Sales Tax California How does it get paid????

[robertlmyers]

I am a hobbyist seller selling stuff from my house on Ebay.  I have never sold more than about $1,000 in any year.  Recently just sold an item for $375 that included $25 in shipping.  EBAY added to the $375 sales tax of $31.50 in sales tax.  EBAY charged me 12.9% on the $406.50 which really irked me.  How can they charge a commission on sales tax and shipping?

Anyway, how does that $31.50 get paid?  Who pays it?  Does EBAY really report to FTB hobbyist home sales????  This is not a business to me.

FYI, the item actually costs me over $2000 purchased when new that I paid sales tax on.

This does not seem right.  How does this work?

[monica-sells]

eBay is required to collect State Sales Tax....they handle all the remittance, paperwork etc......

Is it really worth the lousy 4 bucks they collected to do all the legwork on filing the "proper" sales tax forms?

I think so....I know I would not want to be responsible for collecting sales tax for 8,000 plus taxing authorities/districts in the country.....

all platforms charge for the processing of shipping fees

[eburtonlab]

Sales tax is paid by the buyer; eBay remits payment to the state the item is shipped to.

Sellers pay eBay a fee on the total amount the buyer pays, including the sales tax amount.

Income tax is a separate issue entirely.

[stainlessenginecovers]

The buyer purchased from eBay; not from you in your house.

eBay is required to collect and remit sales tax, just like any thrift store would.

eBay uses all moneys collected as their amount to charge their fee percentage. Just like any store has ever had done- they pay the 'fee' on the amount collected at the cash register.

[monroe67]

eBay will remit the $31.50 sales tax (paid by your buyer) to the State of California. 

The Form 1099-K, reporting the total amount paid to you by eBay, is sent to the Internal Revenue Service.  I do not know whether a copy, or a similar document for eBay's payments to Californians, is sent to California's state taxing authority, the Franchise Tax Board (FTB).   Perhaps somebody else here knows that info.  

I read all the posts on the thread you started yesterday.   Lots and lots of people tried to explain to you that eBay doesn't care whether you call yourself a hobbyist or whether you own and operate a local specialty shop, but also sell on eBay.  Nobody cares whether you call yourself a hobbyist. 

Just -- please -- understand that eBay has no special rules for you.   

[robertlmyers]

So if I buy something from EBAY from someone charged credit card or paypal accout in addition to what I pay the buyer EBAY will charge my account the sales tax.

So a buyer that paid me $375 for my unit including shipping will be charged the sales tax against his purchase me.

Do I have that right?

Thanks

[kosmosattik]

"How can they charge a commission on sales tax and shipping?"

Because they can.  They have financial targets.  If they did not charge those fees they'd make it up somewhere else.  It is evident they went this "hidden" route, rather than raising the final value fee or some other fee, figuring some sellers would not notice, an accurate assumption given how many posts there have been such as this one.

In fairness, there is a balancing act with respect to charging the fee on shipping.  Otherwise, someone offering free shipping but raising their list price to compensate would in effect pay the fee whereas someone charging for shipping would not.

[duffy4444 · Accepted solution]

   You're overthinking this... buyers get charged the sales tax rate for their state/county/city, and eBay handles the remittance for you, so you don't have to pay thousands of sales tax remittances quarterly or each year. The seller does NOT pay sales tax - only 12.9% of the sales tax is included in the total sale (just like you pay at a cash register at a store). On your particular $375 sale, that amounts to around $3-$4 for the service of eBay handling sales tax remittances for you to the California FTB... not a  bad deal.

   What you're under-thinking  is this whole "hobbyist seller" thing. With any total sales over $600 a year, you and the IRS are now going to get a 1099. Whether you are a hobby or a business, you're going to have to report your income at tax time. You'd better start keeping receipts and track generous expense deductions, and perhaps talking to a tax person for methods of valuation if you don't have receipts.

   By the way, you were supposed to have been reporting all past income anyway, "hobby" or not. The smart sellers here have been doing that for years.

Cheers, Duffy

[luckythewinner]

How can they charge a commission on sales tax and shipping?

I'm guessing that what you are really asking is "why" and not "how". They do it because they choose to.

Anyway, how does that $31.50 get paid? Who pays it?

eBay adds it to the buyer's total, the buyer pays it, and then eBay forwards it to the state in question.

Does EBAY really report to FTB hobbyist home sales

Managed Payments calculates the gross amount of payment processed for a taxpayer ID, and if it exceeds the threshold of $600 they will file a 1099-K with the IRS. This is what the law requires, so that is what Managed Payments does.

This is not a business to me.

Neither the law nor the IRS care about your opinion of your activity.

FYI, the item actually costs me over $2000 purchased when new

Then you should be able to deduct the original cost and avoid any tax liability.

that I paid sales tax on.

Sales tax is a tax on a financial transaction, not a tax on a physical item.

[robertlmyers]

Thanks, to all, never ever thought about this much.

Got it!

[luckythewinner]

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So if I buy something from EBAY from someone charged credit card or paypal accout in addition to what I pay the buyer EBAY will charge my account the sales tax.

eBay will calculate the sales tax based on the shipping address you provide, and add that to the total amount you are required to pay. from the buyer's perspective, eBay does nothing different than any other retailer does.

So a buyer that paid me $375 for my unit including shipping will be charged the sales tax against his purchase me.

If the buyer lives in a state with a 10% sales tax, eBay will charge your buyer $412.50. eBay will automatically deducts the $37.50 in sales tax from the payment and send it to the buyer's state. Your account will receive the remaining $375, less the fees that eBay will automatically deduct.

[maxine*j]

Haven't we already been through all this on your other thread:

https://community.ebay.com/t5/Selling/EBAY-fees-for-hobbyist-sellers-are-out-of-control/td-p/3275915...

You got good info and good advice there.

-

[monroe67]

I really, really encourage you to read and learn from the conversations here on eBay's Selling Community.  I learned probably 98% of what I know about eBay by reading both this Selling Community and the Buying Community.  

[precisionservice]

What eBay is doing, charging "sales tax" on shipping and on services is illegal. I believe eBay will fix it someday because they have a big liability exposure.

[eburtonlab]

What eBay is doing, charging "sales tax" on shipping and on services is illegal.

eBay is required to collect sales tax in accordance with the laws of the various states. That includes collecting sales tax on the shipping amount in many states.

https://www.taxjar.com/sales-tax/sales-tax-and-shipping