New Tax Guidelines

[gujersey3ozs]

I am trying to understand the current and upcoming tax implications to sellers.  Currently, when an item is sold and the buyer is located within a state that applies the sales tax, ebay charges, collects and then will pay the state directly.  Thus, the seller really needs to do nothing.  However, if I understand the new rules which will be applied in November, ebay will still apply the charges, BUT it will be the responsibility of the seller to pay each state for the sales tax collected?  Also, the wording I saw on the ebay/paypal notification was that the sales tax would be put into the "gross" amount, which if I understand correctly, will mean that ebay/paypal fees will be applied to this "gross" amount and also, at the end of the year, the tax statement from paypal will include the tax amount?

Any clarification would be helpful because the notification that was issued was not clear on the above items.

[the*dog*ate*my*tablecloth]

eBay will still be responsible for collecting and remitting taxes. Sellers will now be paying Paypal fees on the sales tax portion but not if they use managed payments.

the tax amount will be included in the buyers Paypal payment then clawed back by eBay after the payment settles in the sellers Paypal account

[thehonorabletrader]

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@gujersey3ozs wrote:

I am trying to understand the current and upcoming tax implications to sellers.  Currently, when an item is sold and the buyer is located within a state that applies the sales tax, ebay charges, collects and then will pay the state directly.  Thus, the seller really needs to do nothing.  However, if I understand the new rules which will be applied in November, ebay will still apply the charges, BUT it will be the responsibility of the seller to pay each state for the sales tax collected?  Also, the wording I saw on the ebay/paypal notification was that the sales tax would be put into the "gross" amount, which if I understand correctly, will mean that ebay/paypal fees will be applied to this "gross" amount and also, at the end of the year, the tax statement from paypal will include the tax amount?

Any clarification would be helpful because the notification that was issued was not clear on the above items.

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At the end of the day nothing really changes for your business. The impact it will have to you is that you will see an increase in about .03% to your sales costs because you'll be processing sales tax. But you won't have to file any tax forms or anything. Mean while buyers in those states will see an increase in their costs of buying online in general by 5% to 10% depending on what the sales tax is. 

This is more of a concern for buyers than sellers. Or at least it should be. And the buyers should be lobbying their local governments if they are unhappy. 

[gujersey3ozs]

Thanks for the information, however, correct me if I'm wrong..............but the tax statement generated from Paypal at the end of the year will include the tax amounts collected, which will then show inflated earnings.  I understand that it's a wash because the net taxed amounts will be reduced on the accounting end, but it will still show inflated income.

[mansons2005]

The "inflated income" also includes the money your friend sent for his share of the restaurant bill, the money Aunt Sally sent for your birthday, has always shown tax amounts collected by sellers who collected sales taxes, etc. PayPal is a money processor and they "report" the total of funds going into an account. It technically has nothing to do with "income". A business's accounting should show income and expenses, not a vendor. PayPal reports are really nothing more than a bank statement.