Ebay And State Sales Tax

I have used ebay for a number of years to buy AND SELL.

I'm just a collector disposing of duplicates and unwanted material.

Today, I sold an item to a collector from a state that is now collecting sales tax on on-line purchases. The invoice that was generated from ebay included in the total for the state's sales tax. There was no way of omitting the sales tax. Now I have to decide how to hand the sales tax money. I'm leaning towards not doing anymore sales so that I don't have any potential problems.

*** Moved by Staff to a more appropriate forum. ***

So, it applies the tax, but at payment it doesn't collect it? And they expect you to pay the tax amount to a state that you're not a registered entity in? Now that's just weird.
Keep it... let ebay choke it down. They are the entity that will be responsible for it, if they are forcing it on.

Glen - you don't get the sales tax and you don't have o deal with it - ebay collects and submits the tax to the state.

The sales tax is collected separately by E-Bay. My state is one of those requiring sales tax collection. It shows up in my PayPal account as a separate deduction. You might want to check your PayPal after payment to see how much you actually received. The bigger problem will be how does E-Bay handle sales for those people with legitimate Sales Tax Licenses who should not be paying sales tax as they will be re-selling the item.

eyeonwall is correct. Currently, ebay is collecting applicable state sales tax for Minnesota, Washington State, Iowa and Connecticut. As of May 1st, 2019, ebay will collect applicable state sales tax for New Jersey. On July 1st, 2019, Alabama, Oklahoma and Pennsylvania follow suit.

There are some twists and turns related to some of the states involved. One example is Minnesota which has enacted a small business exemption for out of state unregistered sellers whose taxable retail sales into Minnesota are less than $10,000 in the previous 12-month period. These sellers are not subject to the Minnesota marketplace tax laws, and ebay will not be collecting sales tax on these transactions.

More states will follow, but some of them will also have dollar threshold exemptions.

eyeonwall is right.

The exact source escapes me at the moment, but I believe at one point ebay said that they didn't have a mechanism in place to deal with this scenario.




But even if you as a seller fall under that $10,000 threshold, is that trumped by the marketplace threshold, i.e., if sales on ebay the platform to Minnesota are above a certain threshold, sales tax must still be collected even if you had sales to Minnesota under the the $10,000 threshold? I don't believe ebay is keeping track of how many Minnesota (or other state) sales each individual seller has in order to determine whether to collect sales tax for that state; they either are or are not en masse.

Of greater concern to those who sell both physically or through their own website or other platforms, as well as ebay, is that ebay doesn't provide any kind of sales tax reporting to the individual sellers in question (at least not that I'm aware of). Reconciling sales tax owed (or substantiating not owed) across all platforms is going to be a bigger pain than ever.

Recently I received a request from ebay to submit my reseller's documents if I have them so that they can make my purchases tax exempt.

I just got off the phone with ebay. I've started to collect sales tax on sales to NYS. I've been paying this on behalf of my customers for years but it's gotten to be too much. I've been struggling trying to figure out how to get ebay to add it into my Invoices automatically and the nice ebay rep walked me through it quickly. Then I asked where I could get a total of how much sales tax I'd collected each month. She tried to find it but eventually told me this capability will be coming "soon".

The new download file from the "Paid and Shipped" screen has a separate column for sales tax collected by ebay and sales tax collected by seller. It's not too hard to deal with. The biggest pain is that you can only put in a flat rate for NYS and to pay the right tax you have to go through each sale to figure out what county each sale went to. Pain in the neck for sure.

My wife does the filing but I think you can choose to pay 1. the rate for your county of residence or 2. the rate for the seller's county. I choose 1 but still a pain.

ebay is not the only web platform facing this problem. What are other internet services you sell on doing?

Hi Russ,
I think this is a Washington/government issue. Online commence is now fully on the radar and politicians will extract the taxes they need to give away other stuff to generate the votes so they can be re-elected. Nothing new here except how and what they tax. We should be thankful that online taxes were under the radar for as long as they were.
Don

The "marketplace" states trump individual collections. Basically, the states treat the marketplace as the seller so they can maximize their tax collections.

I had to start collecting and remitting for California effective April 1 2019 since I do over 200 transactions in CA a year (easy to do if you sell regularly on ebay). The "sales tax table" that ebay uses makes it easy to have multiple states in there (in addition to the marketplace states for which tax is automatically collected), but you may have to change your listing templates to use the tax table and do bulk modification of your current listings to add the tax table to get it all to "stick".

As noted above, the monthly paid and shipped report is a good source for data. I track my own data in excel and I simply added a column for CA sales tax next to my OH sales tax column and I track it as I go.

I haven't run into any issues with exemptions yet, but you can change sales tax charges if you issue a new invoice to a buyer.

I think the biggest lurking issue for sellers will be for "marketplace" states where a seller also actually has an individual obligation to report - trying to separate out what ebay collected and remitted versus what the seller must collect and remit for on his or her own (as a result of selling in other channels) will likely be a pain, and not something I look forward to. I am fairly close to the 200 transaction threshold in several other states so it's something I'm watching closely.

Revolt!

I called ebay again today, and the agent suggested that tax collected by ebay could be tracked manually. Even though ebay doesn't report sales tax collected as a market facilitator to sellers in any useful form, Connecticut requires sellers meeting the Wayfair criteria of 200 retail orders to have a tax account and file a return even if tax is exclusively collected by market facilitators. See page 2 of the Connecticut document referenced below:

https://portal.ct.gov/-/media/DRS/P...-8.pdf?la=en

Unfortunately, when the Wayfair decision was reached, lawyers, who often can't count, assumed that the two hundred transaction threshold for South Dakota was fair. But, California, which does not use ebay as a market facilitation, becomes a big problem. How big? It is likely to ensnare sellers shipping to California. Assuming that orders are proportional to population a seller will ship 45 orders to California for each order shipped to South Dakota. A seller shipping 200 orders to South Dakota will have shipped 4,500 orders to California.

The 200-order requirement for California is enforced if 200 or more orders were shipped in the prior year or if the 200-order threshold is reached during the current year. Ignore collecting California sales tax at your peril.

Meanwhile, the US Congress is considering legislation to standardize state sales tax collection and could up the minimum sales threshold to a larger amount like $10,000,000. Like most things in Washington, DC, talk trumps action.