# Reverb.com / Tax reporting



## Alex (Feb 11, 2006)

I was on the Reverb platform posting a few items for sale and there is a notice that new tax reporting rules are in effect for 2022. Previously, if you had sales under $20K AND less than 200 selling transactions, Reverb would not generate a 1099K form to the recipient which is also filed with the US tax authority, the Internal Revenue Service (IRS).

Now, if you have sales over $600, a 1099K will be generated regardless of the number of transactions.

As a Canadian resident with no ties to the US, it's a bureaucratic process with typically no tax implications, however, a few concerns on my part:


The tax agencies share information. This information could/will be shared with the Canada Revenue Agency.
Reverb is requesting confirmation of your personal information including SSN ( I presume SIN willl be required for Canadians). If you don't consent to provide the information, Reverb may withhold amounts from your Reverb payout when your cumulative sale of goods exceed $600 in a given year.

If you operate as a business and filing tax returns etc there should be no problems. However, as an individual selling gear as a hobby, you may need to keep track of all your transactions in the event CRA knocks on your door. In Canada, gains over $1,000 on personal property are taxable i.e. each item generating a gain of over $1K and losses are not factored whereby you can't deduct or offset losses on personal property (unless the rules have changed in the last 30 years). On my end, a gain on disposal of gear doesn't happen, so not a concern, however, keeping books for a hobby is not my preference.

I suspect this will apply to PayPal as well. I've sent a message to PayPal to confirm that proceeds from Goods and Services will be subject to the new rules. Friends and Family is a way to bypass but that could be another wrestle match between seller and buyer.

As an example, if you are selling a vintage guitar or a high end instrument, you are automatically caught over the $600 threshold. Concealing a gain of over $1K may not be as easy with these new reporting requirements. For smaller items, like pedals, you only need to sell a few pedals to get caught under the new rules, and generating a gain of over $1K is practically impossible, however, I don't want to deal with any tax authorities justifying my sales and non taxable amounts.

Reverb stated in their Q&A section that they are lobbying heavily to reverse these new rules. It will surely impact their business.

If PayPal good and services payments are also under the new rules, it's gonna make it hard to bypass the system.

I'm debating using Reverb going forward. Love the platform but may use it for buying only.

Thoughts?


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## StevieMac (Mar 4, 2006)

Thanks Alex. That's one more reason for me to avoid using Reverb moving forward. I have other reasons but this adds yet another layer of complexity to a platform that used to be straight forward and simple to use.


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## Budda (May 29, 2007)

I kind of felt like this was coming. Gonna be curious to see if Reverb and Paypal get this reversed.


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## crann (May 10, 2014)

Budda said:


> Gonna be curious to see if Reverb and Paypal get this reversed.


Probably not. This is likely targeting those who aren't a "business" but do significant sums on those platforms. P2P sales in Canada are supposed to be reported to CRA if you do over 30k over 4 quarters. Some of us (looking at some people in this thread) do that in 2-3 guitar sales. If anything, a competitor will spring up that operates like those platforms did in the early days. And if they're lucky to catch on, they'll eventually have to adopt this as well.


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## Alex (Feb 11, 2006)

crann said:


> P2P sales in Canada are supposed to be reported to CRA if you do over 30k over 4 quarters. Some of us (looking at some people in this thread) do that in 2-3 guitar sales.


Whosoever do you mean?......

Good to know about the P2P sales requirements. Consistency with tax agencies is not in their DNA. The general rule is that a business requires "an expectation of profit" but now, the net is casted wider to go after personal property. In the end, I'm all for disclosing and everyone paying their taxes owed but what's next - Kijiji? If you sell a couch for $1,000 your going to have a tax form submitted by the platform owners(?). The previous rule in the US was practical i.e. less than 200 transactions. Perhaps bring it down to 100 or 50 or even 20 but catching everything over $600 just creates additional bureaucracy and costs for businesses to absorb.


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## norbot (Jan 4, 2022)

thanks for the heads up. It sounds like a big old can of worms for Reverb.com. It would come down to what is legal on our end in terms of sales. I sell items on ebay regularly as a business and any income is reported. It sounds like the ruling that changed policies with reverb may come down to a seller having to charge sales tax depending on what state they are selling to. CRA has cracked down on foreign sellers for online sales to Canada, making rules for HST charges. Other new rules on our end allows border services to charge HST on items coming through regardless. Online sales are a new target for cross border shopping that's for sure. When buying from the US lately, everything gets hit with HST/GST imposed by border services as well as duty. The US seems to be taking things to the next level and reverb.com surely won't be the only site affected.


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## FatStrat2 (Apr 7, 2021)

I have to admit that this is only fair. At the same time, this further propels an underground economy and even more stuff traded through Craigslist/Kijiji.


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## Alex (Feb 11, 2006)

FatStrat2 said:


> I have to admit that this is only fair. At the same time, this further propels an underground economy and even more stuff traded through Craigslist/Kijiji.


Fair to whom? I'm all about everyone paying their fair share but there is a limit. A foreign tax agency (IRS) demanding personal information on foreigners using a platform that is based in the US, for amounts over $600? that is "big brother'ish". One thing I can tell you from experience, the IRS is anything but "fair". The other side is you have small to medium businesses having to report these requirements which is a cost and in the end may not generate revenues for the tax agencies. The more I think about it the scarier it gets.


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## FatStrat2 (Apr 7, 2021)

I trade US stocks and the IRS reaching into my personal info is nothing new. You have to pay to play.


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## laristotle (Aug 29, 2019)

Alex said:


> but what's next - Kijiji?


Taxman. Coming soon to a yard sale near you.


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## TimH (Feb 4, 2006)

Just to be clear, nothing has actually changed in Canada, correct? If I read that accurately, it's incumbent on the gov't to make changes and communicate them, not for us to guess. If the IRS and CRA share info that's entirely inconsequential UNLESS the CRA makes it's own changes. I think at the very least we're safe for 2021 since no new laws were put in place for that tax year and folks are already prepping their taxes. 

For instance, Reverb sales in the US have been subject to taxation across the board for some time. They are not here in Canada and I have heard nothing to that affect.


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## BobChuck (Jan 16, 2012)

If I buy a guitar 10 000$ and then sell it 9000$, Where is the income?


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## player99 (Sep 5, 2019)

BobChuck said:


> If I buy a guitar 10 000$ and then sell it 9000$, Where is the income?


You have to pay a losers tax. It's only fair.


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## keto (May 23, 2006)

TimH said:


> Just to be clear, nothing has actually changed in Canada, correct? If I read that accurately, it's incumbent on the gov't to make changes and communicate them, not for us to guess. If the IRS and CRA share info that's entirely inconsequential UNLESS the CRA makes it's own changes. I think at the very least we're safe for 2021 since no new laws were put in place for that tax year and folks are already prepping their taxes.
> 
> For instance, Reverb sales in the US have been subject to taxation across the board for some time. They are not here in Canada and I have heard nothing to that affect.


Nothing's changed. You're supposed to be honest and pay taxes on your profits. Nobody is hunting for hobbyists flipping partscasters.


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## Powdered Toast Man (Apr 6, 2006)

American income tax rules don't apply in Canada to Canadian sellers.


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## Alex (Feb 11, 2006)

TimH said:


> Just to be clear, nothing has actually changed in Canada, correct? If I read that accurately, it's incumbent on the gov't to make changes and communicate them, not for us to guess. If the IRS and CRA share info that's entirely inconsequential UNLESS the CRA makes it's own changes. I think at the very least we're safe for 2021 since no new laws were put in place for that tax year and folks are already prepping their taxes.
> 
> For instance, Reverb sales in the US have been subject to taxation across the board for some time. They are not here in Canada and I have heard nothing to that affect.


Other than the reporting requirements that @crann stated above ($30K over 4 quarters), the reporting in Canada has not changed. Note that if for example, you were to sell over $CAD30K via Reverb in 2022, a 1099K form will be submitted to the IRS for anything over $600. It doesn't mean you will be subject to a CRA audit, however, it may increase your chances especially if you didn't file in Canada your sales of over $30K. Keeping records of your transactions (including cost base, dates, vendor etc.) may be prudent if you wish to continue the Reverb route. I noticed that Reverb allows you to keep track of the cost of goods. In the end, all tax agencies have become increasingly aggressive over the last 20 years and looking for more revenues.



BobChuck said:


> If I buy a guitar 10 000$ and then sell it 9000$, Where is the income?


The tax agencies don't have the historical cost of your goods (yet...) so the onus is for you to demonstrate that you incurred a loss.


keto said:


> Nobody is hunting for hobbyists flipping partscasters.


For now in Canada but the US position is contrary to this statement. $600+ of sales annually and you have paperwork. Keep in mind that it wasn't long ago that cross border shipping of rosewood was a bureaucratic sh*t show with those rules now partially rescinded. I guess time will tell for online sales and I still don't know what it will mean but shifting from a $20K / 200 transactions rule to $600 / doesn't matter how many transactions rule is quite aggressive.


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## Alex (Feb 11, 2006)

I just received a note from PayPal and the 1099K reporting doesn't apply to Canadians. Either PayPal is treated differently given that they are the financing/funding part of the transaction or, one of them has got it wrong (Reverb or PayPal). That's good news if not applicable with PayPal.


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## TimH (Feb 4, 2006)

Alex said:


> Other than the reporting requirements that @crann stated above ($30K over 4 quarters), the reporting in Canada has not changed. Note that if for example, you were to sell over $CAD30K via Reverb in 2022, a 1099K form will be submitted to the IRS for anything over $600. It doesn't mean you will be subject to a CRA audit, however, it may increase your chances especially if you didn't file in Canada your sales of over $30K. Keeping records of your transactions (including cost base, dates, vendor etc.) may be prudent if you wish to continue the Reverb route. I noticed that Reverb allows you to keep track of the cost of goods. In the end, all tax agencies have become increasingly aggressive over the last 20 years and looking for more revenues.
> 
> 
> The tax agencies don't have the historical cost of your goods (yet...) so the onus is for you to demonstrate that you incurred a loss.
> ...


That $30K rule has been in effect for years. I have always been told by my accountants that one year of it or having that sporadically isn't cause for concern - the effort to bleed stones isn't deemed worth it by the CRA. $600 far less so. Even if the IRS has decided to chase it down I don't think that means anything to us.


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## polyslax (May 15, 2020)

I thought Paypal went down this road awhile ago. There was a time, close to 10 years ago, where they started making me jump through all kinds of hoops, getting a notarized document to prove who I am, having my bank verify my identity. I was like wtf is this all about? They said they wanted to ensure that I was not running a businessor committing some sort of fraud. I said c'mon, I'm selling a few plugins and synths, how is this setting off alarms that I'm up to something fraudulent? They wouldn't back down or back off, so I dumped Paypal right there. Funnily enough, they wouldn't let me close my account without taking the same steps, having my bank verify my identity etc, so I just had to walk away.

So, I'm sure Paypal is collecting more data than we think. Whether that's being passed on or is accessible by governments through request, I don't know.

Has nobody here been through this with them? I mean I was not dealing in amounts anywhere near what some of you cats are up to.


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## cdntac (Oct 11, 2017)

Alex said:


> I was on the Reverb platform posting a few items for sale and there is a notice that new tax reporting rules are in effect for 2022. Previously, if you had sales under $20K AND less than 200 selling transactions, Reverb would not generate a 1099K form to the recipient which is also filed with the US tax authority, the Internal Revenue Service (IRS).
> 
> Now, if you have sales over $600, a 1099K will be generated regardless of the number of transactions.
> 
> ...



Wait a sec….You’re saying we can be taxed on selling something if we make $1000 on it?


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## Alex (Feb 11, 2006)

TimH said:


> That $30K rule has been in effect for years. I have always been told by my accountants that one year of it or having that sporadically isn't cause for concern - the effort to bleed stones isn't deemed worth it by the CRA. $600 far less so. Even if the IRS has decided to chase it down I don't think that means anything to us.


Good to hear and hope you're right Tim. What concerned me is Reverb's statement that they may withhold amounts if the personal information is not provided. For now, no concerns in Canada and time will tell if CRA will follow suite.


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## Alex (Feb 11, 2006)

cdntac said:


> Wait a sec….You’re saying we can be taxed on selling something if we make $1000 on it?


On personal property, if you make a gain of $1K or more, you are suppose to declare it. Many years ago, you weren't allowed to offset losses or generate losses and only gains were taxable. The position on losses on personal property may have changed but doubt it. For example, if you sold 4 guitars and loss $3K and sold one guitar and made $1K, the $1K is taxable.


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## Alex (Feb 11, 2006)

polyslax said:


> I thought Paypal went down this road awhile ago. There was a time, close to 10 years ago, where they started making me jump through all kinds of hoops, getting a notarized document to prove who I am, having my bank verify my identity. I was like wtf is this all about? They said they wanted to ensure that I was not running a businessor committing some sort of fraud. I said c'mon, I'm selling a few plugins and synths, how is this setting off alarms that I'm up to something fraudulent? They wouldn't back down or back off, so I dumped Paypal right there. Funnily enough, they wouldn't let me close my account without taking the same steps, having my bank verify my identity etc, so I just had to walk away.
> 
> So, I'm sure Paypal is collecting more data than we think. Whether that's being passed on or is accessible by governments through request, I don't know.
> 
> Has nobody here been through this with them? I mean I was not dealing in amounts anywhere near what some of you cats are up to.


Bank verification process but nothing further on my end.


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## player99 (Sep 5, 2019)

I read a long time ago the govt wants to remove cash so they can tax everything. The idea is to put chips in the money that can turn the money on or off.

An example of this is: Money would start in a bank machine. It would be off. If someone robs the machine the money is worthless as it is off. When someone like "Jim" takes out some money from the bank machine, the cash is activated or turned on in his name. Then he goes to buy some used tires from Peter. Peter will scan Jim's cash to make sure it's on and registered to Jim. When he gets Jim's cash, he will activate it to himself, creating an electronic record of the transaction, or at least the transfer of money from Jim to Peter.

But Peter has a problem. He is behind in his child support payments to his ex-wife. When he goes to buy something with the cash he got from Jim it's now turned off. The money had been deactivated and the value transferred to his ex-wife's account to pay off the child support arrears. The govt also took 13% of the money as sales tax on the tire deal.


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## crann (May 10, 2014)

player99 said:


> When he goes to buy something with the cash he got from Jim it's now turned off.


The same government that rolled out CERB and DP'd (double paid you sickos) $500 million between that, CRA and ESDC? And they're going to turn money off and on at the $1 level in real time? 

I understand you're presenting an idea not arguing in its favor or feasibility but that seems way out of the government's ability. If Google, Facebook etc had their engineers work on this, maybe.


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## player99 (Sep 5, 2019)

crann said:


> The same government that rolled out CERB and DP'd (double paid you sickos) $500 million between that, CRA and ESDC? And they're going to turn money off and on at the $1 level in real time?
> 
> I understand you're presenting an idea not arguing in its favor or feasibility but that seems way out of the government's ability. If Google, Facebook etc had their engineers work on this, maybe.


I read about this at leat 15 years ago, and it's been tested and working.


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## player99 (Sep 5, 2019)

crann said:


> The same government that rolled out CERB and DP'd (double paid you sickos) $500 million between that, CRA and ESDC? And they're going to turn money off and on at the $1 level in real time?
> 
> I understand you're presenting an idea not arguing in its favor or feasibility but that seems way out of the government's ability. If Google, Facebook etc had their engineers work on this, maybe.


The electonics are in the printing ink.


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## Always12AM (Sep 2, 2018)

Our government likes to figure out exactly what the breaking point of a human being is and then alternate between one notch below our maximum threshold and then 5 notches beyond it on a whim lol.


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## cdntac (Oct 11, 2017)

Alex said:


> On personal property, if you make a gain of $1K or more, you are suppose to declare it. Many years ago, you weren't allowed to offset losses or generate losses and only gains were taxable. The position on losses on personal property may have changed but doubt it. For example, if you sold 4 guitars and loss $3K and sold one guitar and made $1K, the $1K is taxable.


I wasn’t aware of that.

So if you found a ‘59 LP under your grandfather’s bed and sold it, you’re supposed to declare it?

I knew that a scenario like that is what happens in the US but I wasn’t aware personal items sold in Canada should be declared.


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## Westhaver (Jul 26, 2015)

Alex said:


> On personal property, if you make a gain of $1K or more, you are suppose to declare it. Many years ago, you weren't allowed to offset losses or generate losses and only gains were taxable. The position on losses on personal property may have changed but doubt it. For example, if you sold 4 guitars and loss $3K and sold one guitar and made $1K, the $1K is taxable.


CRA does have a $1,000 rule for personal-use property but it is functions differently. CRA will deem your cost base to be the higher of your actual cost base and $1,000, and also deem your proceeds to be the higher of actual proceeds and $1,000. So basically anything you sell for less than $1,000 will have no gain. There is no minimum capital gain threshold to report, you are supposed to report any capital gains.

For example, assume you bought a Klon back in the day for $400 and now sell it for $4,000. Your capital gain is $3,000, which is your $4,000 proceeds less your deemed cost base of $1,000.

If you bought a Klon KTR for $400 and now sell it for $1,000, you would have no capital gain to report on that sale. $1,000 proceeds less your deemed cost base of $1,000.


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## teleboli (Aug 19, 2009)

polyslax said:


> I thought Paypal went down this road awhile ago. There was a time, close to 10 years ago, where they started making me jump through all kinds of hoops, getting a notarized document to prove who I am, having my bank verify my identity. I was like wtf is this all about? They said they wanted to ensure that I was not running a businessor committing some sort of fraud. I said c'mon, I'm selling a few plugins and synths, how is this setting off alarms that I'm up to something fraudulent? They wouldn't back down or back off, so I dumped Paypal right there. Funnily enough, they wouldn't let me close my account without taking the same steps, having my bank verify my identity etc, so I just had to walk away.
> 
> So, I'm sure Paypal is collecting more data than we think. Whether that's being passed on or is accessible by governments through request, I don't know.
> 
> Has nobody here been through this with them? I mean I was not dealing in amounts anywhere near what some of you cats are up to.


This was my experience with Paypal as well and I blew them off about 3 years ago. Too big brother for me and of course they share with IRS and likely CRA because they're told to. I have no problem doing the same with Reverb.

With the Trillions spent over the last couple years on just Covid alone all governments are looking at new 'revenue streams'. They're just getting revved up.


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## Mark Brown (Jan 4, 2022)

It always amazed me the amount of tax information most people just do not know.

Capital gains is capital gains. You make the money, the feds want their cut. Thankfully their enforcement is right around nil for most private sale items, due to the lack of ability to enforce. Then they went and figured out "hey, the internet".


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## silvertonebetty (Jan 4, 2015)

So basically you’ll be taxed if you sell a single guitar lol. Greedy government, the taxes where paid when the items where new . Stop double dipping


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## keto (May 23, 2006)

silvertonebetty said:


> So basically you’ll be taxed if you sell a single guitar lol. Greedy government, the taxes where paid when the items where new . Stop double dipping


If you make a PROFIT, you are supposed to pay taxes - on the profit. Income tax, not GST/PST/HST. That's how our entire economic system is supposed to work. In practice, of course, nobody or hardly anyone at hobby level even keeps track of their profits and losses, let alone reports it on their income taxes.


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## ryanthorne (Jan 31, 2009)

Does every reverb shop charge tax to the buyer now? I just bought a used guitar and normally check the shop policy to see if I need to pay tax on the item (this store didn’t have the tax policy stated) and tax still showed up at checkout.


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## JBFairthorne (Oct 11, 2014)

Yep they do…for everyone. New rules.


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## ryanthorne (Jan 31, 2009)

Wow..my guitar selling / buying on reverb just came to a full halt. I’ll have to start utilizing the gearpage and this site moving forward.


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## player99 (Sep 5, 2019)

Pay your taxes. Then pay them again and again and again etc.


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## Lowlight (Jan 3, 2015)

The thing is, in Canada, captured within the definition of personal use property, the definition appears to historically embrace stuff you buy that is not expected nor contemplated, in any way, to rise in value. Personal assets that were historically contemplated - to have potential to rise in value, identified by example, coin collections, art work, etc., that could well rise in value across time, have a unique set of rules, in that you can carry losses back or forward which to be applied against gains made from the sale of similar assets. 

But more and more guitars could be described as art work. And more and more often, particularly with high end guitars, rising value is very possible, particularly if you are an astute buyer who understands the market, what to buy, whose guitars to buy, what time period to buy (vintage) and where to sell. I believe in those cases, there is a strong argument that such guitars would fall within the definition of listed personal property. If you are making gains on guitar sales, it only makes sense that you should be able to apply loses against gains, and net one against the other so you are effectively paying tax on the net gain of these assets, based on when they are disposed of, over a period of time. My guitars in some cases I feel fall into this category - and are definitely works of art. I don't know if there are cases on this or not, widening the spectrum of what is accepted as listed personal property. 

S.


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## Simon (Jun 14, 2018)

From The Reverb Site: 


*If I’m not a US-based seller, does this apply to me?*
If you aren’t located in the US and don’t file a US tax return, these regulations do not apply to you. 

If you aren’t located in the US but you are paid in USD, we will need a Form W-8 BEN on file to remove you from the 1099-K obligation. Please reach out to [email protected] for this form.


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## Alex (Feb 11, 2006)

Simon said:


> From The Reverb Site:
> 
> 
> *If I’m not a US-based seller, does this apply to me?*
> ...


That's it, that is the form I completed in March this past year. It works, taxes are not collected on my Reverb purchases except for Canadian dealers that are HST/GSt registered.


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## Simon (Jun 14, 2018)

Alex said:


> That's it, that is the form I completed in March this past year. It works, taxes are not collected on my Reverb purchases except for Canadian dealers that are HST/GSt registered.


What if you purchase from a Canadian individual??


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## Alex (Feb 11, 2006)

Simon said:


> What if you purchase from a Canadian individual??


no taxes on Non business or non registered HST/GST individuals. If you don't complete the form, then HST/GST is collected by Reverb. Something seems off as the form is for US tax purposes but I recently purchased an item from a non registered HST/GST Canadian group or individual and no taxes collected. On the other hand, I sold a pedal to a Canadian individual and Reverb charged GST to the buyer.

The W-8 Ben form that I completed seems to work to my benefit.


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## Simon (Jun 14, 2018)

Thanks for that info


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## Simon (Jun 14, 2018)

If I go to purchase an item from a Canadian individual Reverb still wants to charge me tax @12%. How do I stop this??


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