PayPal, BMTMicro, others - Sales tax question

[BantamCityGames]

Hi, I know I should probably know this already, but I don't use PayPal to accept payments currently and I wanted to check on what I'm doing with BMT Micro as well.

I plan on selling credits to use with my WIP MMO in-game shop using PayPal and/or BMT Micro. My question is, do I need to charge sales tax on 'credit' sales made online by people purchasing from CT (where I live) for PayPal? for BMT? for outside of CT?

The reason why I am asking about the two separately is that when I first setup my business using BMT, I called them and was told that I didn't have to charge sales tax for online sales of my game. I can't remember the exact reason they gave, but I think it had something to do with BMT being considered the seller and they just sent me checks or maybe it was their location... not sure. I don't know if this is still true (or was ever true). And if it is true, does the same apply for PayPal? Does this apply to both game sales and credit sales?

I would just like to find out now so I can start paying sales tax if necessary and even pay back sales tax if necessary (I've sold very few games outside of publishers).

[lennard]

I'm a fan of BMTMicro but they are going to take a hefty chunk out of your micro-transactions.

I would also look at Super Rewards (I hooked up their API to Dungeon Brawl, wasn't much work) and at TrialPay who recently told me that I can tie a payment and registration together into one event (have yet to do this but expect to in May).

[Borundin]

About BMT Micro, I think it is explained in this post that you don't have to worry about VAT.
I think Paypal is another case entirely though.

[Over00]

Here's how it was working before Social Gold announced their service was to disappear (bought by Google) which I think is the same situation as you.

I wasn't actually selling anything. Social Gold was selling premium currency to be used in my game. I got a cut (90%) of it that's all.

I confirmed this with an accountant. He told me something like "players are buying rubbles from someone and they give you those rubbles to get something in return. Government doesn't tax rubbles so everything is fine". I live in Canada if that's relevant at all.

Handling tax would have been a headache for the little revenue I was making. Even though you have to give up a share of your revenue it's probably easier to deal with a middle-man to deal with this unless you don't mind the paperwok.

[Over00]

Oh the part I forgot is in the case you are using Paypal to have people send money to your account then you are "the one selling rubbles" so you need to handle tax on those rubbles since Paypal is just handling the transaction of money here and not the "virtual currency" transaction.

[Grey Alien]

I've used both BMT and Paypal. BMT for my game sales, and I let them handle and process the sales tax, and Paypal for my game framework sales. Paypal only handle the customer facing monetary value, and my company is VAT registered in the UK, so I had to note the country that every customer lived in so I could compile a list of people who should have paid VAT, and then basically I stored up part of the payment from paypal as VAT which I paid to the UK government every 3 months. It was a pain in the ass.

[BantamCityGames]

So it sounds like:

- BMT Micro = ignore sales tax
- PayPal = register in CT for a sales tax id, track and pay sales tax quarterly (I'm guessing only for sales made in CT).

I guess all that work setting up the PayPal system may go to waste

[lennard]

How complicated did you get with the Paypal system? I might need to add a system at some point where I get a script called on payment receipt...

[Grey Alien]

I was manually logging my paypal sales on a spreadshet and working out the tax. They were $55 and only came every couple of days, but if I was expecting more volume then a running a script based on payment receipt (XML?) would be smart.

[BantamCityGames]

I integrated the PayPal IPN system which you send a form POST to and then the user is redirected to the PayPal site to enter their payment info. Once they complete the payment, PayPal sends a POST to a php page of your choice, where you process the information and then send a verification back to them to let their system know you received the info. At that point you can credit the user's account in your database or whatever. Over all only a few days work, but I only work one night a week on game development so this took me about a month elapsed time but now that I have it working it wouldn't be too hard to switch out the PayPal part with BMT Micro.

lennard, the example scripts on the PayPal IPN site are decent, but let me know when you get around to it and I can send you what I have

[Thomas@BMT]

So it sounds like:

- BMT Micro = ignore sales tax
- PayPal = register in CT for a sales tax id, track and pay sales tax quarterly (I'm guessing only for sales made in CT).

I guess all that work setting up the PayPal system may go to waste

This is correct - we collect NC sales tax and pay it to the state (and county). You don't need to worry about sales tax on purchases that go through our system - we handle it 100% including EU VAT.

We also collect sales tax on purchases made with PayPal so I'm pretty sure if you run PayPal sales via your own order system you'll need to collect CT sales tax - and if you really want to do it right, VAT for purchases made from EU countries.

[BantamCityGames]

Thanks for confirming Thomas... well... at least I don't owe back taxes on my previous sales lol

The main reason I can see to use PayPal direct over BMT would be the fees on the smaller payments like lennard said. A minimum of 1.25 on a 5 dollar purchase is 25% where PayPal would be about 9% (0.45).

[lennard]

Bruno, I'm getting around to it! I'm doing Trialpay but I'd also like to have an explicit Paypal button so folks with a Paypal account and no knowledge of Trialpay can throw a couple of bucks my way. Thanks.

Thomas, Bruno is right. I'm a big fan of BMTMicro but snack priced gaming means I need to use Paypals micro-transaction pricing to get anywhere, I'd be happy to use BMTMicro for my new ventures if you had something similar.

[Thomas@BMT]

Thomas, Bruno is right. I'm a big fan of BMTMicro but snack priced gaming means I need to use Paypals micro-transaction pricing to get anywhere, I'd be happy to use BMTMicro for my new ventures if you had something similar.

You could create a new vendor account using our comprehensive tier which is 20% but has no minimum fee and setting up lower priced products under that account. This would work pretty well for prices in the $1 range.

Kim can connect this vendor account with your existing account so that you'd still receive one payment each month.

Let me know if you want to pursue it and we'll get it setup for you.