As a seller of retail and wholesale items (since 1981) we currently collect sales tax on all California sales.
Now that eBay and other sites are starting to collect tax in California, I have a question on how we handle this. For any sale in California we have a few categories, retail, for resale, and non-taxable service.
Assuming eBay collects sales tax on a California sale, how do we report that on our sales tax return? If we say it's taxable, then WE, not eBay have to pay the tax to the state. It seems we would report these as "for resale" making eBay a reseller. But for that we need eBay to supply us a valid reseller card.
If eBay does collect the tax, would we then have to bill eBay for that tax so that we could pass it on to the state when we pay our quarterly tax return.? How do we log these sales?
There's also a side issue of how much tax is collected, we collect 100% of the tax due in the district the item is delivered to but the state (the last time I talked to them) only requires mail order sellers to collect a portion of it with the buyer responsible for the rest (this seems like a pretty dumb idea, what buyers know about this?). If eBay collects only the minimum portion, that makes our life all the more complicated as then we would have to somehow collect the portion that eBay didn't.
Of course there's also the issue that we purchase a lot of items for resale. We've filed a resale card with the other big online seller and can set tax on/off on a by-order basis, we need to do this with eBay.
