Sales Tax Question

[crazycraftfrog]

I recently switched to the business account on Ebay instead of individual.  However, I don't understand why it has the sales tax option to add sales tax for a certain state if Ebay already charges sales tax and remits it?  For USA sales, it is my understanding that is Ebay's responsibility now to take care of that.  Am I missing something?  

[caldreamer]

You are correct EBAY is collected and remitting "sales tax" for most states.   

[slippinjimmy · Accepted solution]

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@crazycraftfrog wrote:

I recently switched to the business account on Ebay instead of individual.  However, I don't understand why it has the sales tax option to add sales tax for a certain state if Ebay already charges sales tax and remits it?  For USA sales, it is my understanding that is Ebay's responsibility now to take care of that.  Am I missing something?  

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Have you actually tried to enter a sales tax rate for one of those States?

You may find you can't and if you can it will be ignored.

During the transition period from Seller collected to eBay collected the whole tax table is still there but mostly non-functional.

Florida just started on July 1st and I think there is still one or two left that don't yet have a Marketplace Facilitator law in effect (yet).

 When all States (that have sales tax) are operating under MF rules perhaps then the tax table will go away.

[jack-falstaff]

The states that law requires eBay to collect taxes are:

• Alabama
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• District of Columbia
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Nebraska
• Nevada
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Pennsylvania
• Puerto Rico
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

Almost every state is in there but there a couple that aren't... Montana for example.  For those, I imagine you would set the tax rate yourself.

https://pages.ebay.com/seller-center/service-and-payments/tax-information.html#m17-2-tb2

Best of luck!

[crazycraftfrog]

Ah oK so usually if you live in one of those states and you a running a business you will have to collect in your state from those buyers so maybe that is why that option is still there for those few states left

[crazycraftfrog]

I only have to collect for sales made in my state - Alabama so Ebay already takes care of that then I don't have to worry about it.  I like not having to handle it.  I only sell here and Etsy and both now do the collecting.  But the state let me keep my resalers license thing so I can still buy tax free in some instances.

[stainlessenginecovers]

Best to NOT use the 'resale license' or you will have to account to ALL items you purchase and then ALL items you collect (or ebay collects) sale tax on. You will then HAVE TO file 'sales tax returns' showing ALL gross sales and then ALL ebay collected sales. 

[slippinjimmy]

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@crazycraftfrog wrote:

I only have to collect for sales made in my state - Alabama so Ebay already takes care of that then I don't have to worry about it.  I like not having to handle it.  I only sell here and Etsy and both now do the collecting.  But the state let me keep my resalers license thing so I can still buy tax free in some instances.

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You would still have to collect if you sold something direct and not through a Marketplace like eBay. etsy, Amazon etc.

Sounds like you have a current reseller license so you will likely have to continue to file and perhaps pay other amounts that are collected that way. Every State is different and I know essentially nothing about how it's done in Alabama, you would have to check with your Revenue Department.

[dbfolks166mt]

     The reason Montana is not on the list is because they do not have sales tax. Neither does Alaska, Delaware, New Hampshire or Oregon. So neither the seller or eBay should be collecting sales tax for items sold to buyers in those states. 

     One of the potential problems with eBay or other ecommerce providers, collecting sales tax is many states have complex sales tax laws. I am not a huge seller so I have not taken a deep dive into this but in some states, Illinois for example, there is not only the state sales tax that eBay should be collecting but also any municipal sales tax that is added on top of that. So it the amount of sales tax may not only depend on what state the buyer lives in but where the buyer lives within the state. 

     Several states have different sales tax rates depending on the type of item purchased. For example the sales tax on clothing may only be 4% while for a vehicle it is 6%. Not sure eBay is separating the tax by the item category. Applying and collecting sales tax for ecommerce companies is not a straight forward simple process if it is being done correctly.