mam98031 • Volunteer Community Member • Buyer/Seller since 1999
So starting Q4 eBay started collecting and remitting sales tax on behalf of sellers.
Ebay started in January of 2019 for the states that legally required them to do so. As the year moved on more states passed MFLs [marketplace facilitator laws] and so Ebay was required to collect sales tax on more an more states as the year moved on. By the end of the year there was 34 states that had MFLs in place. As of right now there are 38.
The below link will give you a list of the states that have MFLs in place and the date Ebay was required to start collecting sale tax for those states.
https://www.ebay.com/help/selling/fees-credits-invoices/taxes-import-charges?id=4121#section4
This makes sense in regards to all the states where sellers were not previously paying tax, but I was unsure if eBay would also do it for the local state where sellers should have previously been paying tax already (since such was the law).
They can and they are legally required to do so in ALL states that have MFLs.
Looking at the PayPal records for Q4 it appears eBay is also automatically withholding local sales taxes for remittance purposes.
Ebay didn't start running the sales tax collected from buyer through PP until November 2019.
This is a change to previous years and I for one made the mistake of assuming they would have kept that as it was and already filed and paid sales taxes for Q4 to the local authority based on the old model where we are responsible for filing and paying.
Ebay started collecting sales tax for your state [Texas] on October 1st, 2019. All months previous to that you were responsible for collecting and remitting sale tax for your state. For the month of October, Ebay did NOT run sales tax through PP. That didn't start until November.
So just to make sure, can please everyone confirm they too found that eBay strips pretty much *all* responsibility for collecting and remitting sales taxes for transactions made through their website - local and federal?
Ebay did NOT "strip" anything. Ebay is REQUIRED BY LAW to collect sales tax in 38 states. If this is something you don't like, then you need to take that up with your state representatives, as the ONLY ones that can change it now is either the Supreme Court or the individual states that have implemented these laws.
Ebay is NOT at fault for any of this. Ebay fought long and hard to PREVENT these MFLs from ever becoming a reality. But in 2018 the Supreme Court overturned the Wayfair / Quill law and therefore states gained the ability to create and enforce laws that require out of state sellers / companies to collect and remit sales tax if they hit certain thresholds of sales within their state.
Second question is, if eBay is withholding (from seller) and remitting to taxing authorities the sales tax then what is the purpose of the "Sales Tax" field now in the product details?
Ebay is NOT withholding anything from sellers. Sellers are not the ones that pay sales tax, buyers do. And the field is still necessary as not all states have MFLs yet. There are 38 states with MFLs, I think soon to be 39. 5 states don't charge sales tax, so that is a total of 44 so far. So there are still a few states that sellers need to collect and remit sales tax for the states they are doing business in.
Do sales get double taxation (once imposed from that field and once from the new global eBay transaction sales tax wrapper)?
NOPE. But what is "the new global Ebay transaction sales tax wrapper"? I don't know what you mean. Are you talking about a seller from China selling something to someone in Texas that that Texas buyer gets charged sales tax? If that is what you are talking about, sales tax has never been defined by where the item ships from but by where it is delivered to. It has always been on the location of the buyer. A seller in Maine shipping to Texas never charged a buyer their sales tax rate in Maine, they would charge for Texas where the buyer had it delivered to. It has nothing to do with origination and everything to do with destination.
Sellers that are doing business from one of the states with an MFL is blocked from being able to charge sales tax separately to a buyer in Ebay. Once Ebay became legally responsible to collect these sales taxes due to an MFL, they block sellers in those states from being able to collect any further sales tax in that state.
Or does ebay ignore it?
Ebay isn't ignoring anything. They are doing what is required by law for them to do.
Or, if present, does eBay takes its value over their default values?
What is that? What is the "default value"? Are you suggesting that Ebay is charging buyers more than the sales tax rates of their state?
eBay is collecting sales tax from the customer for all states where MFLs were implemented.
In cases where a vendor's local state also implemented MFL and where vendor may or may not have been previously instructed eBay to collect sales tax on their behalf, eBay is now also collecting sales tax regardless of the vendor's settings.
It think you are talking about the sales tax table that sellers have access to in the site preferences. In that table they can set the tax rate to be charged on invoices to buyers and paid at check out. With that assumption, there is no risk of double taxation. When Ebay becomes legally responsible to collect and remit sales tax, they block ALL sellers from being able to collect sales tax for that state.
So while you may have it set up in your tax table prior to the MFL coming into play, it is frozen now and you will no longer be able to charge sales tax for Texas on Ebay as long as the MFL is in play for your state.
eBay through PayPal (or just PayPal, not sure which of the two is the aggregator, but I think eBay) is remitting all collected sales tax now.
Ebay is collecting the sales tax. They add it to the invoice. The buyer pays with PP for the invoiced amount. Once the payment lands in PP, the amount for sales tax is immediately removed and sent to Ebay for remittance to the appropriate state.
PayPal is marking all sales tax vendor withholding records with ""Tax collected by partner".
That was a temporary label. They changed it within a few days of starting to use it. They realized it was not being widely accepted by sellers. The use of the word "partner" was inappropriate at best. They no longer call it that.
Vendors may still be required to collect and remit sales tax in states that have NOT adopted MFL yet and the old "Sales Tax" fields are used for that purpose.
Yes, if you are in a state that requires sales tax to be collected and they do not have an MFL in place, the seller is still responsible for collecting and remitting the sales tax. And they are still able to do that on Ebay.
If it is then isn't the said "Sales Tax" field still redundant in cases like ours where our state has adopted MFL laws and eBay is collecting sales tax?
No. You are assuming that it appears differently for a buyer. It doesn't. It just appears as sales tax that the buyer has to pay. The buyer has no visibility to know that it is Ebay collecting and remitting or the seller collecting and remitting. The buyer just sees they need to pay sales tax.
Isn't it right to ask what is the purpose of the field then and whether eBay uses it when collecting the sales tax or ignores it in favor of the MFL law specified taxes?
Which field? The field for sales tax on the invoice? Answered above. The field in the Sales tax table? Also answered above.
Thanks again.
I am not picking on anyone, I am trying to make sense of the logic in eBay and PayPal's actions (records) so that I am sure I am importing things properly.
I personally don't think you are picking on anyone. I see you as just trying to wrap your head around this issue. And if you still need more clarity. Keep on asking as I will respond.
I think you are talking about the sales tax table that sellers have access to in the site preferences. In that table they can set the tax rate to be charged on invoices to buyers and paid at check out. With that assumption, there is no risk of double taxation. When Ebay becomes legally responsible to collect and remit sales tax, they block ALL sellers from being able to collect sales tax for that state.
So while you may have it set up in your tax table prior to the MFL coming into play, it is frozen now and you will no longer be able to charge sales tax for Texas on Ebay as long as the MFL is in play for your state.
No, I talk about the "Sales tax" field in every listing that is fully available and configurable and not frozen:
That was a temporary label. They changed it within a few days of starting to use it. They realized it was not being widely accepted by sellers. The use of the word "partner" was inappropriate at best. They no longer call it that.
I can't claim what they call it today, but my data for Q4/19 was downloaded Jan 03 20 and that's what they call it there.
It is typical for them to make a few change until they settle on something, so it's not end of the world if that happens again...but they usually do not make drastic changes...and if they do...it's not like we have a choice, we'll have to rework the importer again.
You are assuming that it appears differently for a buyer. It doesn't. It just appears as sales tax that the buyer has to pay. The buyer has no visibility to know that it is Ebay collecting and remitting or the seller collecting and remitting. The buyer just sees they need to pay sales tax.
Actually I am not assuming that at all because my focus is not with the buyer, but with the data I get from PayPal and how it gets there.
The "Sales tax" field shown at the above screen shot has historically been the reason for the contents of the "Sales Tax" field in the PayPal data - which is the actual sales tax added by eBay to the customer checkout.
Now that they compute MFL sales tax driven by sales tax laws I want to make sure I understand how is the "Sales tax" field populated and its presence in above appears to be redundant given we are in Texas and eBay knows that and they already cover Texas under MFL law.
While that may still appear in your listing set up, it will be over-ridden by Ebay if an MFL is in place. Ebay will not charge the tax and allow you to charge the tax as well.
@earlyant-77 wrote:
@mam98031 wrote:While that may still appear in your listing set up, it will be over-ridden by Ebay if an MFL is in place. Ebay will not charge the tax and allow you to charge the tax as well.
Well, that should put the kibosh on the chinese sellers who charge 25% sales tax in every state ................... at least in the states where the MF sales tax applies.
Yes and those from any other place in the world as well.
