Sales Tax on Free Shipping Supplies w/ Coupon

[elizabethowen]

I noticed today that eBay now collects sales tax on the "free" shipping supplies which are offered to store owners.

My total was just under $50 which would have been covered by my entire coupon but instead I paid a balance for the taxes and have a small amount left on my coupon.

Seems like in the past when I've used coupons for free items elsewhere the whole transaction was free but maybe it was not done correctly...

[luckythewinner]

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@elizabethowen wrote:

I noticed today that eBay now collects sales tax on the "free" shipping supplies which are offered to store owners.

My total was just under $50 which would have been covered by my entire coupon but instead I paid a balance for the taxes and have a small amount left on my coupon.

Seems like in the past when I've used coupons for free items elsewhere the whole transaction was free but maybe it was not done correctly...

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Different states have different tax laws. In some states, a "Buy One Get One Free" on a $50 item results in sales tax being applied to both items at $50, but a 50% off sale of the same two items results in sales tax being applied to both items at $25.

In some states, handling is taxable and shipping is not taxable - but a charge for "Shipping and handling" listed as one line item makes the shipping portion becomes taxable.

What state are you in?

[pburn]

B & M stores in my state total up the transaction, add the tax, and then apply the coupon. Sounds like that may be the process here?

I think it's a little greedy for the state sales tax laws to require tax to be applied that way, but there it is. It'd be better if the seller just said, "This item is $40 today instead of $50," rather than issue a % off coupon, but it's better than nothing.

[impalajohnny]

Charging tax before applying coupons or discounts is a very old trick to put a little fake tax money in your pocket. Perhaps other states have a law that says you get taxed on money you never spent but it's more likely that fraud is widespread and people are used to getting victimized.

[elizabethowen]

Indiana

[impalajohnny]

Indiana treats a coupon like cash unless it was issued by the retailer you are buying from. So if ebay issued the coupon and you are getting your supplies from ebay then it's not taxable.

[lintbrush*]

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@impalajohnny wrote:

Indiana treats a coupon like cash unless it was issued by the retailer you are buying from. So if ebay issued the coupon and you are getting your supplies from ebay then it's not taxable.

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The shipping supplies are from Bascom which is not eBay.  They are an eBay partner.

[divwido]

Greedy?  It's not their money, it is forwarded to their state taxing authority.

Rather than complaining, try to understand that some people have restrictions that are demanded of them.  They don't do it for fun or profit.

[richard1rst]

It depends on how the coupon is issued. If it is for “supplies” then, since tax is not included in the coupon, you must pay the tax. If it is for “your entire purchase” then you might have an argument. The fact that someone else (eBay’s coupon) is paying for the items does not negate the fact that a sale was made and the taxes are due.

The tax, and who pays for it, are 2 entirely separate issues.