Charging Sales Tax for Clothes in a State where it is exempt NJ PA etc

[partsman836]

If the purchase of all clothing and shoes are tax exempt inside New Jersey should Ebay be collecting state sales tax on those purchases?  Should NJ buyers of clothing from sellers in NJ be exempt? should all buyers buying from sellers in NJ be exempt ?  should no buyers buying from sellers in NJ be exempt?  Thank you 

One example of the many sales tax exemptions offered by states is an exemption for clothing. Eight states fully or partially exempt clothing in general. Clothing is fully exempt in Minnesota, New Jersey, Pennsylvania and Vermont. In three states, clothing up to a certain cap is exempt (in Massachusetts the cap is $175, in New York it’s $110, and in Rhode Island it’s $250). Connecticut will exempt clothing and footwear under $50 starting on June 1, 2015.

[luckythewinner]

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@partsman836 wrote:

If the purchase of all clothing and shoes are tax exempt inside New Jersey should Ebay be collecting state sales tax on those purchases?  Should NJ buyers of clothing from sellers in NJ be exempt? should all buyers buying from sellers in NJ be exempt ?  should no buyers buying from sellers in NJ be exempt?  Thank you 

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Sales tax is determined by where the item is being shipped, not by where the seller is located.

[partsman836]

Are you saying that buyers in NJ (PA etc) do not pay sales tax on all clothing and shoes purchases on Ebay?

[kensgiftshop]

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@partsman836 wrote:

Are you saying that buyers in NJ (PA etc) do not pay sales tax on all clothing and shoes purchases on Ebay?

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If buyer lives in a state that doesn't tax those items, they shouldn't pay sales tax.

It also depends on the category the item is listed under.

[luckythewinner]

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@partsman836 wrote:

Are you saying that buyers in NJ (PA etc) do not pay sales tax on all clothing and shoes purchases on Ebay?

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I did not mean to suggest anything about what eBay actually does. 

I was simply explaining in general how sales tax works.

[nobody*s_perfect]

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@partsman836 wrote:

If the purchase of all clothing and shoes are tax exempt inside New Jersey should Ebay be collecting state sales tax on those purchases?  Should NJ buyers of clothing from sellers in NJ be exempt? should all buyers buying from sellers in NJ be exempt ?  should no buyers buying from sellers in NJ be exempt?  ....

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Sales tax is based on  the buyer's location.  The seller's location doesn't matter.  

As noted in one of the other posts, eBay bases their collections on the item's category; they can't possibly determine the status of every separate listing. So if you list a clothing item in a clothing category then your buyer in NJ won't pay sales tax.  But if you list it under Sports or Collectibles, then eBay will ask your buyer to pay sales tax on that item.

[redmodelt]

Could also come down to what category the item is listed in. Often there are posts esp ones dealing with coins or gold/silver bars where the wrong category was used, and sales tax was charge where it might not have been if the correct category was used.

The question would be: are those caps annual or per sale? If annual, how would they track them? 

How eBay charges sales tax would also depend on what information each state gave eBay. 

Did you receive a message asking why sales tax was charged?

If so, maybe post the eBay number of the item and someone might be able to see what was going on. 

[house*of*paws]

Hi @partsman836 

I don’t know whether the laws governing in-state purchases of clothing is the same as online purchases for all states.

eBay collects sales tax according to the Marketplace Facilitator Laws of the state the item is being shipped to.

If eBay is making a tax error regarding an individual state … then it needs to be told by an official from that state.  [eBay will refund incorrectly collected tax.]

[monroe67]

"If the purchase of all clothing and shoes are tax exempt inside New Jersey should Ebay be collecting state sales tax on those purchases?  Should NJ buyers of clothing from sellers in NJ be exempt? should all buyers buying from sellers in NJ be exempt ?  should no buyers buying from sellers in NJ be exempt?  Thank you"

"Should NJ buyers of clothing from sellers in NJ be exempt?"  Well -- on eBay or anywhere else, a NJ buyer of clothing from a NJ seller is not exempt from sales tax.  The type of thing is exempt from sales tax, not the buyer.  New Jersey has apparently decided its residents and citizens should wear clothes and, to encourage them to wear clothes, New Jersey does not apply sales taxes to the purchase of clothes.

The story behind this type of question here on the eBay Community Selling Board is that the item was listed
in an eBay category that is not specifically  clothing.  

You mention Minnesota.  A couple years ago a Minnesota buyer complained bitterly here that he was charged sales tax on a shirt decorated with logos and words related to his favorite professional sports team.  "It was a shirt !!" was his [paraphrased] argument.  "Shirts are not taxed in Minnesota !!  eBay is breaking Minnesota's tax laws !!"  

A closer look at the eBay listing showed that the seller did not list that shirt in a Clothing (Apparel) category.  Instead, the seller listed that shirt in a Sports Memorabilia category.  Kind of like a game program or poster or pennant.  Thus:  sales tax was applied.  

The solution for eBay buyers is to be aware of the eBay listing's category.  If you really don't want the state of New Jersey to get a dollar or two when you buy clothing on eBay, be sure the clothing you buy is listed in a Clothing category.  

[partsman836]

I do appreciate your help and not trying to be a jerk and put words into your mouth. I'm trying to find out who Ebay charges and or exempts from sales tax. There are currently four states (NJ PA MN VT) that do not charge sales tax for the purchase of all clothing. 

What I am hearing is that most often (as long as the seller chose the proper category) ebay DOES NOT charge sales tax on clothing purchases for ALL residents of NJ PA MN & VT. 

is that correct?  and thank you all very much

[nobody*s_perfect]

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@partsman836 wrote: ... as long as the seller chose the proper category) ebay DOES NOT charge sales tax on clothing purchases for ALL residents of NJ PA MN & VT. 

is that correct?  ...

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Yes

[monica-sells · Accepted solution]

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@partsman836 wrote:

I do appreciate your help and not trying to be a jerk and put words into your mouth. I'm trying to find out who Ebay charges and or exempts from sales tax. There are currently four states (NJ PA MN VT) that do not charge sales tax for the purchase of all clothing. 

What I am hearing is that most often (as long as the seller chose the proper category) ebay DOES NOT charge sales tax on clothing purchases for ALL residents of NJ PA MN & VT. 

is that correct?  and thank you all very much

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highlighted for reference

...Yes

(a football jersey, for example, is clothing, but it would most likely be in a taxable category)

[theteamsetguy]

@partsman836 ,

Just curious eBay does all of the collection and remittance to the proper taxing authorities it shouldn't matter who is exempt or not. As a seller you have no responsibility to collect and remit the taxes so I could care less.

[lvr-3929]

FWIW, in New York while the state exempts $110 and below, individual counties apply a local sales tax.  Say the county tax rate is 8%, on clothes you'd pay 4%.  

[selsa84]

Interesting, I was just charged 7 % sales tax on a purchase and I am in Georgia( which is 4%) and  Tennessee(where the sellers is at is 7 %).