Ebay Sellers and Internet Sales Tax

[faithfashionfriends]

I am planning on winding down my Ebay store this Fall. Just found out that by October there will be 21 states in the Union paying online sales tax. That is going to kill online sales. Also by 2020 all the states in the union will charge internet sales tax. Those good ole days of no internet sales tax are over. Paypal and Ebay are already separate,but Ebay will be setting up separate accounts for Sellers and their income tax. Just not something I want to get into. Hope everyone is getting ready for the big change coming. Info was from Ebay. 

[pcmbuy]

So, the retailer has the option generally speaking of charging sales/use tax less or more specifically, as long as they remit the sales/use tax to the state as they are supposed to do. The buyer is the one who is actually paying the tax, the retailer is just collecting it and remitting it to the state. Technically the sales/use tax due is not actually based on where the item is sold to you, it is based on where it is used or consumed by you (generally as the end user, your residence). And many states have varying sales/use taxes depending on county, city, etc. But stores generally charge the tax based on their location, since traditionally most customers will be from that general area. But it can actually quite often happen that the sales tax you are charged is not technically the correct amount if, for instance you purchase something in a different county than your residence. This is more or less analogous to the situation you are describing with eBay incorrectly charging you sales/use tax on an item.

So if you as the buyer feel that you were charged an incorrect amount of tax, you need to prove that to the state and they will give you a tax refund (forms online at state tax website for this as I think another poster mentioned). 

Now generally speaking, it is bad for business for a retailer to be incorrectly charging you sales/use taxes because you the customer will justifiably get mad about paying tax if you are not required to on something you buy, so if there are certain tax exempt products the retailer's systems often will account for that, but there is no guarantee and it is more of a customer service type thing where you could take your business elsewhere to a place that has the correct systems in place to charge the correct sales/use tax. For NYS an example is grocery stores where food is not sales/use taxable but prepared food is taxable just like a restaurant dish. And if you checkout in most grocery stores you will be charged sales/use tax on some items and not others depending on the item. Will eBay adjust their systems for that? Maybe but maybe not.

Also, if you are buying fabric/buttons/zippers/etc and re-selling them you may want to check with your state's tax website as you may be exempt from paying sales taxes on any of it if you then re-sell it to someone else. Generally speaking, sales/use taxes are charged to the end user/consumer of the tangible property. If you materially change the item or are using it as raw materials in a manufacturing process then sometimes that can change things as far as taxes are concerned so I would check with your state.

[pcmbuy]

In those situations it basically becomes the responsibility of the buyer/end user/consumer to contact their state and get a tax refund for any incorrectly charged sales/use tax. 

[mam98031]

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@7606dennis wrote:

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@fern*wood wrote:

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@soh.maryl wrote:

Those are probably questions you need to ask the government of the State of New Jersey.

And haven't you been paying New Jersey state sales tax on items you buy at WalMart, Macy's, TireMart etc for at least a few years? 

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Keep in mind this original poster has openly posted many times advising sellers that income taxes don't need to be paid if you sell under $20,000.  --- just check out their most recent thread.

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I'm not sure how "income taxes" entered into the conversation about sales tax.  Income taxes, both State & Federal would be the responsibility of the seller.  Sales/use tax is the responsibility of the buyer.  Whether it is collected by the seller, a market facilitator or paid directly by the buyer himself, it is still buyer's duty to pay it.  

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Revisit the OP.  It is in the opening statement on this thread.

[faithfashionfriends]

The agent was trying to explain it,but he lost me. He said there was something Ebay was going to do that would make is somehow easier actually for the Seller to keep track of their taxes which is already separate from Paypal which is what he was saying. Anyway,I just don't like the internet sales tax thing at all. I mean it is what is going to destroy online sales. That is why people buy stuff online. It is why I buy online. Isn't why you buy online??

[faithfashionfriends]

I understand my friend. We are just trying to keep out heads above water on here. I know I am. I mean I am selling my stuff half the price I sold it for last year and the year before.  You have to keep selling it cheaper every year to keep selling it. Gotta stay in business. 

[mam98031]

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@faithfashionfriends wrote:

The agent was trying to explain it,but he lost me. He said there was something Ebay was going to do that would make is somehow easier actually for the Seller to keep track of their taxes which is already separate from Paypal which is what he was saying. Anyway,I just don't like the internet sales tax thing at all. I mean it is what is going to destroy online sales. That is why people buy stuff online. It is why I buy online. Isn't why you buy online??

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@faithfashionfriends 

I just think you are over thinking this.  It isn't just Ebay, it is affecting the entire internet.  Shopping on the internet is just too easy for many and more and more people grow to depend on it.  So I don't see a big loss of revenue here.  Pay tax for buying on line or pay tax to buy locally.  Buyer's choice.  But taxes will be paid.

Ebay will give us some better reports to work with regarding sales and sales tax.  That is a given.  They are going to have to do that, but mostly because they are implementing Managed Payments.  

And your position on that other thread where you are of the opinion that you don't have to declare your income on your yearly Federal Tax Return to IRS unless you make more than $20,000 is also incorrect.  If this is something you have depended on over the years that you have been selling here and have not been declaring all your income, you may want to change your approach ASAP before you have some expensive issues.

[faithfashionfriends]

Well,I can see that the agent's info is absolutely correct. If you see the latest bulletin they are talking about all the states that will implement Taxes starting in October 2019. He didn't make this stuff up. It is going to happen. It will affect our sales on Ebay. No doubt about it. As far as sales above $20k and reporting taxes I am correct on that. Call Paypal. It is the truth and the reason is very simple. They do not send a 1099 until you sell more than 20K. If you sell less than that they do not send the IRS a 1099. If you want to report taxes then it is your business. I am not going report anything I don't have to. If I sell less than 20K then I am not reporting my sales to the IRS,clear and simple. What Paypal doesn't send the IRS doesn't get a record of. If you want you can have more than one Ebay account to make it even work better. I am just telling you what other Sellers have done to avoid paying taxes. Do what you gotta do. I say worry about your OWN taxes and let them worry about theirs. 

[faithfashionfriends]

You CHOOSE to pay sales tax. I'm not paying and never have. Not going to pay it either. 

[faithfashionfriends]

The agent has already been correct on the tax issue. Look at the latest bulletin. I am sure we will see the rest of the info he told me revealed soon. I am not sure  what he was referring to about the Ebay and doing our taxes,but look for a bulletin on it soon. It is coming. 

[mam98031]

@faithfashionfriends 

Well,I can see that the agent's info is absolutely correct. If you see the latest bulletin they are talking about all the states that will implement Taxes starting in October 2019. He didn't make this stuff up. It is going to happen. It will affect our sales on Ebay. No doubt about it.

I don't know if you have been reading this thread, but NO ONE has said that the sales tax being collected by Ebay has not been happening.    I don't know where you are getting this information from.  It all depends on EACH individual state.  EACH state has to pass a facilitator law for Ebay to be required to collect the sales tax for all sales being delivered within that state.

This NOT STARTING in October of 2019.  It started January 1st 2019 with those states that required taxes to be collected by Ebay.  As the months have moved forward through the year, more and more states have passed laws.  There is a big jump July 1st on several states coming on board with this type of law.  And yes more will join in October.

The current list is found on this link.  Just scroll down until you get to the list, it is there.

https://www.ebay.com/help/selling/fees-credits-invoices/taxes-import-charges?id=4121

As far as sales above $20k and reporting taxes I am correct on that. Call Paypal. It is the truth and the reason is very simple.

You seem to be confusing a couple of things here.  First, this has NOTHING to do with Ebay collecting sales tax.  Two, the 1099 threshold for PP and other money transmitter have NOTHING to do with what income YOU need to report.  The $20k threshold is ONLY for the money transmitters.  They do not have to create a 1099 for you if the total money you collected throughout the year on their site falls under that threshold.

PP does NOT determine what amounts you have to report to IRS as your income.  The IRS rules do.  And there is NO IRS rule that states if your income is less than 20k you do not have to claim the income on your taxes.  You are confusing when the form must be created per IRS rules to also mean that you don't have to claim the income as taxable if you don't get a 1099.  AND THAT IS NOT TRUE.

They do not send a 1099 until you sell more than 20K. If you sell less than that they do not send the IRS a 1099. If you want to report taxes then it is your business. I am not going report anything I don't have to. If I sell less than 20K then I am not reporting my sales to the IRS,clear and simple. What Paypal doesn't send the IRS doesn't get a record of. If you want you can have more than one Ebay account to make it even work better. I am just telling you what other Sellers have done to avoid paying taxes. Do what you gotta do. I say worry about your OWN taxes and let them worry about theirs. 

Multiple selling accounts will NOT protect you against owing taxes on your income earned or prevent PP from issuing 1099's when appropriate.  If you tie all your selling accounts to one PP account, then if you hit the threshold for 1099's, PP will create them.  It is not driven by selling accounts.

You are absolutely correct.  Many sellers over the years have reported their income incorrectly to IRS.  That is exactly why the rule to require money transmitters to issue 1099's was created.  But you are absolutely incorrect that it is legal to dodge paying taxes on the income you have that falls under the 20k threshold for 1099s.  

It of course is your choice to evade paying taxes or not.  It wouldn't be anything I would ever recommend to anyone for any reason.  I've claimed my income from the day I started selling here and that is how it should be.  

[div_style]

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@extrememobility wrote:

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As to internet sales and sales tax.  Buyers will get use to it and all will be fine in time.  It isn't just Ebay, it is everywhere on the internet.  Internet shopping is too convenient for many people and they aren't going to give that up.  It saves them too much time and energy.  So I think for this portion of your concern, it is going to work out fine.

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Buyers are NOT going to pay shipping & sales tax  if they can buy locally and just pay sales tax. I won`t do it!  say goodby to internet sales!

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Well there is THAT problem, but the solution is to sell items that are NOT available locally.  And even for locally available items, paying for shipping still may be a better bet than driving somewhere (gas and time costs) to buy.

[div_style]

"Looks like there may be a fair chance that sellers in Delaware, Oregon, Montana, and New Hampshire may  well get more sales and a lot more sellers will move to those states.  "

Don't say that too loudly--they'll be wanting their own border walls to keep us carpetbaggers out!

[the*dog*ate*my*tablecloth]

Seriously don’t get your tax advice from the Paypal customer service guy. It sounds like they misunderstood your question. The 1099 is a requirement to prevent money laundering and terrorism. It has nothing to do with whether you have to include your sales on your income tax.

MA and VT require 1099s over $600 in sales. Does that mean sellers in those states have to report income over $600? 

So you’re admitting on a on a public forum to breaking the law and stiffing your income tax for years? Good luck, since payments are online tax cheaters will.be caught sooner or later. They can go back years with interest and penalties

[trukur_0]

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@extrememobility wrote:

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As to internet sales and sales tax.  Buyers will get use to it and all will be fine in time.  It isn't just Ebay, it is everywhere on the internet.  Internet shopping is too convenient for many people and they aren't going to give that up.  It saves them too much time and energy.  So I think for this portion of your concern, it is going to work out fine.

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Buyers are NOT going to pay shipping & sales tax  if they can buy locally and just pay sales tax. I won`t do it!  say goodby to internet sales!

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No, it's really not "cheaper" to drive a car 10 miles round trip to try and save $4.

[trukur_0]

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@fern*wood wrote:

The laws in my state required paying a use tax when I filed my taxes if  I purchased outside my state without paying the tax.  Most people never did this, so the states decided to act and the Supreme court agreed.  

You know what they say a death and taxes (of course some are above one of these).

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Even those of us who did (at least in my case) most likely paid an estimated tax which isn't entirely fair either, but I do agree with you that most likely most people never paid a dime... I've spoken to many people in my life where taxes are an issue, it seems a common thread, these people are almost proud to not pay taxes, they act like they're "winning" by stealing from the government.

Speaking for myself I have no issue with the enforced tax, I'm glad they're doing it, maybe now we'll have money to fix the roads, maybe now they won't have annual government shutdowns.