Ebay Tax

[nkpina2014]

So something very odd about the state tax Ebay charges - 

If you have a discount, the sales tax that Ebay charges is based on the initial purchase price rather than the discounted price. 

If I go to any retail shop and buy a product for $100, give them a $10 off coupon, sales tax is not charged on the $100, only the $90 that I actually paid. Yet on Ebay, I'm charged on the $100. If I have a buy-one-get-one free coupon, I don't pay sales tax on the value of the free product. And that's at each and every store I've ever been to. 

Why is this, Ebay? Seems odd and contrary to actual tax law. 

[corvettestainless]

Not true in Cali; so I would say that is state to state. Items are totaled and taxed at the register, then coupons are used for just the amount of the coupon. Rebates at car dealers, you are taxed in full, then rebate is applied (which is just another term for a 'coupon'). 

[the*dog*ate*my*tablecloth]

That’s not true in MA. I remember buying a “free” phone from my service provider and paying tax on the $600+ original price of the phone.

[lacemaker3]

If the seller offers a discount on the purchase price, like a mark-down or a percent discount if you buy 2 or more items, then that lowers the purchase price and you are taxed on the total purchase price.

But if you use an eBay coupon, or a store coupon, or a voucher, that is applied as a payment method. The tax is calculated on the total purchase price, and the coupon/voucher  is part of the payment.

That's how it is done when you purchase at a B&M store, and that's also how Amazon does it.

[chapeau-noir]

A coupon is considered part payment - tax is charged on the entire price - what you pay and what the coupon pays.  If the seller just discounts the item (no coupon), sales tax is only charged on discounted price as the discounted price is the full transactional price.

[nkpina2014]

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@chapeau-noir wrote:

A coupon is considered part payment - tax is charged on the entire price - what you pay and what the coupon pays.  If the seller just discounts the item (no coupon), sales tax is only charged on discounted price as the discounted price is the full transactional price.

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Absolutely not how it's done in Texas. And if Ebay is handling state sales tax on a per-state basis, why aren't they adhering to state-based rules?  

I just came from Burger King. I had a buy one get one free Whopper.  

I was charged $2.99 for the Whopper. Next Whopper was $0.00. 

Tax - $0.23 

Total - $3.23

(sales tax is 8.25% here). 

I was NOT charged sales tax for the Whopper that was $0.00 as if I had purchased it at full price. 
The same occurs with money off coupons. 

Gift cards, of course get taxed as that's a method of payment and the IRS considers them cash-equivalent. 

[nkpina2014]

I found the answer - apparently Georgia does it this way as well. Sales Tax is ONLY applied to the actual sale value after coupons. 

https://blog.taxjar.com/sales-tax-discounts-coupons-promotions/

"In layman’s terms, that means if the original price of something you sell was $100, but you offer a 50% discount, then the taxable price is $50."

There's also exception with the type of coupon (manufacturer vs store), where a manufacturer coupon is considered to be reimbursable, thus gets taxed (again, depending on state rules). Texas treats them the same, and applies the taxable value to the actual sales value only. 

Texas Rule 3.301:

“When coupons or certificates are accepted by retailers as a part of the selling price of any taxable item, the value of the coupon or certificate is excludable from the tax as a cash discount, regardless of whether the retailer is reimbursed for the amount represented by the coupon or certificate.” 

So the question still stands - if Ebay is collecting sales tax on a per-state basis, shouldn't they follow the taxing laws also on a per-state basis? That was the entire point behind Ebay collecting in the first place rather than individual merchants. 

[mam98031]

That isn't true in WA either.  

[cynthealee2]

Back years ago when I got food stamps and used coupons I would have to have cash to pay taxes on the coupons  drove me batty.

Food stamp sales do not pay taxes, but if I used coupons to lesson the amount of food stamps I used I would have to pay taxes in both TN and WV not on the full total bill but on the amount the coupons were.

[mam98031]

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@cynthealee2 wrote:

Back years ago when I got food stamps and used coupons I would have to have cash to pay taxes on the coupons  drove me batty.

Food stamp sales do not pay taxes, but if I used coupons to lesson the amount of food stamps I used I would have to pay taxes in both TN and WV not on the full total bill but on the amount the coupons were.

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We use to have sales tax on food in WA too.  But years ago we changed that, so what you describe no longer happens in our state.  It was a good move.

[the*dog*ate*my*tablecloth]

It seems to me if the coupon sales tax calculation is wonky in a couple of States the easiest way for eBay to stop it is for them to stop offering coupons.