Tax on shipping in Illinois

[debbmcnee0]

My buyer lives in Illinois. Illinois does NOT charge sales tax on shipping. I was not aware of the law when I sent my invoice.

I tried to enter an adjustment to correct the total, but got an error message. The only way I could reduce the amount the buyer should pay to the correct amount was to reduce the shipping amount. Therefore I am eating part of the shipping, and the state of Illinois is receiving tax revenue on shipping which the law says they do not collect.

Is eBay aware that their invoicing for the state of Illinois is WRONG and that sellers are losing money because of it?

[jacbarcollectibles]

First off you do know that you have nothing to do with sales tax being charged to buyers.  Since the Supreme Court decision several years ago online sales is subject to Marketplace Facilitation sales taxes enacted by the individual States all but one of which has decided to get on the gravy train (but they will next year).  So eBay is responsible for the collection and remission of the sales tax which may be calculated differently than the in State sales tax.  If you feel that the sales tax is wrong you have to contact eBay customer service who will send the problem to the third party vendor that supplies the sales tax rules for investigation.  eBay only uses the information that is provided to them for collecting the sales tax.

[debbmcnee0]

Thanks for your reply. I had intended to contact eBay customer service, but never found a way to do so. I'll keep looking. My previous search ended with a suggestion ask the community.

Yes, I know I have nothing to do with sales tax being charged to buyers. I checked the Illinois law; my buyer is correct. 

[jacbarcollectibles]

You have to use this link to contact customer service:   https://www.ebay.com/help/home  and click on the white Contact Us box at the bottom of the page and answer the questions so eBay can classify your required help.  Customer service hours are 5am to 9pm Pacific Time.

[wooden_flower · Accepted solution]

I live in IL.  I used to collect sales tax when I was an active seller.  IL does charge sales tax on the shipping. 

Shipping and handling charges are taxable when:

• The transportation and delivery charges are not separately identified to the purchaser on the contract or invoice or
• The transportation and delivery charges are separately identified to the purchaser on the contract or invoice, but the seller does not offer the purchaser the option to receive the property in any manner except by delivery from the seller (i.e., no pick up option is given).

https://www2.illinois.gov/rev/questionsandanswers/Pages/144.aspx

So the real question is how eBay treats the tax when local pickup is offered, or if that distinction is even made in the marketplace sales tax rules or applies to out of state sellers.  I don't plan on reading the marketplace legislation. I assume eBay's tax attorneys have correctly interpreted the tax laws, since they want buyers to pay as little as possible, but still comply with the law.

If your buyer feels strongly that eBay is not correctly interpreting the law, she should contact the IL dept of revenue.

[debbmcnee0]

I did offer local pick-up, but of course don't expect someone from Chicago to drive to WV. So it looks as though it was handled correctly. Thanks for your clarification.

[woodland_gnome]

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@debbmcnee0 wrote:

I did offer local pick-up, but of course don't expect someone from Chicago to drive to WV. So it looks as though it was handled correctly. Thanks for your clarification.

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The local pickup exception has nothing to do with how likely it is that a particular buyer will use it, it is simply to make sure that that stated price is not deflated to avoid tax by inflating the shipping charges.  

I see some of your recent sales offer local pickup in the listing and some don't.   If this one did then @wooden_flower 's assumption that eBay is doing it right (an assumption that I don't credit eBay with when they set something up) needs to be reconsidered in light of new evidence.

[wooden_flower]

@woodland_gnome  I would go read the marketplace tax legislation before wasting any time  on it.  IL is not going to complain, and eBay will stand by their interpretation.

[gosimus]

@debbmcnee0 

From time to time I come across a thread in which the Original Poster selects her/his own reply as the accepted Solution.  Sometimes I believed that the OP did that because none of the other replies was good enough, but this thread has some very good replies.  Did you select your own here because you thought that none of the others was worthy? 

[debbmcnee0]

That was an accident. As you might be able to tell from my feedback, I'm a fairly new seller. If I can figure out how to mark the correct reply as solved, I will do that.

[gosimus]

@debbmcnee0 

  < That was an accident >    

Ahh, I can understand that, being a bit of a dunderhead myself, thanks for explaining.  I see that you've learned how to un-accept an answer and accept a different one.  Good work.  I think you'll go far.