eBay now charging Sales Tax to residents of certain States

[imagine.ink]

I recently had my first eBay sale with the sales tax charged by eBay to a customer in Washington State.  I was surprised, but relieved that eBay is taking care of this obligation.  There is nothing for a seller to do:  the tax is apparently automatically charged to the buyer and eBay collects and pays it to the applicable state.  

From an eBay announcement in September 2018:

As you may know, the Supreme Court ruled in favor of South Dakota in June 2018, which removed the requirement that certain retailers have a physical presence in a state in order for that state to impose sales tax obligations on these retailers.

Some states have extended the tax collection obligation to marketplaces.  We believe this ruling is unfair to small businesses and will continue to call for greater simplicity. In the meantime, we’re working to find the best way to support our sellers.

What this means for eBay sellers: Regardless of where you’re physically located, if you sell to buyers in certain states, those states may require you to collect applicable taxes on your transactions.

I found this chart on another seller's page and believe this is the most up to date list of the states affected:

Beginning January 2019 the House of Representatives of some U.S. states are requiring that eBay charge sales tax.  Following is a list of the states in which this has /will be implemented and the month of the effective date.   (This is a list of all of the states which are known to be putting this into effect at this time; however, other states may also be passing this law in the future.)  The sales tax goes directly to eBay.  eBay is required to collect and report the sales tax to the respective states.   

January 2019:       Minnesota - Washington State

February 2019:     Iowa

April 2019:            Connecticut

May 2019:             New Jersey

July 2019:             Alabama - Oklahoma - Pennsylvania

Just passing this info along ... 

As for how it affects me personally, being a resident of Pennsylvania,  any purchase I make on eBay on or after July 1st will be charged sales tax.  No more tax-free internet purchases!  However, since Pennsylvania doesn't charge sales tax on clothing, I wonder if eBay will apply this same exemption on eBay clothing purchases made by Pennsylvania buyers.  It will be interesting to see how this all works out. 

A word of warning:  I foresee eBay increasing selling fees in the near future to cover all the additional administrative costs they are incurring to collect and remit sales taxes to various states. 

[cleaningoutmyclosets17]

I guess time will tell. I'm not saying I don't buy anything here but I often drive to Massachusetts (the boarder is only 10 minutes away) to Buy liquor, clothes, get gas ext... unless you live here upyou can't imagine how much we pay in taxes. 

Our new idiot governer is trying to tax our groceries now too. 

You are right and people say that all the time but I truly think it's different with this time.

for new items- Buyers aren't going to pay tax & shipping when they can get it from amazon, Walmart ect... with free shipping.

For used items- tax has already been paid when the item was bought new. Buyers are not going to pay tax and shipping unless it is a very rare item.

I don't know if I am in the minority but the reason I purchased so much on eBay was because I was getting it cheaper than buying it from a retail store (mostly due to the tax) if I am no longer getting a savings, I have no reason to shop here. 

I see the writing ting on the wall and will not be buying any more  inventory until I see how this all plays out. Hopefully I'm wrong. 

[lludwig]

re: "For used items- tax has already been paid when the item was bought new." That is a very common misconception of how the sales tax works.

The sales tax is on the "transaction", not on the item. Think of it in the way that a credit card company takes a fee for each 'transaction' or that when you buy a used car, there is a tax on that transaction.

There is what is commonly known as a "yard sale" exemption (isolated transaction). Most states limit it to 3 times a year and no longer than 14 days. Besides individuals falling under this with sporadic yard sales, organizations such as Friends of the Library limit their sales to fall under the regs.

In the early years of ebay, many people thought they were 'exempt' from collecting the tax for their state because they were selling used items. Nope, new or used, doesn't matter, the tax is on the transaction.

[lludwig]

@cleaningoutmyclosets17- I forgot to mention that it is the Sales & Use tax. The Use tax is when you buy something and didn't pay sales tax such as non-taxable items of other states and then take it to your home in a state which taxes the item, you are then to pay a 'use tax.' 

For example if I bought a stove in a state which did not charge sales tax on appliances and then brought it home for my personal use, the state expects me to remit the tax due as if I had bought it instate. 

In my many years around the legislative scene there is always talk in every state about tinkering with the Sales & Use tax, if not increasing the tax then looking for items currently exempt and taxing them. In PA, we adhere to "necessities" such as food and clothing (but not mink coats!). States also follow the lead of other states - domino effect in some cases.

[cleaningoutmyclosets17]

Thanks for the info. I guess I'm just ticked off that my state is always the last to implement anything that saves us money but is always first in line when is comes to charging us new taxes. 

We use to to have the  necessities  exemption but Connecticut has decided to try and pull blood from a rock and tax us on  absolutely everything. The food tax hasn't passed yet but I have no doubt that it will. 

I don't completely disagree with being charged tax on new items but I do feel used items is like a yard sale and they 100% shouldn't be taxed. 

When I shop on eBay, I look at the total bid price including shipping. I determine the total I am willing to pay for that item including the shipping cost. This week I would have to calculate the bid price, shipping cost and tax so my bid price would be lower. 

If I found an item here on eBay that I would have paid up to $100 last week with a $7 shipping charge my bid would have been $93.  This week for the same item I would only be willing to bid up to $87. 

Again, I could be wrong but I don't think that buyers are going to pay 6 to 8 percent more so sellers are going to be forced to lower prices and it won't be worth it for them to sell here anymore.