When calculating sales tax on personal property, what should it be based on?

The correct approach to calculating sales tax on personal property is to base it on the bid price plus the buyer's premium. This is significant because the buyer’s premium is an additional cost that the buyer must pay on top of the winning bid amount, and it is considered part of the total purchase price.

When a buyer successfully bids on an item at an auction, they are responsible for paying not only the amount of their winning bid but also any premium imposed by the auction house, which is typically a percentage of the bid price. Since sales tax is applied to the total monetary exchange involved in the transaction, including all elements of the cost, it is essential that both the bid price and the buyer's premium are included in the calculation.

In including both components, the calculation reflects the full financial obligation of the buyer, ensuring that the sales tax is accurately assessed based on the total amount they ultimately pay for the property.