Sales taxes
To my understanding EBay is responsible for collecting and rendering sales taxes to the state. I live in Missouri. I have received a letter stating I have received a 1099-k for tax year 2020 and 2021 but the state of MO has not received any sales taxes from my sales. Has eBay failed me as a seller here?? 1099-k was filed properly on my taxes.
9 comments
caldreamer
·6 months agoeBay began collecting sales tax for the state of Missouri on January 1, 2023. This implementation followed Missouri's enactment of a marketplace facilitator law, making it the last state to require remote sellers to collect sales tax on online transactions
You must report GROSS SALES (purchase price of item + shipping income) and NOT the "sales tax" that the customer paid.
You must file annually sales tax report with Missouri State Tax Board (you need to keep track of EBAY sales that were shipped to MISSOURI). Because EBAY includes "shipping income" in their "gross sales" amount (you must claim deduction for "shipping income" from your "gross sales").
$20,000 (Gross Sales) Entire USA
-1,000 (Shipping Income
-5,000 MISSOURI SALES
$14,000 (Sales Outside Missouri)
slippinjimmy
·6 months agoDepending on the State you may be required to register with your State Sales Tax department even if you have no taxable sales or your sales are all on a platform like eBay which does the tax collection and remittance on your behalf. In the latter situation you are required to file (monthly, quarterly, annually) nil returns.
In addition, your State has no way to know if the sales reported on the 1099-K were from sales via eBay, all out of State, all to anyone with a exemption certificate, all for tax exempt goods. Lacking any reporting they can and often will simply look at the total revenue, assume all were taxable and all sold within your State by regular consumers. From that number they will estimate the tax payable, add latte payment penalties and interest and send you the bill.
Best to clear up this situation now rather than let it dangle out there. If had sales prior to eBay doing the collecting you really need to get your records in orders so that you can provide reports for that period. You would only owe Sales Tax for your in-State sales during that period.
From personal experience I can unequivocally state that from the following list the worse type of audits are any related to Sales Tax
Ranked by degree of pain
State Sales Tax
Customs (a very close 2nd)
IRS Income Tax
As @bonanza125 posted eBay started collecting MO Sales Tax on January 1, 2023, any sales before that would be your responsibility to collect and remit for in-State sales.
Missouri
January 1, 2023
Missouri Department of Revenue - opens in new window or tab
eBay Inc. – Taxpayer Identification Number: 17173086
Missouri Marketplace Facilitator Certificate
onefootflipper
·6 months agoAnd it is basically an impossible thing to even go back and retroactively do. You would need the records of which of your sales went to missouri and which did not, from 6 years ago. Which is information that you can't get now unless you were keeping track of it yourself.
Generally statistical data shows that there would have been about 120,000 ebay sellers in Missouri in 2020. Almost none of which were collecting sales tax. They will just have no way to broadly retroactively enforce this.
thelongball
·6 months agoThis may not help your situation or not as I'm in Michigan. The way it worked here before all the laws changed in 2023, I had to collect and remit the sales tax on my own. Mine only applied to sales I made in my own state. Ebay was billing each sale for the sales tax on my customer's invoice. So it was easy for me book keeping wise as eBay always had the totals for me to find. The amount I sold within my own state was small because people typically avoided buying from same state sellers so not to have to pay the extra in taxes. Once the new laws took place it made it a level playing field. Now Buyers pay the tax regardless of where they buy from. Again each state is different so how my situation worked may be totally different than yours. Like recommended above you should talk to an accountant or tax professional in your area. You should avoid any answers given here as they may not be right and you never want to guess when dealing with this type stuff. I've used a acct. for many years and its so much easier to know that what I do is the right way. Cost a little more but you can't put a price on sleepless nights.
kensgiftshop
·6 months agoThe 1099K doesn't have anything to do with sales tax.
It just reports your gross income.
stainlessenginecovers
·6 months ago@kensgiftshop but since the state gets a copy of a 1099 (Missouri over $600) they
a.) know it's from a 3rd Party Processor that does 'sales on a persons behalf'
b.) know person 'sold stuff' in their state and did not get an SREA number and/or file and remit 'sales tax' on those 'sold' items.
So in this case, they do (1099 something to do with Sales Tax)
onefootflipper
·6 months agoI sent in a letter that stated. "Personal items sold. I was not registered as a business during this time period." and I never heard back from them.
Fact is they are going to have to send out a couple hundred thousand of these letters and couldn't possibly have the staff to actually do anything.
tsme35
·6 months agoYea, MO passed internet sales but took them 2 years to update and collect it, I've gotten them too. Best to contact your accountant if you used one, if not, may best to look one up. Their best to know what to do, mine sent in a letter and never heard back from the state.
bonanza125
·6 months agoEbay didn't start collecting sales tax for Missouri until 2023 based on quick research I did. So Ebay wouldn't be responsible for 2020 or 2021. That's on you.