June 7, 2022
It’s officially garage sale season! Early risers on the weekend are excited and ready to find some treasures on the cheap!
So, do sellers have to collect tax on the items they sell? According to state law, a garage sale, rummage sale or similar sale is considered a casual sale. This means no sales or use tax is due as long as the following conditions are met:
- The sale must be at the residence of the owner of the tangible personal property.
- The sale must be conducted by the owner or the immediate family of the owner of the property being sold.
- The tangible personal property must not have been acquired by the owner for the purpose of resale.
- All sales or use tax due on the original acquisition of the property must have been paid by the owner.
- Sales must be held on an infrequent basis.
Conversely, this is not the case for someone who regularly visits garage sales and purchases items to resell in their own monthly garage sales. This violates “casual sale” exemption rules 3, 4 and 5 listed above. In this instance, the seller would be required to register as a retail merchant and collect sales tax when conducting their own garage sales. To get started, DOR recommends using INBiz—Indiana’s one-stop resource for registering and managing a business and ensuring it complies with state laws and regulations. Visit INBiz for more information.
For now, be sure to keep these guidelines in mind while enjoying summer and garage sale season.
Check out Information Bulletin #20 for more information.