Ebay Now Collects Sales Tax

I had a sales tax charge on my Kelleher bill too. I provided my resale license number and had a new invoice sans tax in a matter of minutes. Max was very easy to work with to solve that....

California changed direction in mid-April and retroactively applied a $500,000 sales threshold with no transaction threshold at the direction of the state legislature. Sales tax collected under the superseded threshold limit was then refunded. Keep in mind that California is 35 times the population of South Dakota where the $10,000 Wayfair threshold was established. Beware of inconsistent descriptions of requirements by sales tax services vendors. TaxJar did not describe the old requirement correctly but Avalara did. Bottom line: Check official state tax websites.

Does ebay collect sales tax on purchases from the official USPS store on ebay?

The Postal Service, as a Federal entity, is exempt from State and local sales tax on its products.

Does ebay know that Federal entities are exempt? USPS listings on ebay include the standard ebay notice that ebay may collect sales tax at checkout. Kansas explicitly exempts stamps intended for use as postage from sales tax. Other states may also have similar rules.

When ebay starts collecting sales tax for sellers shipping to Massachusetts on October 1st, expect outrage if ebay starts collecting sales tax on clothing.

....and food. That's exempt too.

Jack Kelley

Tangent alert:

It depends on the state. Here in Sillynoise we have bifurcated rates when it comes to food and drink. For example, soft drinks and some other things deemed bad for you by the food police are taxed at the full sales tax rate, whereas normal foodstuffs are taxed at 1%.

It gets even crazier when you deal with local sales tax rates. For example, our wonderful local government has instituted an additional 1.5% sales tax on food and drink sold at fast food restaurants.

New state motto "Illinois: California's Smaller Intellectually Challenged Little Brother"

MA is a mess. Apparel is exempt except if it is solely for protective or athletic use. So "riding boots" are taxable but "boots" are not. Athletic uniforms are taxable but jogging bras, tennis clothing and ski pants are not.......

I sure hope no sales tax is collected on sales of postage stamps from the USPS store on ebay come October 1st, when my state commences sales tax collection on marketplace facilitators.

I received a sales tax status update from ebay yesterday;




I only sell on ebay, so from my point of view this is good news. I used to collect sales data, cull out NYS sales and report yearly. Now ebay does it all for me. I couldn't possibly comply with the various state sales tax rules, now I don't worry about any of that.

Ken,

I am not sure if anything ebay does is good news. To date, they have botched tax and payments reporting, especially for users of third-party applications like SixBIt. While ebay tax collection may be a convenience to sellers who have no sales tax account, sellers who fail to capture sales tax payment amounts may end up paying too much to the IRS at tax time. Unless something has changed, ebay reporting only goes back 90 days. Sellers who attempt to capture data at the end of the year be out of luck unless they are using a third-party application like SixBit to collect sales, tax and payments data.

Unfortunately, ebay was slow to implement reporting changes for sales tax collection. State of Washington tax collection by ebay began January 1st but sales tax collected by ebay was not added to the Orders Report until mid-April. Sales tax collected for combined orders continued to be a problem all summer. The bug many have been fixed at the end of September. Do not be surprised if state sales tax authorities ask sellers to report sales tax collected by ebay.

When ebay started the Managed Payments program, nothing was done to report data to third-party applications like SixBit. In the fall seller update, ebay made a vague promise to make data available to third party applications. As of now, sellers incarcerated in the Managed Payments program cannot not receive information about ebay payment commissions from third-party applications.

Clark

Here is ebays new policy posted today.

Upcoming changes to ebay tax collection.

In 2018, PayPal and ebay worked together to implement a solution to comply with laws that require ebay to collect and remit tax on applicable transactions. Those transactions that require ebay to collect tax are currently divided into two separate charges - one for the item purchased and another for the associated tax.

Effective November 2019, PayPal and ebay will change the way these transactions are processed and how taxes are collected and remitted.

For transactions that require ebay to collect tax from buyers, the tax amount will be included in the gross purchase amount to be processed. Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.

You do not need to take any action.

This is not true. Anyone who attempts to keep accurate records may be forced to make changes to their accounting system to correctly import sales data received from ebay or PayPal. The current Orders report is already set up correctly and presumably will not change the meaning or content of the "Sold For" or the "Total Price" column. Before item is paid and the shipping address is determined how can the "Total Price" column is zero, suggesting that it should have been named "Total Paid"

Will ebay and PayPal make changes on the same date? What happens to unpaid ebay orders and pending PayPal eChecks? Why not wait and change at the end of the calendar year>\? Will sellers and third-party applications have enough time to adapt?

Also, the complete ebay message included a note that Managed Payments would not be affected. What did they mean by that?

Hi Cfrphoto. just copied and pasted what I received today from ebay word for word.

This is certainly true.

At my brick and mortar company we had a CFO (a partner of the company) who spent weeks every year reviewing the revisions in the IRS, state and local tax codes; tax accounting is a part of any legitimate business. Changes occur every single year and many of them had significant impact on how we did business and kept the books. In fact, I do not recall a single year that we did not have any changes.

In the smaller companies I owned I simply hired an accountant to deal with these constant tax changes and accounting impacts.

The 'under the radar' nature of ebay and other online business is pretty much over, the politicians certainly were not going to sit back and allow brick and mortar taxes to shrink without going after online businesses.

ebay is not the one changing the tax codes; if folks desire change they will need to make it at the federal, state and local governments.
Don