Ag land... IA. State has always been very attentive for any way to collect from any source. They’ll audit or review at the slightest sniff of coin.
Ironically, it was getting audited by N.M. state twice that really gave me an inside view of how the N.M. tax "system" (huge air quotes there) works. The left hand doesn't know what the right hand is doing. They have rules and regulations that nobody down at the Taxation and Revenue office understand. Even tenured employees with a dozen years under their belt don't understand it.
The problems...
We're one of only a hand full of states that have Gross Receipts Tax (which is like Sales Tax, but differs in that it taxes GROSS receipts, as opposed to Sales Tax that taxes NET receipts). Regular sales tax is like "Net receipts" tax. N.M. doesn't care if your business endeavor LOST money (a loss is normally a write off as a "loss" in most states). N.M. collects tax regardless of the net outcome.
We're also one of only a hand full of state who charge tax on labor. So the state doesn't see me as a drummer in a rock band. They see me as some kind of "rock drummer business" to be taxed for every note I play. A more stark example would be something like your 13-year-old kid who mows lawns in the summer for extra cash. In the eyes of N.M., THAT is a business and is to be taxed accordingly. So, in a nutshell, it's ridiculous, borderline retarded. But it's so strict that it's nearly impossible to track. Therein lies their flaw. But I digress....
My point is the system is so flawed that nobody in the N.M. Taxation and Revenue office really knows how it works. If I don't like the answers I'm getting from agent #1, I simply move on to agent #2. This is how I got out of TWO audits virtually unscathed - which were for thousands of dollars each. Turns out, going toe-to-toe with an $8/hour tax lemming isn't that tough. You just have to know the loopholes. And they're all women down there, so flirting doesn't hurt; "Oh...are those your children?? How beautiful they are!" In N.M. I advise friends "DO NOT CALL. DO NOT EMAIL. Go in person." I got WAAAAAY more done in person. Email and phone were exercises in futility. But I digress...
When I do business, depending on the business, I generally don't collect tax unless they want me to fill out a W9. For drone stuff I collect tax 100%. For computer repairs I generally don't because that's a cash-only business. For my sound company or any of my bands, it depends on the client. If they want me to fill out tax forms (like a W9), then they are charged tax. If they don't like the fact that I'm collecting tax, then I tell them that there's the "cash price" and the "W9 price." Pick one. You can't have your cake and eat it, too. You don't get to make the transaction "official" so you can write off my performance without paying the Gross Receipts tax. Most bands/musicians around here don't understand how the whole tax thing works. So they allow vendors to get away with compulsory paperwork without paying the tax. So if musician makes $100 for a night, they have to "back out" the tax so they only make $93/night. I've gone to war with musicians on this. I don't allow musicians to "back out" state tax. I don't do it to them. So I don't allow it to be done to me. But again, I digress... It's a mess.
Anyone who knows anything about sales tax will tell you that the tax is supposed to be paid in the state of origin, NOT the state of delivery. If I purchase a widget in Arizona, I pay tax on that widget IN Arizona, NOT N.M. And what about used items? Are we supposed to pay tax on items that have been taxed already in their original sale? That kind of taxation is literally against the law.
It's a ridiculous system that hugely flawed and literally breaks its own rules. Bottom line, I'm not worried about the eBay dealings.
D