Internet sales tax

[sharp*]

On Jan 1st eBay started automatically charging sales tax on items sent to Washington a Minnesota. They are collecting the tax and turning it over to the states themselves. As a seller, you really don't know this is happening. As a buyer in either of these states, you now see that you are being charged. First, eBay seems to have jumped into the pool with their clothes on instead of a swimsuit. Most states laws have said taxes need to be paid after the first $100,000 or 200 transactions. I am pretty sure no one on eBay had done $100,000 or 200 transactions to either state on the first day of the year. Therefore I am paying taxes which I am not obligated to pay. Moreover and more importantly for me, I am a business, have a valid business license and am not required to pay tax on anything I purchase for resale. I can walk into any state store and buy without tax as a business. Yet eBay is now forcing me to pay tax on the 99% of items that I purchase on the platform for resale, which seems illegal to me. You can not opt out. I am now at a 10% disadvantage with my competition who may not purchase on eBay, or at the very least I become less competitive because I have to raise prices. EBAY!! Stop forcing me to pay an illegal tax. Also curious that after calling and speaking with two concierge members, they had no idea this was being done. One tried to tell me that eBay was NOT collecting taxes yet an Oct notice states they would. How well has this been thought out if their own people, who answer questions, have never been told about it?  

[thevintagesilvershop]

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@shipscript wrote:

@dtexley3

(As I read it, the California threshold is by district, not by state totals) But, if that didn't scare your pants off, read this page from tax-compliance business Avalara, with whom, I believe, eBay has a relationship:

https://www.avalara.com/us/en/blog/2018/12/not-all-states-want-marketplace-facilitators-to-collect-t...

"Most [of the 13 states] require marketplace facilitators like Amazon, eBay, and Wayfair to collect and remit sales tax on behalf of their non-collecting third-party sellers. Yet, not all states are interested in having marketplace facilitators play tax collector. Some want the facilitator to identify marketplace sellers (FBA [fulfillment by Amazon] sellers) so they can contact those sellers directly."

Notice all the deadlines were in 2018, so its a done deal.

"[California] has previously used data mining software to uncover the identity of Amazon sellers. It then sent letters to those businesses asking them to fill out a nexus questionnaire regarding their business activity in the state."

Data mining is the new hammer of taxing states in the wake of "Wayfair". So sellers beware and be prepared.

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States now don't have the technology or human resources to (prior to Wayfair) go after "use taxes" from their own citizens.  I can't imagine that they have the technology or human resources to go after the millions and millions of people selling on Ebay, Amazon, etc.  Can you imagine?  Can't even audit their own citizens and everyone thinks they can audit a gazillion other out of state sellers.  Largest cluster I've ever seen.

[Anonymous]

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@shipscript wrote:

@dlarryhancock

Of the examples I have seen, eBay includes the tax in the invoice the buyer sees, but not necessarily on all invoices the seller sees. Additionally, if a seller tries to modify an invoice, they are unable to modify the tax. Sometimes the seller record has not totaled correctly in the seller's display.

During checkout, eBay separately charges the buyer's bankcard or eBay account as two transactions: The "item" payment shows on the payment record as going to the seller. That "tax" paypment shows as paying to eBay.

You bring up a good point if payment is not processed through eBay. This issue will go away when eBay controls all payments with "Managed Payments", but in the meantime you've brought up a gray area.

If you are paid by check, then you are going to mark the item as paid. eBay is probably going to come after you for the tax through your seller account, particularly if the buyer pays you the total that includes tax because it is illegal to not remit that tax to the state. Let's see if eBay has a stand on that yet.  @Anonymous

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Hi @shipscript, this is definitely a great question and something I will pass along so we can have it addressed! I can confirm that we are working on reporting for sellers that will provide the details being requested regarding sales tax.

[7606dennis]

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@oldhound wrote:

The buyer does not see that they have to pay the tax until AFTER they have committed to buy. Perhaps a lawyer out there can check into that (I think people should have the right to know) I think that if Ebay can calculate the tax after I purchse, then they could at least put it in writing BEFORE people commit to buy. 

Also, if this a supreme court decision, why are peiople in only 2 states getting the shaft?

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I'm not a lawyer but I would assume that buyers in the states mentioned are expected to know their own state's laws.  I've always been under the impression that ignorance of the law is no excuse.

[7606dennis]

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@bughaus wrote:

A quick question that I haven't found an answer to regarding the sales tax collection - hopefully someone here will know.

We're in Oklahoma and already collect and remit sales tax on anything we ship within Oklahoma. Starting in July when eBay starts collecting Oklahoma sales tax - does it mean we'll no longer be collecting it ourselves or are we still doing it as before and eBay is only going to collect if a buyer from Oklahoma purchases something from another state?

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I would contact the state taxing authority for clarification.

[go-bad-chicken]

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@7606dennis wrote:

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@bughaus wrote:

A quick question that I haven't found an answer to regarding the sales tax collection - hopefully someone here will know.

We're in Oklahoma and already collect and remit sales tax on anything we ship within Oklahoma. Starting in July when eBay starts collecting Oklahoma sales tax - does it mean we'll no longer be collecting it ourselves or are we still doing it as before and eBay is only going to collect if a buyer from Oklahoma purchases something from another state?

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I would contact the state taxing authority for clarification.

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Bughaus did contact their state's taxing authority (Oklahoma) and reported that state's response/information in post #60, but i will paste their reponse here as well.

Post #60 Bughaus said:

"OK Tax Comm just got back to me on the reporting and they want us to just move the in-state taxable sales that eBay is collecting tax on over to the non-taxable column. I guess it will screw up their numbers in the big picture but oh well - not my problem."

[bughaus]

Hey trinton@ebay - is eBay going to enable buyers to charge more specific taxes? Specifically in California, their tax nexus specifies that an out-of-state seller who has more than 200 sales to one district in the state has to not only charge the state tax (like they would for hitting the overall nexus) but also the district and city tax now. Currently there is only a flat rate by state available as an option but nothing more detailed. Or - is eBay going to start collecting taxes for California?

[7606dennis]

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@go-bad-chicken wrote:

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@7606dennis wrote:

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@bughaus wrote:

A quick question that I haven't found an answer to regarding the sales tax collection - hopefully someone here will know.

We're in Oklahoma and already collect and remit sales tax on anything we ship within Oklahoma. Starting in July when eBay starts collecting Oklahoma sales tax - does it mean we'll no longer be collecting it ourselves or are we still doing it as before and eBay is only going to collect if a buyer from Oklahoma purchases something from another state?

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I would contact the state taxing authority for clarification.

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Bughaus did contact their state's taxing authority (Oklahoma) and reported that state's response/information in post #60, but i will paste their reponse here as well.

Post #60 Bughaus said:

"OK Tax Comm just got back to me on the reporting and they want us to just move the in-state taxable sales that eBay is collecting tax on over to the non-taxable column. I guess it will screw up their numbers in the big picture but oh well - not my problem."

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That sounds quite reasonable.  

[t2buckeye]

Hi Everyone.  There is a great deal of good information and I appreciate everyone who has shared some knowledge on this thread.

I run a business in the state of WA which buys about $100k per year on eBay for resale.  To pay the state's 9.5% sales tax on all of should be tax-free purchases not only creates a huge added expense for us, but also creates a huge administrative burden to now go back to the state and request a refund of the non-applicable sales taxes we have paid.  I am sure there are many WA and MN businesses in this same circumstance.

Has anyone heard of eBay considering letting licensed resellers register so they can be exempted from the new taxes?  Any retail business in WA will sell to me without charging me sales tax.  Amazon has a way to recognize me as a business and exempt me from taxes.  Why not eBay?

Thanks for any insight on this particular topic!

[topgeardvd]

Lame copy and paste. You didn't answer anything.

[the*dog*ate*my*tablecloth]

I recently got a letter from the DOR in PA giving me information about me filing sales taxes there. I sell using Shopify so I don't have a MF. Fortunately I didn't sell enough to qualify for the taxes.

Anyone who sells where there is an MF who will file for you should consider yourself lucky.

[escuintla]

I just know that I bought something worth $45.xx and I was charged $3.xx taxes for an item coming from NY.

I live in CA. 

[shipscript]

@escuintla

California's cross border law does not go into effect until April 1 2019, so if you were taxed, it was by a seller who already has a nexus in California (perhaps a drop-shipper warehouse) and who was already required to collect sales tax before the Supreme Court ruling.

Or the seller could be set up to voluntarily collect state taxes. Buyers who purchase taxable goods from across the border and who fail to pay California sales tax at time of purchase are required to report and pay the tax on their California state income tax return. The law has been that way for decades. Many Internet buyers have been ignoring that law, possibly through ignorance.

[slippinjimmy]

The law has been that way for decades, Many Internet buyers have been ignoring that law.

I read a study from about 5 years ago, conclusion was that compliance with Use Tax reporting laws by individuals was in the 5 - 10% range nationally. It's a voluntary disclosure system with no paper trail so compliance enforcement is virtually impossible.

And thus we have the current mess which is both unequally applied and excessively complicated with onerous reporting requirements.

[suncoastdiva]

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@escuintla wrote:

I just know that I bought something worth $45.xx and I was charged $3.xx taxes for an item coming from NY.

I live in CA. 

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It's possible your seller sells on eBay and Amazon, is located in NY but has inventory in an Amazon CA warehouse. This would cause the item to be taxable to you in CA. Many sellers who sell on both platforms have their inventory stored at Amazon (FBA) and they simply ship their eBay sales from their AMZ inventory.

[jeansandthings01]

I live in WA state, and when I click on Buy it now or  Add to Cart, it will show the breakdown of my total before I push to pay. It will show the amount of the item + shipping + sales tax, so yes you can see that before you buy. But you do have to LOOK.