of the other country will be applied.
21. Does this apply to all sellers who live in a country that uses VAT?
No, at least not at the present time. This policy will extend only to countries within the EU.
22. Why do VAT-registered EU sellers not have to pay VAT on their BrickLink store fees?
VAT-enabled sellers already pay VAT through self-accounting practices. Instead of paying them to BrickLink, they pay them directly to the relevant tax authority.
23. What if I have an exceptional VAT rate for charity organizations?
Please contact us for cases like this and we will review the appropriate adjustments.
24. If I am VAT registered in a country other than where I reside, does my store need to be VAT enabled on BrickLink?
BrickLink only requires that you be VAT enabled on BrickLink if you are VAT registered in the country associated with your account.
25. What happens if my VAT ID is invalid when BrickLink checks it?
If your VAT ID is found to be invalid during the monthly automatic check, your VAT-enabled setting will be changed to non-VAT-enabled and you will be charged VAT on BrickLink fees on your next invoice.
26. What sort of checking will be done by BrickLink to make sure my VAT registration is authentic and up-to-date?
We will check your VAT ID electronically to make sure it is valid. This will be done before each billing cycle to ensure we issue the correct type of invoice.
27. This means EU sellers will have to pay more to use BrickLink than US sellers. Is this fair?
This is simply a reality of the difference between two tax systems. We are no different than services such as PayPal in this regard.
28. Even though the fee schedule has not changed, the practical effect of this new VAT charge is that some sellers will now be paying more in fees. How can BrickLink reconcile this with the promise made earlier that fees would not go up?
Some sellers' overall cost has increased, but BrickLink is actually earning a little less than before, due to PayPal fees that we must pay. We see this as a slight correction in how we operate instead of an increase in revenue.
29. I live in Switzerland, which is not in the EU, but we do have a VAT system. Will I also be charged VAT on my BrickLink fees?
No, at least not at present. This change only affects sellers within the EU.
30. When I am invoiced on August 5, will I be charged VAT on my entire outstanding BrickLink balance?
You will only be charged VAT on fees for orders with a date of July 1, 2020 or later. Fees for orders placed before this date will not incur a VAT charge.
We recently decided to absorb the cost of VAT on BrickLink fees until September 5. You will now only be charged VAT on fees for orders with a date of August 5, 2020 or later. Fees for orders placed before this date will not incur a VAT charge.
We decided to delay the start of VAT fee collection until September 5. You will now only be charged VAT on fees for orders with a date of August 1, 2020 or later. Fees for orders placed before this date will not incur a VAT charge.
31. If I pay my BrickLink fees by September 4, can I avoid paying VAT on fees for August?
No. VAT charges will be calculated based on order date, not when you pay your fees. Paying your fees early will not make a difference in how much VAT you will be charged.
Revised Terms of Service
32. When will these terms go into effect?
The new terms will go into effect at 6:00 PM Eastern Time on Aug 4, 2020.
33. What will happen if I don’t agree to these terms?
After August 4th, you will no longer be able to access your account or trade on BrickLink.
34. What are the main differences between the old terms and the new terms?
Language has been added to cover the collection of US sales tax and the charging of VAT on BrickLink fees for EU sellers. Also, the company has been changed from BrickLink Limited to LEGO BrickLink, Inc.
35. If I am a seller or a designer, do I need to agree with the Seller Terms and Designer Terms separately?
No. If you agree with the base terms of service, you also agree to the Seller and Designer Terms by extension.
36. If I have previously opted out of the arbitration agreement (Section 28.7) do I need to opt out again within 30 days of agreeing to the new terms?
No. If you have previously opted out within the 30-day time limit, you do not need to opt out again.
37. Are there any minor changes to the TOS that I should be aware of?
Yes, there are a few: