How does sales tax work on local pickup for cash sales?

[atikovi]

If they paid with Paypal, they would have been charged sales tax through Ebay, but since they are paying with cash on pickup, they won't. How has Ebay addressed this if at all? I'm not asking them for the extra $3.60 on a $60 item I just sold nor am I going through whatever paperwork it takes to mail it to the state either for the 3 or 4 times a year it happens.

[atikovi]

Oh btw, the buyer is out of state if that matters.

[rock.star]

If the buyer is paying you in person in cash then ebay and paypal are not involved nor do they care .

[mcdougle4248]

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@atikovi wrote:

If they paid with Paypal, they would have been charged sales tax through Ebay, but since they are paying with cash on pickup, they won't. How has Ebay addressed this if at all? I'm not asking them for the extra $3.60 on a $60 item I just sold nor am I going through whatever paperwork it takes to mail it to the state either for the 3 or 4 times a year it happens.

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In my state, Arizona, you would need to have tax license and do exactly what you said you will not do.  You might want to check with your state tax authority to find out what they require for a situation like this.

[atikovi]

At least now, a buyer has an incentive to pay with cash on pick up. Probably the only side benefit to sellers of local pickup items with this recent Ebay sales tax policy.

[gwgw-73]

The buyer is responsible for use tax in their own state.

[lacemaker3]

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@atikovi wrote:

If they paid with Paypal, they would have been charged sales tax through Ebay, but since they are paying with cash on pickup, they won't. How has Ebay addressed this if at all? I'm not asking them for the extra $3.60 on a $60 item I just sold nor am I going through whatever paperwork it takes to mail it to the state either for the 3 or 4 times a year it happens.

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All of the Marketplace Facilitator legislations that I have reviewed for various states, have hinged on the fact that the marketplace was facilitating the payment as well as the transaction. There may be other factors as well, but facilitating the payment is the major one. All online payments for eBay transactions go through eBay Checkout, so they are facilitating both the payment and the transaction.

If the payment is cash on pickup, then the marketplace (eBay) is not facilitating the payment. They are not required to collect sales tax if they did not facilitate the payment as well as the transaction.

So, this falls back to the sales and use tax legislations that cover transactions that are not facilitated by a marketplace. Assuming that the purchase is taxable in either the seller's or the buyer's state, then there are two possibilities:

1. If the seller lives in a state that has sales/use tax, then the seller is expected to comply with their state's legislation and collect sales tax if required to do so. Enforcement of this is up to the seller's state.
   
   
2. If sales tax is not collected on the sale, and if the buyer lives in a state that has sales/use tax, then the buyer is expected to comply with their state's legislation and pay use tax to their state. Enforcement of this is up to the buyer's state. Compliance with use tax has historically been low, which why so many state now have marketplace facilitator sales tax legislation.

[mr_lincoln]

@atikovi   Technically, if you sell an item IN your state then YOUR state's sales tax would apply.  If the Buyer paid via PayPay then the tax is based on THEIR state not yours and the venue (eBay) collects and remits it, nothing you have to do other then deduct that tax amount off the gross amount in PayPal at the end of the year for income tax purposes.

If your Local Pickups do NOT require immediate payment AND an item sells, you can arrange pick and take the cash then simply mark the item as shipped in eBay.  PayPal would never handle any money, sales tax would never be levied on the purchase in PayPal and eBay charges their FVFs as soon as it ends with a bid or a purchase is pending payment.  In this scenario it would be an IN state sale and you would process the sales tax accordingly.

[luckythewinner]

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@atikovi wrote:

Oh btw, the buyer is out of state if that matters.

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It does not matter where the buyer lives.

If a buyer meets you in your state, then the sale took place in your state and the sales tax is owed to your state. 

[7606dennis]

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@luckythewinner wrote:

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@atikovi wrote:

Oh btw, the buyer is out of state if that matters.

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It does not matter where the buyer lives.

If a buyer meets you in your state, then the sale took place in your state and the sales tax is owed to your state. 

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Correct.

[kensgiftshop]

When I do my taxes, there is a section to fill out about out of State purchases that I bring back into Oklahoma.

If the buyers State is the same, they should be filling out that section.

[7606dennis]

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@kensgiftshop wrote:

When I do my taxes, there is a section to fill out about out of State purchases that I bring back into Oklahoma.

If the buyers State is the same, they should be filling out that section.

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If the purchase actually takes place at the seller's location at the time of buyer picking up the item, the seller's state should be entitled to the sales tax.  Of course, if the item was shipped to the buyer and the seller wasn't authorized to collect sales tax in that state and it wasn't a marketplace facilitator state, use tax would probably be owed by the buyer to their state.

Of course, that would preclude it actually being a local pickup transaction anyway.

[atikovi]

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@7606dennis wrote:

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@kensgiftshop wrote:

When I do my taxes, there is a section to fill out about out of State purchases that I bring back into Oklahoma.

If the buyers State is the same, they should be filling out that section.

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If the purchase actually takes place at the seller's location at the time of buyer picking up the item, the seller's state should be entitled to the sales tax.  Of course, if the item was shipped to the buyer and the seller wasn't authorized to collect sales tax in that state and it wasn't a marketplace facilitator state, use tax would probably be owed by the buyer to their state.

Of course, that would preclude it actually being a local pickup transaction anyway.

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The purchase takes place on Ebay, that's why I'm charged a fee. The payment is received in person on pickup. Regardless, I'm not worried enough about a few dollars sales tax to file anything. If that is a problem, every seller on Craigslist or Facebook Marketplace is in trouble.

[3strokepenalty]

Ther will be a IRS agent at every garage sale across the country soon

[alcoforever]

This, in effect, is a garage sale transaction.   Most states have sales tax exemptions for occasional garage sale sellers.   I wouldn't worry about sales tax for this transaction.