Why is Ebay charging sales tax on the shipping cost?????

[collectingcandymemorabilia]

Why is Ebay charging sales tax on the shipping cost????? I thought we were only taxed on the product itself. 

[7606dennis]

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@collectingcandymemorabilia wrote:

I know you are trying to justify retail but not all sellers are a business and not all products are sold in local stores (antiques, vintage collectibles, family heirlooms). Apples to oranges. My point is we should not be taxed on a service that does not originate in our state. 

Easy enough?

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Check with your state's taxing authority.  Most states that have sales tax statutes on the books also have had use tax statutes as well.  Most have been enacted decades ago and those that have not been paying them have been evading taxes.

[7606dennis]

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@collectingcandymemorabilia wrote:

sellers pay a "tax" to eBay for the total cost of the sale: product cost and shipping cost. 

Are you referring to "sellers" fee that is paid to Ebay? If so you are incorrect.

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Seller's pay a fee to eBay.  Only government entities can levy a tax.  Some states have been charging their residents sales/use tax for decades.  What many of them have done, since the US Supreme Court ruled that it was constitutional for them to do so, is to pass marketplace facilitator laws which require sites such as eBay and others to collect these taxes for them.  Thus they have put a plug in their revenue drain caused by people that weren't paying the taxes that they were bound by law to pay.

The MF laws have not created any new taxes, only new tax collectors.

With regard to tax on shipping, some state's consider it taxable others do not.  If your state does you must pay it.

By the way, those that haven't paid the sales/use tax that they should have been paying for years have been committing a crime although it is not likely that the state will prosecute all those people now.  However, I suppose it is a possibility.

[soh.maryl]

I believe the OP is referring to the fact that eBay is now charging buyers, on behalf of their state, state sales tax on both the item and (in some states) the shipping cost.  

[soh.maryl]

Are you unaware that, due to a 2018 Supreme Court ruling, individual states can now collect state sales tax on internet purchases?

To clarify, this is not a money grab by eBay.  This is a law enacted by the buyer's state and ALL online sales will be charged state sales tax, not only those through eBay.

[soh.maryl]

The final value fee that eBay charges sellers when an item is sold is an entirely separate thing from state sales tax that eBay (and other online venues) are now required to charge buyers.  Not sure you completely understand.

The final value fee is charged by eBay and is charged only to sellers.

Paypal charges 2.9% for processing payment and, again, that is charged to sellers.

Individual states are now allowed to charge STATE SALES TAX on online purchases.  eBay, acting as a Marketplace Facilitator, is charging this fee per the law of the state where the buyer has his items delivered and eBay remits these funds to the Treasury Department of that state.  This is entirely separate from the final value fee and the Paypal fee.  

Furthermore, this is not a money-grabbing scheme from eBay.  This is a state LAW and ALL internet sales will require the buyer to pay state sales tax, not just eBay.  Some states require that the sales tax be charged on only the price of the item, but the majority of states require that state sales tax be charged on the shipping fee also.  

[sunnysouth1]

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@ifyouloveit wrote:

Now with free shipping and flat FVF's for sale plus shipping, they do it with the taxes too. If they don't, the dirty sellers will once again put a low sale price with a high shipping price to lure in tax evaders who figure that out as well.

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@ifyouloveit ,

The tax on shipping is not due to any eBay policy. This is enacted by each individual state. Some states charge a tax on shipping and other states do not.

[no_zero369]

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@soh.maryl wrote:

I believe the OP is referring to the fact that eBay is now charging buyers, on behalf of their state, state sales tax on both the item and (in some states) the shipping cost.  

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Ding, Ding, Ding! 

Yes, states require that eBay collect sales tax for the sellers because of the same reason eBay requires a FVF on the price of the item and shipping - because of CHEATING!   Buyers have been CHEATING for years and not paying the appropriate and required tax.  Just like sellers were cheating on FVFs by charging $1 for an item and $99 for shipping to avoid paying FVF on the price.  But hey, as my last line stated, I doubted that buyers would understand this and the response appears to bear out that supposition!

Sure appears as though some are mired in ignorance (lack of knowledge) and stubbornness about such and are unwilling to adjust their thinking and/or learn.  Apparently some feel attacked, defensive and a need to respond as such.  I would dearly love it if those with this stance would prove me wrong!

[the*dog*ate*my*tablecloth]

People are complaining about the tax on shipping like it’s new. AFAIK The states that charge it have not created new rules, they always charged it. Buyers were just ignorant.

BTW eBay fees are what they are. I sometimes think eBay should raise Fvf on item price to 15 or 20% and drop it on shipping just to stop the Fvf on shipping complainers.

[soh.maryl]

In the remote possibility of that happening, wouldn't we back to what started the change in the first place:

Some sellers listing items for $1 with $99 shipping?

[hundredpercent2002]

"Anticipate sales tax, and bid that much lower"  Sadly, this puts the loss on the Seller, who may raise starting bids, or simply stop selling items on eBay.   I don't like eBay being a national bank for state tax collectors.   I don't like shopping locally because of the lack of selection/traffic/price.  I do like eBay, and hope that some middle ground can be worked out. 

[the*dog*ate*my*tablecloth]

Yes we'd be inviting shipping bandits again. I was going to say it but I was on my ipad and tired of typing.

[ifyouloveit]

I think you misunderstood what I wrote. I know all the above. I was answering why sites like eBay show tax on the entire purchase including SALES TAX.

They tax the entire thing BECAUSE some sellers would offer their items (On any platform) for $1 and $50 shipping (Example), so to avoid their BUYERS paying taxes.

I was not referring to FVF's, was answering WHY the entire price plus shipping is taxed 🙂

[the*dog*ate*my*tablecloth]

That is very confusing. Sales tax is charged on shipping for only the states that charge sales tax on shipping. It has nothing to do with what is shown on other sites.

Many (maybe most) states charge on shipping so putting more in the shipping bucket saves the buyer nothing.

[soh.maryl]

You may be missing a point here:  If you "don't like eBay being a national bank for state tax collectors", how do you feel about WalMart, Amazon and other online venues fulfilling that same function?

The state sales tax on internet purchases isn't just limited to buyers on eBay.  

What "middle ground" could be worked out?  This is a state Law, it's non-negotiable.

[7606dennis]

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@hundredpercent2002 wrote:

"Anticipate sales tax, and bid that much lower"  Sadly, this puts the loss on the Seller, who may raise starting bids, or simply stop selling items on eBay.   I don't like eBay being a national bank for state tax collectors.   I don't like shopping locally because of the lack of selection/traffic/price.  I do like eBay, and hope that some middle ground can be worked out. 

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Actually, merchants have always been tax collectors for their respective states and buyers have always been responsible for paying the sales/use tax levied by their states.  Prior to the 2018 Supreme Court ruling that it was constitutional for states to enact laws that require out of state merchants without out a nexus in the state to collect the sales tax for them, the states, through use tax statutes, required buyers to pay a use tax, in the same amount as the sales tax if it had been purchased within the state, on items delivered within the state themselves directly to the state.  Most added a line on their state income tax return for this purpose.

What the Supreme Courts ruling did was to allow the states to pass legislation that required out of state sellers and marketplace facilitators (basically marketplaces that consist of multiple third party sellers) to collect and remit the taxes to the respective states, thus making it much harder for buyers, either through ignorance or criminal intent, to evade paying the taxes owed.  Naturally, most of the states have wasted little or no time in enacting these laws.  

For decades, buyers have been paying sales tax when purchasing taxable goods and services from local merchants.  The only difference now is that online merchants are being required to collect the tax and remit it to the state just as the local merchants have been required to do all along.  The reason the buyers are becoming upset is that now they are having to pay the taxes that they were suppose to have been paying but were not. 

At least the states didn't spend large amounts of the taxpayer's money to investigate and prosecute those residents that have been evading these taxes all along.  Can you imagine the wailing & gnashing of teeth if the states were to do that, even though they could legally do it.