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If I am to buy used clothing from an online used clothing site ebay, mercari
ect, or even a thrift store, am I able to re-sell these myself for profit
listed as used, second hand new with tags without penalty or permit of any
kind? Are any taxes owed or all under the table? Am I able to sell on a site
such as shopify in an online store of my own without penalty or any
documentation, permits ect needed? Any taxes owed or still under the table?
Asked on December 13, 2016 under Business Law, Illinois
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
Legally, you can buy used clothing and resell it, so long as 1) you don't misrepresent what it is (that is, lie about in some way, like claiming it is new); 2) use the clothing manufacturer's trademarks without their permission; and 3) do not violate any agreements--e.g. if when you bought the clothing, the agreement of sale was "not for resale," you would be bound to honor that.
In terms of taxes, yes, you have to collect and turn over to the state's in which you sell the items (i.e. in which the buyers are) the appropriate sales tax, which varies state by state: for example, in IL it is, I believe 6.35%. The vast majority of states collect sales tax on clothing, so assume you have to pay sales tax on all your sales. And any profits will be subject to income tax, at either the "corporate" (business) level and/or on your personal income taxes (depending on how you structured the businesss).
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