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Sales tax being charged by eBay and other web sellers is wrong, and wrong advice given
Summary: A participant raised concerns about sales tax being misapplied by eBay and other online sellers, particularly in Colorado, highlighting significant overcharges. They mentioned their extensive efforts to resolve the issue through customer service, but noted a lack of success despite multiple attempts via phone, email, and chat. The discussion gathers comments from others who seem to share similar concerns, although no specific solutions or responses from eBay are noted.
I have recently been charged sales tax on shipping ( a no-no in Colorado, see item 12 : https://tax.colorado.gov/sales-use-tax-FAQ) and this is not limited to eBay. It has nothing to do with my states revenue department, but is a problem with the seller and the sales tax table providers, likely a 3rd party, who provide this service to eBay and other sellers. I'm not positive about whether eBay has this in house or uses a 3rd party, because they'll never tell. I suspect both have it wrong.
Contacting your state is the long way around, it might take months for them to do anything, after which your money is long gone. As I said, it is not limited to eBay and I have had the same problem with rockauto and homedepot. The latter charged a state mandated "delivery fee" for a ship to store purchase, also incorrect.
The only way around this is for enough people to complain to eBay or the selling company, not the individual seller who has no input to this process. Hopefully they will contact their internal people or 3rd party to correct the problem. Yes, it's a small $$$ until you consider that it is applied to all purchases over a period of time.
BTW, eBay said I'll be getting a refund in 60 business days. Ridiculous!
9bosox9
·2 months ago · EditedI just posted as I have this same issue and in the state of Colorado. I am acutely aware of the shipping taxable / not taxable, state, county and local taxes, the retail delivery fee, and all other elements. And the tax % changes inexplicably with every order.
Has anyone had success in getting eBay's attention here? I'm into the thousands of dollars in overcharges and into my second dozen lines of inquiry to customer service via phone, email and chat.
eBay charging something above what should be charged and then indicating I need to file a claim with the state (as someone alluded to in this chain) seems illegal and horrid from a customer experience standpoint. Thank you to anyone with insights here.
stephenmorgan
·1 year agoAll the states taxing USPS Shipping are likely breaking the law unless they are charging the same tax on USPS shipments with the state. If it is ever challenged in court I think the tax would go away.
lacemaker3
·1 year agoAccording to the link you provided, the sales tax is not taxable as long as the charges are both stated separately and are "separable" and then it provides a definition of what that means:
There are two parts to that definition, and both have to be met for the delivery/shipping charge to be separable (and not taxable):
(which is clearly the case for shipping an eBay purchase)
So this means that, the shipping charge is not separable, and is taxable, unless the seller allows the buyer to use an alternative transportation service, for example local pick-up. (Essentially, this means that the buyer is not required to pay the seller for shipping, it makes it optional.)
Did your seller offer local pick-up on the listing, or did you have an opportunity to use another alternative service (such as a having a courier pick it up)?
carlmarxx
·1 year agoEbay will not do a thing about it. when it maybe a one off error charge .
1786davycrockett
·1 year ago@maxplaytime
Are you possibly confusing the Colorado State Sales Tax of 2.9%, with the Colorado Retail Delivery Fee, which was instituted by the state of Colorado in July 2022? --
Retail Delivery Fee Rates
The Retail Delivery Fee is made up of six different fees. The rates are listed below. The retail delivery fee may increase each July to adjust for inflation. Per statute, the Department is annually required to publish the new rate by April 15 for the upcoming rate effective in July.
Fee Type July 2022 To June 2023 July 2023 To June 2024 July 2024 To June 2025maxplaytime
OP1 year agoThis has nothing to do with the retail delivery fee. That is a fee, not a tax. Please read the FAQ in the original post, which applies to retail sales tax.
If the shipping charges are separable from the purchase price then they are generally not taxable. Not sure whey the term "generally" is thrown in, except to provide for some kind of exception, but I could not find any exceptions in researching this. I think I'll call CO Revenue tomorrow and ask them for clarity.
Looking forward to being on hold for an hour or more...not.
fab_finds4u
·1 year agoWhat about certain home rule cities in Colorado that eBay is required to charge sales tax on shipping?
monica-sells
·1 year agoGlad you reiterated that point....
could be the OP's resident city/local tax that supersedes the state tax
maxplaytime
OP1 year agoWhen I take my locality sales tax rate of 5% and multiply that by the purchase price AND the shipping costs it comes out to exactly the sales tax amount eBay charged me. So there is no mistake, they applied the tax rate to shipping charges.
monroe67
·1 year ago"As I said, it is not limited to eBay and I have had the same problem with rockauto and homedepot. The latter charged a state mandated "delivery fee" for a ship to store purchase, also incorrect."
Is it possible that eBay, Rock Auto, and Home Depot, are all truly following the laws of the State of Colorado?
Is it possible that you could be mistaken?
BTW: eBay does not refund the sales taxes they collected. eBay sends sales taxes to the state where the item was delivered. Thus, your sales tax money is in Denver or wherever the sales tax accounting offices are.
Do you think your state government is using your sales tax dollars properly?
If not, you might want to consider running for office in your state.
monica-sells
·1 year agofor the sake of discussion, I think you may be overlooking 2 relevant factors.....
1. How does one reconcile a 'free shipping' scenario, when the shipping price is baked into the sale price? All my Home Depot orders are "Free Shipping" for example. We know it's not free, but.....
2. Colorado (as with other "tax-free" states) has hundreds of "home-rule" jurisdictions that "may" impose a local tax on items that the state exempts.....
somehow, I believe all the "mindtrust" behind the scenes are aware of these intricacies, and the multitudes of in-house tax specialists are not going to risk both fines and bad publicity or exposure for "misinterpreting" sales tax laws
monroe67
·1 year ago"for the sake of discussion, I think you may be overlooking 2 relevant factors.....
1. How does one reconcile a 'free shipping' scenario, when the shipping price is baked into the sale price?"
OP did provide a link to an FAQ page from the Colorado Department of Revenue which states this:
[Start of quote]
12. Are delivery and freight charges subject to sales tax?
Delivery and freight charges are generally not subject to sales tax, so long as the charges are both separable from the purchase and separately stated on the customer invoice.
[End of quote]
When a shipping price is "baked into" the price of the item, it is neither -- per the language of that FAQ-- separable from the purchase price nor separately stated on the eBay listing.
There's only one dollar amount on which the sales tax can be calculated: price of the item.
SO -- yes, Colorado buyers of "free shipping" items on eBay, on which the shipping price is included in the item price -- they actually do pay sales taxes on shipping.
Because the shipping price is not separable from the purchase price.
Because that's the way the Colorado state law is written, at least per this FAQ page.
simba6
·1 year agoThat is a problem when every state has different laws. If you don't receive the refund you have to file for it.
Save all the paperwork and file a claim for the wrongly charged sales tax. You do that on your state income tax form. Check your state's tax site for the needed forms.