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?  

[the*dog*ate*my*tablecloth]

They are collecting Marketplace Facilitator taxes, they are not collecting on behalf of the seller. The 100k amount therefore applies to their total, not yours.

Someone on another board said they were going to bring up the sales tax exemption for resellers in some discussion somewhere. Otherwise you will have to claim it back on your taxes.

[the*dog*ate*my*tablecloth]

Oh and all the new sales tax laws I've seen calculate eligibility on the sales for the previous calendar year (eg. over $100K sales in 1918). Not for sales so far this year. 

Otherwise we would get partway through the year before people realized they were supposed to be capturing and remitting from January on.

[the*dog*ate*my*tablecloth]

Recent Ebay announcement explaining the tax

https://community.ebay.com/t5/Announcements/UPDATE-Ongoing-Changes-in-How-Internet-Sales-Tax-May-Imp...

[bigdeals.etc]

Let's clarify a few things on your post. I'm in Calif, are you saying that if someone in Washington or Minnesota buys from me and I ship to those states, that ebay will collect sales tax from me? I've never heard of that... and it does sound weird.

From what I know, sales tax should only be collected when you make a sale in the same state as your business is operating from or have a license with. (I.E. for me it's Calif and nowhere else).

"Most states laws have said taxes need to be paid after the first $100,000 or 200 transactions." I believe states say you need to pay sales tax for ANY sale within that state... no matter how small. That's the cost of operating your business from that state. Technically every seller should be charging sales tax from their own state sales and pushing it to their state tax dept. Many people just don't. If you don't collect sales tax from your buyer and the state audits you, you will have to pay the sales tax out of your own pocket. So might as well collect it. And yes, you may be not as competitive as the sellers who don't collect the tax and don't pay it to the state... but they doing it illegally.

Are you perhaps referring to the Paypal 1099 Form? If so, that policy is regarding income tax, not sales tax.

As for you having to pay sales tax on ebay for wholesale items, unfortunately I don't think there is a system for you to attach your reseller permit to not have to pay the tax from sellers in your state.

[duncanvr]

At least in Australia we are charged 10% tax now on everything we buy from international sellers on eBay its the law in this country. I also have to pay 10% on every sale to and there is no way to avoid this. I sell used goods from the 18th century or earlier and the tax still applies. eBay collects the tax fees and onsends to the tax office. As a seller you have to find ways to incorprate rising costs including taxes into your eBay business. One way is to sell on eBay stuff with higher prices. And batch up items where you can and charge more. If you use an average cost of all items in your store it can be easier. Because your average cost per item is reduced.

[buyselljack2016]

Buyer in MN, WA pays the sales tax, not the seller in Cali..

[fern*wood]

Check what is says under your shipping and payments tab for tax collection. 

If I understand it correctly, ebay doesn't collect the tax from you but for you.

[bigdeals.etc]

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@fern*wood wrote:

Check what is says under your shipping and payments tab for tax collection. 

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Oooh that. Yea I thought it was from Canada buyers or other international when they have to pay extra duty taxes or something.

Well if it's all buyers in MN and WA pays additional sales tax, then it doesn't matter which seller they buy from. You are not at a disadvantage compared to your competition in regards to this. The playing field is still level... just higher across the board for those buyers.

[luckythewinner]

I'm in Calif, are you saying that if someone in Washington or Minnesota buys from me and I ship to those states, that ebay will collect sales tax from me?

No, they will collect it from the buyer.

From what I know, sales tax should only be collected when you make a sale in the same state as your business is operating from or have a license with. (I.E. for me it's Calif and nowhere else).

"What you know" used to be the case, until the supreme court rules otherwise in June 21, 2018 (South Dakota vs. Wayfair).

Are you perhaps referring to the Paypal 1099 Form?

No, they are referring to Marketplace Facilitator taxes. Those taxes basically treat an eBay sale by you to Washington as a sale by eBay to Washington. Thus, the sales tax thresholds for sales to Washington residents apply to eBay as the facilitator, rather than to the eBay seller.

[dirk12955]

I made several sales recently to Australia and ebay collected the "Sales tax" from my buyer.

I made a sale yesterday to Washington state and ebay collected the "Sales tax" from my buyer.

In the sales record, at the bottom it clearly states,

This total includes tax that ebay is required to collect from your buyer, ETC ETC

In this case, the buyer (In Australia) paid $6.59 and I received $5.99 The tax was collected by ebay and I assume, they will forward the correct amount to the Aussies at some point.

Same deal with Washington state.

I didn't have to do nothin.

[tsme35]

I had a buyer from WA yesterday and they had to pay sales tax, I got a small notice under the sale on print shipping page. I don't know what they paid because it doesn't show it.

 Question I have is will the buyer in WA and MN see that sales tax will be collected on the listing page before they click buy it now?  I looked at my listings and you have to click payment details(small print next to shipping cost) and down the page in small print says "Sales tax may apply when shipping to: Minnesota , Washington"  I had to look to find that, I doubt the buyers will. I saw on another thread a buyer was mad because he didn't see the sale tax added until they bought and click to pay, asking why he should pay taxes because he doesnt' live in that state.

 Just wondering if I'm gonna get hit with a negative or have buyers cancel a sale because they didn't see sales tax until they go to pay.

 OH also:    "Small business exemption - Minnesota has enacted a small business exemption for out of state unregistered sellers whose taxable retail sales into Minnesota are less than $10,000 in the previous 12-month period. These sellers are not subject to the Minnesota marketplace tax laws, and eBay will not be collecting sales tax on these transactions."

 So does that mean their not gonna collect taxes in MN now?  

[shipscript]

@bigdeals.etc

California has also issued new rules as a result of the Supreme Court decision, and this one also affects IN-STATE sales.  As a seller within California, you were previously required to collect the underlying 7.25% state tax, not the added tax within any district of delivery, if your online buyer did not reside in the same district as your business.  

Now, California is requiring IN-state sellers to collect that extra district tax when sales exceed some thresholds into that specific district. So, instead of collecting 7.25%, you may be required to collect 9% or 10% on some sales. You should have received a notice from the State last month. This goes into effect in April, and eBay may be getting ready to handle it.

https://www.cdtfa.ca.gov/news/18-59.htm

"...This requirement will apply equally to in-state and out-of-state retailers....

Beginning April 1, 2019, any retailer whose sales into a district exceed $100,000 or who make sales into a district in 200 or more transactions in the preceding or current calendar year is considered to be engaged in business in that district and is required to collect that district 's use tax on sales made for delivery in that district."

[bigdeals.etc]

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@shipscript wrote:

@bigdeals.etc

California has also issued new rules as a result of the Supreme Court decision, and this one also affects IN-STATE sales.  As a seller within California, you were previously required to collect the underlying 7.25% state tax, not the added tax within any district of delivery, if your online buyer did not reside in the same district as your business.  

Now, California is requiring IN-state sellers to collect that extra district tax when sales exceed some thresholds into that specific district. So, instead of collecting 7.25%, you may be required to collect 9% or 10% on some sales. You should have received a notice from the State last month. This goes into effect in April, and eBay may be getting ready to handle it.

https://www.cdtfa.ca.gov/news/18-59.htm

"...This requirement will apply equally to in-state and out-of-state retailers....

Beginning April 1, 2019, any retailer whose sales into a district exceed $100,000 or who make sales into a district in 200 or more transactions in the preceding or current calendar year is considered to be engaged in business in that district and is required to collect that district 's use tax on sales made for delivery in that district."

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Yup... totally correct. I got the notice and my CPA also reminded me of this. She says it's totally stupid and is going to create more problems for her clients because there's so many districts and different rules. One thing though... tax software companies like taxjar are basically cracking open champagne and laughing their way to the bank because of this. Maybe they bribed the state to do this.

[the*dog*ate*my*tablecloth]

The $100K exemption or 200 sales applies to out of State sellers only.

Within the State you have to collect sales tax the way you always did. Unless an instate seller sells to an instate buyer in a state that Ebay is collecting for. Then Ebay will collect the tax instead.