Refurbs are generally around 15% off the cost.
Assume a refurb would sell for $534.65
Now used is effectively less valuable version of a refurb. It comes with less of a warranty, no return period if you change your mind and endless possibilities of hidden problems caused by the previous owner.
If refurbs are available or are available sometimes then you really should price significantly enough less to account for the ACTUAL losses to a perspective buyer that chooses yours over a refurb. This is a scaling difference. Honestly though $500 seems like a pretty fair price for a seller given the circumstance.
Even if refurbs are not available, open box items from retailers will come at a bigger discount with generally fewer disadvantages than a simply used product. Consider than in the price. (i find open box items sell from retailers for anywhere from 15-30% off original price depending on the disadvantages for a buyer).
As for the issue of sales tax. It's certainly a point to raise with a prospective seller but given the number of folks who frequently evade sales taxes by resorting to a variety of behaviors, you the seller must be aware that its probably not a big consideration.
In short, that $500 offer is pretty solid. You might sit on that ipad for much longer. And remember, the longer you sit on it, the less it's worth. Of course, if Apple rolls out some newer generation iPad, your iPad instantly takes a substantial hit in value.