California just increased their Internet Sales Tax Threshold

[cascarole]

California just increased their internet sales tax threshold from  to 500,000. The new law requires collection and remittance of sales taxes ONLY if the seller does $500,000 or more in business with the state of California.

I'm a small seller, but a 500K threshold to a state as big as California is a pretty significant number. Will ebay adjust it accordingly or still charge the tax to customers of small sellers? 

[nobody*s_perfect]

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@escuintla wrote: ...  just $497,000 to reach that goal. Am I going to make it?

Yeah, I didn't think so! 

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eBay is the facilitator and the $500K threshold applies to eBay.  

As explained in the pillsbury article linked above: "the marketplace facilitator must pay sales tax or collect and remit use tax on all sales of tangible personal property into California, including those sales made on behalf of its marketplace sellers, if the marketplace facilitator’s cumulative sales into California meet the $500,000 economic nexus threshold."

[cascarole]

Yes, I see what eBay is stating, but it is not with the California law is stating. The ruling states that Marketplace Facilitators have to collect the taxes on behalf of retailers who have at least $500,000 worth of annual sales in California. Those retailers are us, ebay is not a retailer.  I understand that ebay will have to collect and remit, but if the monetary guideline is based on the retailer, not the MF, they will most likely be over collecting a ton of tax money, and certainly will not be refunding it to eBay, assuming all of the money collected is passed to the state, or our customers. The obligation is ebay's problem, and my sales are a minuscule fraction of that amount,  I was just concerned as to how they will handle all of the overpayments they are collectng and making on behalf of small sellers.

[autopiacarcare]

I'll be interested to see what eBay does with California.  The wording of the California law is similar to the Washington DC law that eBay is still not in compliance with and from the response I have gotten on my thread about DC, eBay doesn't seem terribly concerned or in much of a hurry to get on board. 

"Additionally, the legislation requires marketplace facilitators, as defined by new D.C. Code § 47-2001(g-5),to collect and remit to the District sales tax on sales made on their marketplaces. This requirement is effective as of April 1, 2019"

DC Code 47-2001 (g-5)

(g-5) "Marketplace facilitator" means a person that provides a marketplace that lists, advertises, stores, or processes orders for retail sales subject to tax under this chapter for sale by such marketplace sellers, and directly or indirectly collects payment from a purchaser and remits payment to a marketplace seller regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for its services.

I know ultimately it's eBay's problem, but I can't help but think it would be disruptive for sellers if eBay ends up in a big legal mess with some of these states (or districts).  You'd think they'd have enough lawyers and accountants hanging around to figure this stuff out?

[autopiacarcare]

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@cascarole wrote:

Yes, I see what eBay is stating, but it is not with the California law is stating. The ruling states that Marketplace Facilitators have to collect the taxes on behalf of retailers who have at least $500,000 worth of annual sales in California. Those retailers are us, ebay is not a retailer.

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A "retailer" is whoever the law defines it as.  Most of these states know it is a million times easier to go after the big guys like Amazon and eBay than each individual seller.  All they have to do is write the law in a way that defines the word "retailer" to mean eBay and Amazon. 

"marketplace facilitators are statutorily the seller or retailer in a sales transaction they facilitate for a marketplace seller." - That means for the purposes of this statute, "marketplace facilitators" are legally defined as the seller or retailer in any transaction they facilitate and are therefore subject to collect the tax with the thresholds being measured by all transactions they facilitate that ship into that state.

[thevintagesilvershop]

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@cascarole wrote:

Follow up to my own question:

The ruling states that marketplace facilitators have to collect taxes on behalf of these retailers, but only if they have at least $500,000 of annual sales in California. 

The sentence is worded strangely,T I am assuming that THEY refers to the retailer.  Am I reading it correctly?

If that is the case, they are collecting for everyone, but are they remitting to the state for everyone? If they collect $1,000,000 from customers in California (to use a round number) and none of the retailers reached the $500,000 threshold, are they refunding the customers? Sorry if I sound confused but I am confused!

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You need to read the law, you are getting confused by this.

Ebay is a Marketplace Facilitator and anyone selling to California under the Ebay umbrella is not singled out as a retailer.  Ebay is the Marketplace Facilitator and will collect and submit taxes for those of us that sell to CA residents as part of our Ebay activity.  We do not need to worry about it.

If you are a retailer NOT selling under Ebay's umbrella, but meet the $500,000 threshold, you will have to collect and submit taxes to CA on your own. 

Here's a synopsis I've added red for clarification US stands for us (the normal seller slobs):

Marketplace Facilitator Act

The new Marketplace Facilitator Act (the Act) carefully distinguishes between marketplace facilitators and marketplace sellers and their respective sales or use tax obligations. Beginning October 1, 2019, marketplace facilitators (EBAY) are statutorily the seller or retailer in a sales transaction they facilitate for a marketplace seller (US).  As the retailer, the marketplace facilitator (EBAY) must pay sales tax or collect and remit use tax on all sales of tangible personal property into California, including those sales made on behalf of its marketplace sellers (US), if the marketplace facilitator’s (EBAY) cumulative sales into California meet the $500,000 economic nexus threshold. In calculating cumulative sales, a marketplace facilitator (EBAY) must include sales of tangible personal property made on its own behalf and sales of the same facilitated through its marketplace for its marketplace sellers (US).

[nobody*s_perfect]

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@thevintagesilvershop wrote: ... Ebay is a Marketplace Facilitator and anyone selling to California under the Ebay umbrella is not singled out as a retailer.  Ebay is the Marketplace Facilitator and will collect and submit taxes for those of us that sell to CA residents as part of our Ebay activity. ...

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Nothing to add, I just though that summary was worth repeating.

[dtexley3]

@autopiacarcare Did you notice the sales tax seller update released yesterday?   I just noticed, says they added two states but I haven't tracked close enough to know which two.  Still no mention of Wash. DC. though....

[dtexley3]

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@dtexley3 wrote:

@autopiacarcare Did you notice the sales tax seller update released yesterday?   I just noticed, says they added two states but I haven't tracked close enough to know which two.  Still no mention of Wash. DC. though....

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Correct "to more states" not "two more states".  Really need to make that eye appt....

[autopiacarcare]

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@dtexley3 wrote:

@autopiacarcare Did you notice the sales tax seller update released yesterday?   I just noticed, says they added two states but I haven't tracked close enough to know which two.  Still no mention of Wash. DC. though....

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@dtexley3- Yeah, I tagged Trinton again on my post about DC and mentioned it wasn't added on the update yesterday.  His answer was "no more information to provide. You will find an update in our Help Pages as soon as there is more information to share. Until then you can consult with a tax professional if you have any questions about what expectations you may need to comply with."

[ungermann]

It is October 3. I am in Cali and wanted to buy an item from a guy in Cali. I remember that before October 1, eBay would show how much tax I should pay if I buy from this or that seller. Often, I would have to pay tax to a Cali seller, but not always, I guess it depended on how much business they had in Cali.

Now, if I read the law correctly, it wants buyers to pay tax if facilitator (eBay) has more than half-mil sales in Cali, which it sure does. Does it mean, that if I am in Cali and buying stuff from a guy in NY, I still have to pay Cali tax because it goes through eBay, which makes more than half-mil a year? So, basically ALL my purchases are now taxed?

Also, eBay used to show expected tax BEFORE I would commit to buy. Now it does not show it, but does show it on checkout? How come? Why cannot eBay calculate it before I am about to buy? Had to cancel a purchase yesterday because of this **bleep**.

[nobody*s_perfect]

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@ungermann wrote: ... Now, if I read the law correctly, it wants buyers to pay tax if facilitator (eBay) has more than half-mil sales in Cali, which it sure does. Does it mean, that if I am in Cali and buying stuff from a guy in NY, I still have to pay Cali tax because it goes through eBay, which makes more than half-mil a year? So, basically ALL my purchases are now taxed? ...

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Yes, that's exactly what it means.

[adubkov]

I'm a buyer in CA. I made an offer to PRIVATE person from OUTSIDE CA to buy one USED item. At the time I did offer there was not a single word about taxes. My offer was accepted and now I obligated to pay almost $200 in tax.

Something is definitely wrong with this law. Private sales should not be taxed.

[bonjourami]

Doesnt matter if the item is a 'private' sale,or new or used, you will pay the use tax to your state.

[the*dog*ate*my*tablecloth]

If you bought it on Ebay it was not a private sale. It was a sale facilitated by a marketplace. Private sales are those through places like newspapers and the list where there is no record of things changing hands.