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  #1  
Old 08-02-2005, 06:06 PM
silverneptune12 silverneptune12 is offline
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are garage sales illegal?

i have heard of cases where a little kids Lemonade stand gets shutdown because someone complained. and since they dont have a permit then it is technicly illegal. but what about garage sells? or how about like paying somone to watch my kid? I mean i give someone cash to do a job and they arent getting taxed. is that too illegal?
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  #2  
Old 08-02-2005, 06:14 PM
Little Nemo Little Nemo is online now
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I'm not a lawyer, jurisdictions vary, and you haven't cited a particular case. But I would guess that a lemonade stand would be more likely to be shut down because it is serving prepared food. There would be health code concerns that wouldn't exist in a garage sale.

As for tax liability, I believe there is a threshold for employers who pay out below a certain amount, excusing them to not withhold taxes. In these situations, the employee is supposed to keep track of their income and claim it when they file their tax report.
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  #3  
Old 08-02-2005, 07:01 PM
tomndebb tomndebb is offline
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There have been a few cases in which it was reported that people were using "garage sales" to fence stolen property. Some communities reacted to those reports by imposing rules regarding registry, maximum number of "sales" in a specific period, and other rules. If one held a garage sale in such a locale while violating one (or more) of those rules, then the sale would be illegal. There may be places where, either for the same motive as the previous communities or simply to cut down on the traffic or perceived "tackiness" of such sales, they have banned them altogether.
In other places, they are totally legal.
So the basic answer is "It depends."
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  #4  
Old 08-02-2005, 07:05 PM
Raguleader Raguleader is offline
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I remember when I was in junior high school, the city we lived in required permits for garage sales. So our whole neighborhood would basically apply en masse for two weekends each year, and it'd be a big neighborhood event, as we basically bought eachother's junk off eachother (one man's garbage...)

Actually, at the last garage sale I went to, I scored a sweet scanner that only cost me $10. Downside is that the software that comes with it is a royal pain in the neck. But $10!!!
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  #5  
Old 08-02-2005, 07:35 PM
RealityChuck RealityChuck is offline
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In our town, Garage Sales are allowed, though you must get a permit and you can't have one more than a certain number of days in a year (I think the number is 5; you could have five one-day sales, if you wished). The town does not enforce the law all that rigorously, though, and some people have longer sales and others don't get the permit.
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  #6  
Old 08-02-2005, 09:07 PM
Jake4 Jake4 is offline
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Even if permits aren't required, paying sales tax or reporting the sales as income to the IRS may still be required. I seem to recall hearing about folks who basically had continuous garage sale/flea market activity and got busted for tax evasion.
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  #7  
Old 08-02-2005, 09:21 PM
Hal Briston Hal Briston is offline
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We're a permit town too. Costs like five bucks for the permit, they're good for a weekend, limted to two permits per year.

The township brought this about a few years ago, when certain residents basically set up flea markets on their lawns every single non-winter weekend.
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  #8  
Old 08-02-2005, 09:54 PM
AncientHumanoid AncientHumanoid is offline
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Quote:
Originally Posted by Hal Briston
We're a permit town too. Costs like five bucks for the permit, they're good for a weekend, limted to two permits per year.

About the same here (OKC), except the fee is more like $10.00 and you're allowed four per year. The permit gets you preprinted signs with stencils for address. If you don't buy a permit and they catch you (via complants only I'm sure. who would patrol for that?) then they charge you double or tell you to close up. If you get caught multiple times for that, like you're running a backyard flea market, then the fines start to escalate on a steep scale and sales tax concerns become an issue.

Even with all that, we have garage sales here virtually every weekend somewhere in the metro. Even during the Winter. It peaks in late Spring.
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  #9  
Old 08-02-2005, 10:00 PM
AncientHumanoid AncientHumanoid is offline
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Quote:
Originally Posted by Hal Briston
We're a permit town too. Costs like five bucks for the permit, they're good for a weekend, limted to two permits per year.

About the same here (OKC), except the fee is more like $10.00 and you're allowed four per year. The permit gets you preprinted signs with stencils for address. If you don't buy a permit and they catch you (via complants only I'm sure. who would patrol for that?) then they charge you double or tell you to close up. If you get caught multiple times for that, like you're running a backyard flea market, then the fines start to escalate on a steep scale and sales tax concerns become an issue.

Even with all that, we have garage sales here virtually every weekend somewhere in the metro. Even during the Winter. It peaks in late Spring.
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  #10  
Old 08-03-2005, 08:07 AM
Mr. Goob Mr. Goob is offline
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My local newspaper (The Buffalo News) had an article this or last spring giving tips on how to have a garage sale.

Same thing as what most others are saying. Limited to two a year to cut down on the perpetual junk sales at one persons house.

I do know of a house on a rural stretch of road that has been having the same estate sale for about 10 years now.
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  #11  
Old 08-03-2005, 08:13 AM
TwistofFate TwistofFate is offline
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If you've already paid tax on the goods to buy them before selling them on again, why should you be taxed twice?
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  #12  
Old 08-03-2005, 08:23 AM
Duck Duck Goose Duck Duck Goose is offline
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Gosh.

Decatur is Perpetual Garage Sale City. The idea of having to have a permit to hold a garage sale here boggles the mind--the paperwork alone would swamp 'em down at the Civic Center in under a week. The only time there aren't two pages of "Garage Sale" ads in the paper is in the dead of winter, and even then, you can always find something to do if you're in need of a garage sale "fix".

And not only do we have ongoing front yard junk sales, there are numbers of people who apparently have made a professional career of it. Seriously. Every time you go past their house, there are the shirts and dresses on coat hangers swinging from clothesline strung along the porch, there are the Little Tykes toys in the front yard...

And that's not counting the specialists who deal only in things like bicycles (spread out in the front yard, scrupulously trotted back to the garage when it threatens rain) or the ladies who deal in collectible knickknacks and who have a regular ad in the "Garage Sale" section of the paper.

Licenses? Permits? It is to laugh. It's Free Enterprise, willy nilly.
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  #13  
Old 08-03-2005, 09:04 AM
Acsenray Acsenray is offline
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Quote:
Originally Posted by TwistofFate
If you've already paid tax on the goods to buy them before selling them on again, why should you be taxed twice?
Because a sales tax is a tax on sales, not a tax on goods.
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  #14  
Old 08-03-2005, 10:21 AM
aktep aktep is offline
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Many jurisdictions have sales tax exceptions for the occasional garage sale (I know Texas has one, but I don't know the details and I don't know where to look it up), but if you're have sales on a regular basis, you will be considered liable for paying sales tax. The state comptroller can't be bothered to track down and pick up the $16 worth of sales tax from every garage sale that goes on, but if you're doing it often enough, you might be worth the effort.

For income tax, it's probably not an issue. Nobody makes a profit at a garage sale. Since your basis for the stuff you're selling is probably more than the 25c - $2.00 you're charging for it, you've got no profit, and no income.

On Preview: Here's a summary of the Texas stance on garage sales : http://tinyurl.com/dbvte looks like you get 2 in a year tax-free, under certain conditions.
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  #15  
Old 08-03-2005, 12:36 PM
js_africanus js_africanus is offline
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The ability to regulate land use comes from the constitutional amendment that reserves power not explicitly given to the federal government for the states. States in turn write their own laws that govern whether, and in what ways, local governments may regulate land use. These are called "enabling acts" because they enable cities, villages, counties, and townships to engage in zoning the regulation of land use.

The question in the OP, whether garage sales are legal, will vary from zoning authority to zoning authority. There is no over-arching statement that can be made which will be inclusive, or particularly useful to answer the question.

I get the impression that, at least in Michigan, zoning ordinances are such that they specifically set out what is allowable and whatever is not listed is therefore proscribed. My township does not list garage sales as a legal use; however, garage sale signs are indeed allowable, and one would then assume that garage sales are intended to be allowed as well. One question that will arise is where to draw the line between a garage sale and a shop selling second-hand merchandise. Is a garage sale every weekend actually a commercial operation, and therefore a different land-use category from simply residential use?

I've heard about kids getting busted for lemonade stands. Technically, setting one up in my township would be illegal, but I cannot imagine enforcing it without a damn good reason unless some asshole is forcing me to do it for some bizarre reason; e.g., he's trying to set up a commercial lemonade business on his street and insists that eight-year-old kids' stands get the same sort of treatment. I haven't seen it happen, but it wouldn't surprise me at all.

In conclusion, the OP is in some sense unanswerable because of the myriad different governmental bodies with zoning authority.
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  #16  
Old 08-03-2005, 12:43 PM
RyJae RyJae is offline
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Quote:
Originally Posted by silverneptune12
i have heard of cases where a little kids Lemonade stand gets shutdown because someone complained.
Here is a recent kids lemonade stand shut down story. From the looks of it, do not complain if you want your business to prosper.
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  #17  
Old 08-03-2005, 05:39 PM
Kat Kat is offline
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Quote:
Originally Posted by acsenray
Because a sales tax is a tax on sales, not a tax on goods.
*blinks* Then why do people get sales tax exemptions when purchasing for resale?
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  #18  
Old 08-04-2005, 08:19 AM
Acsenray Acsenray is offline
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Quote:
Originally Posted by Kat
*blinks* Then why do people get sales tax exemptions when purchasing for resale?
Well, that's an exemption, offered for policy reasons.
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  #19  
Old 08-04-2005, 09:03 AM
js_africanus js_africanus is offline
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There's been an update in this story. The Mayor brokered a merger between the rival businesses.
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  #20  
Old 08-04-2005, 11:34 AM
elmwood elmwood is offline
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Quote:
Originally Posted by js_africanus
I've heard about kids getting busted for lemonade stands. Technically, setting one up in my township would be illegal, but I cannot imagine enforcing it without a damn good reason unless some asshole is forcing me to do it for some bizarre reason; e.g., he's trying to set up a commercial lemonade business on his street and insists that eight-year-old kids' stands get the same sort of treatment. I haven't seen it happen, but it wouldn't surprise me at all..
In my zoning administrator days, I never had to shut down a lemonade stand. Every time a story about a closed lemonade stand in some other part of the country made the news, though, the local property rights/anti-zoning crowd would come out of the closet, point at me, and throw around the usual Communist and National Socialist labels. "IT COULD HAPPEN HERE, TOO!"

In most communities with zoning, a lemonade stand would be technically illegal. Why? It's a retail business on a residential property. Zoning codes usually allow liited garage sales, and some home businesses. However, those home businesses usually can't be retail in nature, with unscheduled drop-in customers.

I don't know a zoning administrator or code enforcement officer who would go out of their way to shut down lemonade stands; if they see one, the fact that it's illegal probably doesn't even cross their mind. What usually happens, though, is that a busy-body neighbor -- usually elderly -- or a subdivision HOA official will call to complain, or someone with a commercial lemonade stand set up in a parking lot somewhere will call for equity in enforcement when they're busted for operating without a business license. A zoning administrator or code enforcement officer isn't shutting down lemonade stands because he/she is a cruel, heartless soul; it's because the guy operating an unlicensed commercial lemonade stand said "Why don't you go after the lemonade stand those kids have in front of the Tudor house on Red Deer Trail?", and he's trying to keep the city from being sued.

I did have to enforce some benign violations when others called for equity in enforcement. In one city, the man that ran the portable sign rental business complained that he needed sign permits, but the people with temporary fireworks stands, Christmas tree lots and shaved ice stands didn't get them. As a result, I had to make people submit sign plans and get permits for signs that would be displayed for a temporary business that would be gone in a couple of weeks. Very petty, yes, but it raises very serious legal problems if it can be shown that the zonign laws are being enforced unfairly.

(Fortunately, the portable sign guy went out of business, and they're not a thing of the past there; I think they're now banned in that community.)








* Retail business on a residential property.
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  #21  
Old 08-04-2005, 12:38 PM
tomndebb tomndebb is offline
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Quote:
*blinks* Then why do people get sales tax exemptions when purchasing for resale?
Taxing authorities extend exemptions to wholesalers and O.E.M.s in order to avoid inadvertant levying of Value Added Taxes, where a product would increase price (cost to the consumer) by multiple iterations just for having more than one company handle it between manufacture and purchase. The O.E.M.s, final manufacturers, wholesalers, and anyone else in the chain all need to keep good records or the taxing authority (typically the state), will be quite happy to bust them for failure to report.

On the other hand, once a product has been purchased and used,the issue of the value added tax is considered irrelevant. The original buyer purchased the car, the house, the machinery, or whatever, paid the original tax, then used it for his, her, or their own purposes for some period of time. When the property or object is then offered for sale, again, it is considered a wholly separate transaction. There is not a simple chain of possession from manufacturer to ultimate buyer, in which successive taxes arbitrarily inflate the original manufacturer's price to the ultimate buyer. The price will have already been modified by depreciation or appreciation, wear and tear, repair and enhancements, or any number of other events that are not being imposed by the state. At that point, the state figures that they have a right to claim a portion of this later transaction.
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