Ebay Sales Tax Collection And Impact On Sales/Prices

Now that as of July 1st 2019, ebay has begun to collect sales tax for items shipped to 13 additional states, what will be the impact on sales of stamps and sold prices?

It'll hurt some sales, although it's hard to put a number on it. Speaking for myself, what irks me is that they collect tax even on postage (even directly from the USPS ebay store), so I've already quit buying postage on ebay. They also collect it on international purchases, which I think should also be exempt, although I'm not certain of that. I've since started contacting international sellers directly in order to avoid the tax. Other than that, I haven't changed my buying habits too much, although my state has a relatively low tax rate (6%) compared to some others.

Morning Torin and all,

Sales tax is a fact of commercial life. States are just now catching up with economic reality that a significant amount of taxable activity is conducted over the internet. It has become economically necessary and feasible for states to pursue this lost revenue. Unlike a national tax each state has its own flavor of sales tax with varying rules and collection procedures. What a maze.

Yes, more small(er) hobby sellers and buyers now must pay up. This will impact some more than others but life and commerce will go on.

I haven't seen any difference in sales at all with the collection from sales tax from some states and GST for Australia. For lowered priced items I don't see it making a difference. At least ebay is handling it and the sellers don't have to deal with it.

As a seller I am very happy with the way ebay is handling this. For years I've paid NYS sales tax for my customers out of my own pocket. Two years ago I picked up a big NYS customer and all of a sudden I owed NYS a couple thousand when I reported my sales tax. As a result I started having ebay collect sales tax on my NY sales, but reconciling the ebay collections was very difficult. Now ebay collects the appropriate sales tax on NY sales and pays NYS and I'm out of the loop, it's great! I'm just not clear on how NYS will find out the payment is from me, but I'm hopeful.

I've had no pushback from my buyers after I started charging sales tax.

Stamp dealers have traditionally regarded postage sales as nontaxable. When I checked on the web, Kansas states:




See Kansas Q & A at:
http://rvpolicy.kdor.ks.gov/Pilots/...4b9affeba58c862565240076af96

Other states may have similar regulations buried somewhere in their tax code. No state collects sales tax on stamps sold by the US Postal Service at post offices. How can ebay justify collecting sales tax on USPS sales?





Don't be surprised to see a new line on your next tax return asking how much tax was collected by market facilitators like ebay?

Unfortunately, ebay has not been diligent about reporting sales tax collected on behalf of sellers. Although ebay started collecting sales tax on January 1, 2019 in Washington State, the Orders Report did not include ebay collected sales tax until mid-April. After the new column appeared in the reports, amounts collected before mid-April incorrectly displayed zero amounts even if tax was collected. Worse, in my opinion, is that Orders reports return a maximum of 90 days in the past. Unlike PayPal, where it is possible to download seven or more years of past reports, ebay is limited to 90 days. The reports are in CSV format, requiring manual intervention to convert to a readable Excel report. I regard ebay's handling of reporting as irresponsible.

Also, for users of SixBit or other third-party applications, ebay did not add ebay tax collected to the API until mid-April. When I last checked with SixBit report, sales tax collected on combined orders was not being reported correctly. Once the glitches and bugs are worked out of the ebay API, SixBit sellers should have a complete picture of sales tax collected, going forward. However, this year seems like a lost cause unless the seller has the necessary skills to update the SixBit database to include missing amounts.

Sellers residing in Washington State and elsewhere could be out of luck, because it may not be possible to complete correct sales tax returns without including ebay retail and wholesale sales totals and tax amounts collected. Without Orders Reports extending back to at least the prior year, a seller being audited would have no way to substantiate amounts collected by ebay.

Don't worry. Managed payments is coming. The Payments Report is separate from the Orders report, requiring a separate download, adding another layer of hassle for sellers who can now report PayPal fees at the order level. Access to ebay Payments at the aggregate level may be the only option. What happens when an ebay ACH payment fails?

"How can ebay justify collecting sales tax on USPS sales?"

They may simply be clueless that such an exemption exists.

Can someone cite an example of tax being collected on an international purchase? I have never heard of such a thing and wonder how they justify it? VAT is a fact of life in many places but has always been exempt as an expense for out of country buyers, has this changed now?

ebay has a floor/department full of lawyers, including financial lawyers; since I do not have a legal degree I would be hard pressed to believe that they are clueless. No doubt that they have analyzed the situation and come up with whatever is the best approach for them. Their first priority is to cover their own butts (and those of the officers and shareholders). We can be 99% sure that they would not implement anything that puts them at legal risk, this is always the very first thing any large corporation considers.

I do agree that while this might be covering their butts it is adding additional burden for sellers and buyers.
Don

I haven't researched this, but I assume ebay is applying the "use" tax to sales from a foreign country to a resident of a state with a use tax and not the "sales" tax applicable to the foreign seller.

I believe the two of you are discussing completely different scenarios. Stamps1962 is referring to a sale by a U.S. seller to a buyer in another country, whereas SPQR is referring to a sale by a non-U.S. seller to a U.S. resident.

Apples and oranges IMO.

It's state sales tax that they're collecting, and they collect it on everything, regardless of the category or where it's shipping from. If I buy kiloware from Japan, for example, I'm hit with 6% Iowa sales tax.

I just think their system isn't smart enough to exempt certain categories and/or they're afraid of people abusing it by listing non-postage items in the postage category. Ultimately if they don't do it right and a state audits them, they'll be responsible for paying the tax whether they collected it from the buyer or not.

Some states have started to reach out to individual Amazon sellers seeking quarterly or monthly sales tax filings. California has been especially aggressive. This effort will only increase with time. So even though Amazon continues to add states for which it collects sales tax, the states themselves are going to want individual business to file returns. It's not going to be easy to deal with all this "noise," but make no mistake- eventually states will want the same thing for ebay sales.

I posted this link a year or two ago, has anyone signed up for this and given it test drive?
https://www.taxjar.com/
Don

If you are an Amazon Professional Seller you have access to Amazon tax reports. Of course their is a fee and you are on your own as far as remittances.

Don,

TaxJar looks to be too expensive for the average stamp dealer. Fees to file state sales tax returns could dwarf ebay fees.

The problem is, and remains, that ebay does not report tax collections in a convenient format, and annual reporting is nonexistent. Will ebay provide complete reporting including missing 2019 figures? Probably not, but the game is not over. Sellers impaled by new state sales tax requirements may be forced to use the legal system.