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Any Thoughts on Hipstamp?

 
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Posted 01/12/2019   12:20 pm  Show Profile Bookmark this reply Add Redtail to your friends list  Get a Link to this Reply
High volume dealers would be wise to file sales tax reports each year starting now with their business state (Nexus) for their internet sales if they don't already. MA, like many states have a 7 year lookback for non-filers and only 3 years for filers. Stake your position so they don't come knocking in 2026 and say you owe for sales tax dating back to 2019 (penalty/interest on top of that) based on some crazy extrapolation formula for 7 years. Sales tax for internet sales is a developing business risk that can cost big $ if not done right. Good luck to all.
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Posted 01/12/2019   4:29 pm  Show Profile Check cfrphoto's eBay Listings Bookmark this reply Add cfrphoto to your friends list  Get a Link to this Reply
Why is eBay collecting sales tax on behalf of sellers who don't have or will never achieve a Washington State economic nexus?

https://dor.wa.gov/doing-business/b...nesses#Nexus


Quote:
Economic nexus for retail sales tax;

Effective October 1, 2018, out-of-state businesses without a physical presence in Washington have substantial nexus with the state if they exceed $100,000 in annual retail sales to or 200 transactions with Washington consumers in the current or preceding year. Businesses who meet either threshold must register their business with the State, and collect and submit retail sales tax on their sales delivered to customers in Washington.


Another complication for stamp dealers is the possibility that attending even one stamp show may create a physical nexus that would compel the dealer to also collect taxes on out-of-state sales in that state. The 200-transaction threshold may ensnare a substantial number of stamp dealers in high-population states like California.

Still, where does eBay get off collecting tax for sellers not obligated to collect or report taxes?

And, eBay sales tax collections from stamp dealers will result in additional tax return complexities and filings for tax rebates with their in-state tax return - yet another annoyance.

Finally, the state Business and Occupation (B&O) tax is based on gross sales. If eBay doesn't report sales and tax amounts collected to Washington State sellers, how will they be able to file a correct B&O tax return?
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Posted 01/12/2019   4:39 pm  Show Profile Bookmark this reply Add Redtail to your friends list  Get a Link to this Reply
This is regulatory hell! Nexus should be defined by a physical presence only but a state can do what they want in terms of asinine rules. Come and get me could work for a just-around-the-margin player but any sizable dealer well over the line better be in compliance or have a well-funded kitty for the enviable revenue hunt by state tax audit agents paid on collections only. Who would have ever thought internet stamp selling was such a complex business to be in compliance with the laws?
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Edited by Redtail - 01/12/2019 4:40 pm
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Posted 01/12/2019   6:04 pm  Show Profile Check revenuecollector's eBay Listings Bookmark this reply Add revenuecollector to your friends list  Get a Link to this Reply

Quote:
And, eBay sales tax collections from stamp dealers will result in additional tax return complexities and filings for tax rebates with their in-state tax return - yet another annoyance.


eBay collects and remits the sales tax on the seller's behalf. It never touches the seller or is attributed to them. How does this impact the seller's tax return?
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Edited by revenuecollector - 01/12/2019 6:06 pm
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Posted 01/12/2019   6:11 pm  Show Profile Bookmark this reply Add ikeyPikey to your friends list  Get a Link to this Reply
.
I expect this all to be resolved, some day, by the feds creating a 1099-type document that would be filed by sales venues like eBay, and list gross sales, for each seller, by state.

This is something (relatively) easily done by eBay, and leaves compliance with the taxpayer ... and enforcement with the states.

But having the venue collect & remit sales tax means making many small sellers file for many small refunds, which even the states might not welcome.

Another possibility is that the states will create something along the lines of the Nursing Licensure Compact, wherein they will contract with each other to enforce each other's sales tax collection on each other's citizens.

What makes that unlikely is that the state that often takes the lead for that sort of thing is also the state that is home to so many of these venues that they may prefer to drag their feet, thereby dragging everyone else's feet as well.

Cheers,

/s/ ikeyPikey

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Posted 01/12/2019   10:43 pm  Show Profile Check cfrphoto's eBay Listings Bookmark this reply Add cfrphoto to your friends list  Get a Link to this Reply

Quote:
eBay collects and remits the sales tax on the seller's behalf. It never touches the seller or is attributed to them. How does this impact the seller's tax return?


Washington state B&O tax, mentioned above, is based on gross retail and wholesale sales. Retail in-state sales on eBay must be included in the total. But, if eBay doesn't report the taxable sales to sellers, how will they know how much to report?

Also, until 2017, sellers could exclude all out of state sales from the B&O tax. Then, the rules changed and Internet sales to any state meeting the Washington State Wayfair threshold are also included. Accountants and tax professionals will be taking longer vacations in more exotic locations before this is over unless they use the extra money to buy stamps, collectibles or a bigger house.
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Edited by cfrphoto - 01/12/2019 10:43 pm
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Posted 01/13/2019   03:19 am  Show Profile Check 51studebaker's eBay Listings Bookmark this reply Add 51studebaker to your friends list  Get a Link to this Reply
I've mentioned this before TaxJar - https://www.taxjar.com/
Up to 1,000 transactions per month = $17 per month. If this saved an hour per month of a sellers time, this seems to be a viable solution.
Don
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Posted 01/13/2019   12:05 pm  Show Profile Check cfrphoto's eBay Listings Bookmark this reply Add cfrphoto to your friends list  Get a Link to this Reply
Don,

https://www.avalara.com may is also competitive but neither is useful without point of sale integration. However, this is off topic. After checking the Washington State DOR account, HipStamp is likely to be regarded as a marketplace facilitator and may be required to collect applicable sales taxes for multiple states. Buyers not wanting to pay sales taxes should check HipStamp for eBay sync listings. If the same stamp is available from the same seller on both sites, one with sales tax and one without, which would you choose? There is no reason for buyers to buy on eBay if the seller also lists the stamp on HipStamp.

Meantime, sellers who meet the 200 transaction Wayfair threshold in any state must collect and report sales tax from direct sales or market facilitators like HipStamp or Delcampe that do not currently collect sales taxes.

Still, reporting is important. How do sellers file an accurate sales tax return without knowing the exact amount of the deduction for marketplace facilitator collected taxes?

If eBay is collecting Washington State sales tax on behalf of in-state sellers, where is the reporting? How do Washington State based sellers and certain other sellers obligated to pay Washington State Business & occupation (B&O) tax correctly calculate gross sales without timely monthly reports from eBay?

California, unlike Washington State with its aggressively micro-scale destination-based sales tax, will not require collection of local sales tax unless Wayfair thresholds are met within that local district. Because of this difference, smaller sellers to California can set a fixed tax rate on eBay when their rules kick in on April 1, 2019. Washington State sellers have never been able to accurately collect sales tax on eBay before they took over. However, without a detailed report how would sellers know if tax collections are accurate?

Clark
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Edited by cfrphoto - 01/13/2019 12:14 pm
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Posted 01/13/2019   2:50 pm  Show Profile Check srailkb's eBay Listings Bookmark this reply Add srailkb to your friends list  Get a Link to this Reply
"Meantime, sellers who meet the 200 transaction Wayfair threshold in any state must collect and report sales tax from direct sales or market facilitators like HipStamp or Delcampe that do not currently collect sales taxes"

Clark, I don't believe this is correct. Can you elaborate/clarify what you mean?
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Posted 01/13/2019   4:43 pm  Show Profile Check revenuecollector's eBay Listings Bookmark this reply Add revenuecollector to your friends list  Get a Link to this Reply
I believe the 200-transaction threshold is state-specific, not universal as Clark wrote. In the case of Wayfair, South Dakota had a threshold of $100,000 in sales or 200 transactions to buyers from South Dakota to require collection and remittance of state sales tax. So the thresholds (both dollar amount and number of transactions) are not universal; they vary by state.

What makes this all so ugly and onerous is that you as a seller have to keep track of the thresholds/requirements of 50 different states.

eBay is treating it as the thresholds apply to the marketplace as a whole, rather than individual sellers using the marketplace, hence their implementing the collection and reporting of sales tax at their end. For those sellers who sell only on eBay, this is a major boon, eliminating the need to track state sales tax or requirements, as eBay takes care of it for you.
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Edited by revenuecollector - 01/13/2019 4:47 pm
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Posted 01/13/2019   6:54 pm  Show Profile Check cfrphoto's eBay Listings Bookmark this reply Add cfrphoto to your friends list  Get a Link to this Reply
Ken,

These links were found after a three minutes of Internet search:

https://blog.taxjar.com/economic-nexus-laws/

https://www.avalara.com/us/en/learn...wayfair.html

And for more detail:

https://blog.taxjar.com/sales-tax-n...every-state/

Most states include a 200-transaction minimum for reporting, but Massachusetts and Minnesota drop the minimum to 100 and a few states base their threshold on gross sales only. Sales requirements vary from $10,000 to $500,000. A few states have "Notice & Report" requirements allowing sellers to notify buyers subject to use tax.

Contrary to what revenuecollector believes, eBay collection of taxes in Washington state is not a boon. I have Washington state business license and paid additional B&O taxes on gross receipts on in-state transactions. If eBay fails to provide detailed reports to Washington state sellers, they will not have necessary information to file a sales tax return.

Dealers who appear at stamp shows in multiple states face even more complex situations if any of the show-host states rule that having a physical nexus, even for only a day, creates an economic nexus. Also, transition rules creating an economic nexus may occur in the current sales year if thresholds are reached (California), or the previous year (Washington state?).

Currently, I am most concerned with California rules because the number of shipments last year exceeded the 200-transaction threshold. I am also concerned about counting transactions. I assume that a combined order shipped together counts as one transaction. I am concerned that eBay will count instant payment sales as separate transaction or that PayPal will regard each payment as a transaction. It is not uncommon for users to pay for sales in a combined order separately. I also have a Massachusetts resale license and a California sellers permit, plus others. Perhaps winding down show activities was fortuitous.

Determining economic nexus will become more difficult as more states are onboarded by eBay unless detailed information is available to sellers in useful formats. Minnesota exempts tax collections from small sellers means that tax must be paid by the seller if total sales or transactions meet the threshold.

Some sellers may still be required to collect sales tax on untaxed eBay sales, but how will transitions be eBay collection be handled? Will some buyers be stuck with paying sales tax twice? It is unfortunate that Marketplace Facilitator laws will force buyers to pay taxes, they would not be obligated to pay on a small single-owner web site. I suppose this may motivate more dealers to set their own web site.

Clark
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Edited by cfrphoto - 01/13/2019 6:58 pm
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Posted 01/13/2019   8:20 pm  Show Profile Check srailkb's eBay Listings Bookmark this reply Add srailkb to your friends list  Get a Link to this Reply
Clark, I'm aware of and have read many links like those you found in your 3 minutes, but my reading of those links indicates that this statement (that you made earlier) is incorrect, and it's the reason I asked for clarification:

"Meantime, sellers who meet the 200 transaction Wayfair threshold in any state must collect and report sales tax from direct sales or market facilitators like HipStamp or Delcampe that do not currently collect sales taxes."

It's not "any" state. It's only in states that have passed legislation adopting a different definition of nexus and/or a threshold of 200 sales, and then only if you hit that threshold. Some states have no sales tax at all. Some states have no transaction threshold, just a dollar threshold. Some states have a transaction threshold, but only if you hit that AND have over a certain dollar threshold. Some states passed legislation, but set a later effective date etc., etc. It's not "all" states, and it's not nearly as simple as the "200 transactions" threshold.

The environment is certainly changing quickly, and it will be difficult to keep up with (and impossible to understand) every state's collection & filing requirements for small out-of-state businesses. I expect additional lawsuits will be filed which will also reach the Supreme Court, and I expect the earlier decision will be "clarified" to more reasonably indicate that sellers with no real (physical) nexus in the state cannot be enslaved to do their taxation work without adequate representation in their government. We did fight a war over something like that long ago...

...and while Don's link may help someone figure out their liability on taxable transactions for $17/mo, it really doesn't help you collect tax via your website, or identify JUST the transactions which are taxable for sales tax to be collected on -- that's on YOU to figure out. It also doesn't deal at all with the numerous required filings, some of which are monthly, others which are quarterly or semi-annually. Oh, you can add filings on to your $17/mo, but those are an extra $25/filing. With 12x or 4x or 2x filings in however many dozens of states @ $25/ea, that will still add up to quite a burden on small businesses.
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Edited by srailkb - 01/13/2019 8:22 pm
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Posted 01/13/2019   11:05 pm  Show Profile Check cfrphoto's eBay Listings Bookmark this reply Add cfrphoto to your friends list  Get a Link to this Reply
Ken,

The Wayfair criteria would not apply to states without sales tax and legislation. It was not my intent to enumerate states that have passed legislation and set enforcement start dates. My concern is with California which recently announced an that enforcement would start as of April 1st of this year. This is important to me because have done stamp shows there for many years and my do so again in the future. I also am concerned about Washington for the same reason, but I don't have an economic or physical nexus there at the present time. Stamp show promoters should also be concerned if recruiting out of state dealers becomes more difficult because if states start using the temporary physical nexus of a show as leverage in extorting sales tax collection on Internet sales. While many stamp dealers may ignore economic nexus and not collect sales tax where required, it is possible that states will go after every stamp dealer they can find if the first few audited are not complying with state regulations. The APS, ASDA and NSDA dealer lists are on line. In time, some state may start fishing in those waters. I am not saying that ignoring out of state tax regulations will have consequences, but I am not willing to be the first one to find out.

I believe that what I wrote was clear, and I am sorry that you interpreted it differently than I had intended. I still have concerns about eBay incompetence and the potential that actions of a few of the worst stamp dealers could impact all of us. I hope that stamp dealers who attempt to comply with tax regulations don't end up with a competitive disadvantage. For now, the situation is chaotic and likely to remain so for some time. While it may be possible to ignore some states, I would not ignore California. Stories still circulate about dealers having their inventory seized at Southern California stamp shows. I don't believe that these are urban legends. States want more of our money, and if stamp collectors have a fixed amount to spend, stamp dealers will end up with less money or collectors will end up with fewer stamps. As everyone knows, sales taxes are regressive, disproportionally affecting those who can least afford to pay.

I won't have any more time to comment on this issue further. I have several state tax returns to complete by the end of next week.

Clark
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Posted 01/15/2019   8:50 pm  Show Profile Bookmark this reply Add ikeyPikey to your friends list  Get a Link to this Reply

Quote:
... It is unfortunate that Marketplace Facilitator laws will force buyers to pay taxes, they would not be obligated to pay on a small single-owner web site. I suppose this may motivate more dealers to set their own web site ...


The buyers will be paying (sometimes). The sellers will be collecting (sometimes), remitting (those times), and filing (and filing and filing).

For U$D 10,000 per month of taxable sales, we're talking about U$D 500 per month ... paid by the buyers.

I don't see buyer defections on a scale that would "motivate more dealers to set their own web site", and I don't see any sellers being both paperwork-averse and willing to manage their own eCommerce site ... that is just too odd a combination.

Cheers,

/s/ ikeyPikey
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