Sales/Use Tax

[egarchow89]

So just in the past couple of days, I as a buyer have been charged sales(use?) tax for purchases I've made on eBay. I also sell. Previously, I've been separately tracking sales I've made as a seller within my own state, and paying sales tax on those. Now that eBay is collecting this tax on me (and for me, apparently?), can I skip this separate tracking? If I don't it seems like the tax would be paid twice for in-state purchases (once when ebay collects the tax on the buyer, and then once when I mail in the check each year).

[fern*wood]

Ebay is only collecting for certain states so far.  Here is their most recent announcement:

https://community.ebay.com/t5/Announcements/UPDATE-Internet-Sales-Tax-now-applies-to-more-states-eBa...

[twnpopcards]

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@egarchow89 wrote:

So just in the past couple of days, I as a buyer have been charged sales(use?) tax for purchases I've made on eBay. I also sell. Previously, I've been separately tracking sales I've made as a seller within my own state, and paying sales tax on those. Now that eBay is collecting this tax on me (and for me, apparently?), can I skip this separate tracking? If I don't it seems like the tax would be paid twice for in-state purchases (once when ebay collects the tax on the buyer, and then once when I mail in the check each year).

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If Ebay is charging tax on the items you sell in your state of Residence then you do not need to collect it or report it as from you.  However if you sell items on other sites that you should be paying Sales Tax on and the site does not collect it, then you would need to charge it and remit what you collected to your State of Residence.  Also if you have physical locations in or surpass whatever minimums that another State has for being liable to charge tax then you should also still collect that tax and remit it to the Taxing Authority.

[mam98031]

I would caution you to check the requirements of the state you are in before you do that.  

For example.  I'm in the state of Washington.  Even though Ebay is collecting the taxes for WA state and remitting it to them instead of me doing it.  I am still required to report the sales on my tax report to the state and take a deduction for the sales that Ebay collected taxes for me and remitted the funds to the state.

I am assuming, but most states will probably require this too as it is a way for them to make sure sales and taxes are reported accurately.  Plus many sellers on Ebay don't just sell on Ebay, so there may be other platforms involved, some that may collect the taxes and some that may not.

So I would suggest to check the requirements for your state before you stop keeping detailed records on this.

[pburn]

You know, somewhat off topic, but can you imagine the different states' revenue/commerce departments receiving all these bazillions of documents (electronically, I imagine) from all the online sellers in the known world? I mean, think of the data they'll receive from eBay, Amazon, Alibaba, Bonanza, et al, with the names and transaction details from what would have to be thousands (or tens of thousands, maybe) of individual sellers who've made sales to residents of any given state. Add to that any free-standing online vendors (not marketplace facilitators) that have started collecting tax in 2019.

The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

Maybe I'm wrong, but I'm sure glad I don't work in my state's revenue/commerce department.

[mam98031]

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@pburn wrote:
You know, somewhat off topic, but can you imagine the different states' revenue/commerce departments receiving all these bazillions of documents (electronically, I imagine) from all the online sellers in the known world? I mean, think of the data they'll receive from eBay, Amazon, Alibaba, Bonanza, et al, with the names and transaction details from what would have to be thousands (or tens of thousands, maybe) of individual sellers who've made sales to residents of any given state. Add to that any free-standing online vendors (not marketplace facilitators) that have started collecting tax in 2019.

The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

Maybe I'm wrong, but I'm sure glad I don't work in my state's revenue/commerce department.

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I actually don't imagine any of them will have to report in detail.  That is what audits are for.  

I'm not sure why they would require facilitators to report in detail when that isn't a requirement of individual business owners.  We report in summary form on the appropriate forms supplied by our respective states.

Those other large sites that were not collecting sales tax before this from you may not have had a nexus in your state.  Which then would mean they weren't required to collect sales tax from you.  That is the big change about the recent supreme court ruling.  It is this ruling that has changed everything.  So it is likely that they now will charge you sales tax.

[soh.maryl]

It seems to me that states that charge sales tax already have much of the mechanism in place to receive state sales tax payments for online sales.  And if they don't, there is always the possibility of hiring more people.

I would also imagine that most states would be pretty happy with the extra income.  

[pburn]

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@mam98031 wrote:

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@pburn wrote:
You know, somewhat off topic, but can you imagine the different states' revenue/commerce departments receiving all these bazillions of documents (electronically, I imagine) from all the online sellers in the known world? I mean, think of the data they'll receive from eBay, Amazon, Alibaba, Bonanza, et al, with the names and transaction details from what would have to be thousands (or tens of thousands, maybe) of individual sellers who've made sales to residents of any given state. Add to that any free-standing online vendors (not marketplace facilitators) that have started collecting tax in 2019.

The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

Maybe I'm wrong, but I'm sure glad I don't work in my state's revenue/commerce department.

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I actually don't imagine any of them will have to report in detail.  That is what audits are for.  

I'm not sure why they would require facilitators to report in detail when that isn't a requirement of individual business owners.  We report in summary form on the appropriate forms supplied by our respective states.

Those other large sites that were not collecting sales tax before this from you may not have had a nexus in your state.  Which then would mean they weren't required to collect sales tax from you.

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Mam, perhaps I wasn't clear. (Imagine that! LOL). When I was referring to market facilitators having to report sales, I meant they will have to report that eBay seller A (by name and any other identifying information) sold $1,000 in (for example) Connecticut; seller B sold $13,208 in Connecticut; seller C sold $107,295 in Connecticut. Or do you think they'll just report that eBay collected $1,407,685 for the sales in the state of Connecticut? How would Connecticut ever know who sold in their state and how much they sold?

I'm sure the states will not have any sort of requirement that the buyers names be supplied by eBay. Is that what you meant?

In reference to your comment that: "Those other large sites that were not collecting sales tax before this from you may not have had a nexus in your state.  Which then would mean they weren't required to collect sales tax from you."

I think that's exactly what I said: "The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

[pburn]

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@soh.maryl wrote:

It seems to me that states that charge sales tax already have much of the mechanism in place to receive state sales tax payments for online sales.  And if they don't, there is always the possibility of hiring more people.

I would also imagine that most states would be pretty happy with the extra income.  

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Let's say there are 1,000 online vendors. Or 1,000,000. Whatever. And only the ones with a presence in my state have had to pay sales tax. I live in a rural ag state, so let's say 20% of them have had to report and remit sales tax. That's either 200 or 200,000. Now, the other 80% will have to report and remit sales tax. 

And the marketplace facilitators, in theory, should be reporting the sales in their state that you made, and I made, and mam made and twnpopcards made, and fern*wood made, etc. Wonder how many that is?

Some states have pretty small government agencies with limited resources. I worked for a state government agency. I know. This is huge. There's a hiring freeze on right now in my state's government because our economy has been decimated by spring flooding and now Chinese tariffs. It isn't like private industry. States can't just hire people whenever. There are a million hoops to jump through and it takes forever.

[myjunqueyourtreasure]

The really weird thing about all this, is that South Dakota (the state that opened the floodgates) hasn't seen fit to add a Market Facilitator clause.

[gracieallen01]

Personally, I really think you should call and see if you can make an appointment with, or walk-in to an office of, your state's 'tax authority' or a local tax consultant, or even login online to your state's tax board, so you can ask THEM specific questions and have them explain your tax liability and what you should be doing (they often have a number you can call for help). 

Not all of your assumptions seem to be accurate and an open forum is not necessarily the place to get definitive answers to specific questions that may only apply to you and/or your situation.

Get it from the horse's mouth, so to speak, before you get yourself into financial difficulties or tax trouble. 

[southern*sweet*tea]

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@pburn wrote:
You know, somewhat off topic, but can you imagine the different states' revenue/commerce departments receiving all these bazillions of documents (electronically, I imagine) from all the online sellers in the known world? I mean, think of the data they'll receive from eBay, Amazon, Alibaba, Bonanza, et al, with the names and transaction details from what would have to be thousands (or tens of thousands, maybe) of individual sellers who've made sales to residents of any given state. Add to that any free-standing online vendors (not marketplace facilitators) that have started collecting tax in 2019.

The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

Maybe I'm wrong, but I'm sure glad I don't work in my state's revenue/commerce department.

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I've thought about that, too. I imagine that's why MS has the high threshold that we do - no transaction minimum but a total of $250,000 in sales per year. I can't picture any small seller anywhere online having that many sales into Mississippi. Shoot, I've only had seven sales to my own home state in the past 16 years.  By having it set this high there won't be that much more extra work lol

[mam98031]

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@pburn wrote:

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@mam98031 wrote:

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@pburn wrote:
You know, somewhat off topic, but can you imagine the different states' revenue/commerce departments receiving all these bazillions of documents (electronically, I imagine) from all the online sellers in the known world? I mean, think of the data they'll receive from eBay, Amazon, Alibaba, Bonanza, et al, with the names and transaction details from what would have to be thousands (or tens of thousands, maybe) of individual sellers who've made sales to residents of any given state. Add to that any free-standing online vendors (not marketplace facilitators) that have started collecting tax in 2019.

The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

Maybe I'm wrong, but I'm sure glad I don't work in my state's revenue/commerce department.

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I actually don't imagine any of them will have to report in detail.  That is what audits are for.  

I'm not sure why they would require facilitators to report in detail when that isn't a requirement of individual business owners.  We report in summary form on the appropriate forms supplied by our respective states.

Those other large sites that were not collecting sales tax before this from you may not have had a nexus in your state.  Which then would mean they weren't required to collect sales tax from you.

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Mam, perhaps I wasn't clear. (Imagine that! LOL). When I was referring to market facilitators having to report sales, I meant they will have to report that eBay seller A (by name and any other identifying information) sold $1,000 in (for example) Connecticut; seller B sold $13,208 in Connecticut; seller C sold $107,295 in Connecticut. Or do you think they'll just report that eBay collected $1,407,685 for the sales in the state of Connecticut? How would Connecticut ever know who sold in their state and how much they sold?

I'm sure the states will not have any sort of requirement that the buyers names be supplied by eBay. Is that what you meant?

In reference to your comment that: "Those other large sites that were not collecting sales tax before this from you may not have had a nexus in your state.  Which then would mean they weren't required to collect sales tax from you."

I think that's exactly what I said: "The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

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No I understood you.  You did just fine.  But no that isn't how reporting to the state goes.  Ebay will not have to be reporting how much they collected for each individual seller unless this is a specific requirement inside of the Facilitator rule that I'm not aware of.  And I'd find that highly unlikely.  The Supreme court ruling states that the reporting process can not be unduly burdensome.  That much detail would be unusual and not something that other businesses have to do.

For example, when I report my sales to my state, I do not give them a break down of all my customers.  it is in a summary format only.

[mam98031]

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@pburn wrote:

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@soh.maryl wrote:

It seems to me that states that charge sales tax already have much of the mechanism in place to receive state sales tax payments for online sales.  And if they don't, there is always the possibility of hiring more people.

I would also imagine that most states would be pretty happy with the extra income.  

---

Let's say there are 1,000 online vendors. Or 1,000,000. Whatever. And only the ones with a presence in my state have had to pay sales tax. I live in a rural ag state, so let's say 20% of them have had to report and remit sales tax. That's either 200 or 200,000. Now, the other 80% will have to report and remit sales tax. 

And the marketplace facilitators, in theory, should be reporting the sales in their state that you made, and I made, and mam made and twnpopcards made, and fern*wood made, etc. Wonder how many that is?

Some states have pretty small government agencies with limited resources. I worked for a state government agency. I know. This is huge. There's a hiring freeze on right now in my state's government because our economy has been decimated by spring flooding and now Chinese tariffs. It isn't like private industry. States can't just hire people whenever. There are a million hoops to jump through and it takes forever.

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I'm not sure why you think they have to report all that detail.  They don't.  It is far simpler than that.  By a long shot.  

The various states will be fine with the staff they have to process these tax return forms that are only a couple pages long because it is all SUMMARY format, not details.  

If any given state feels they have the need, they will at some point audit the facilitator and that is when the detail records will be reviewed by the state.  That isn't likely to happen for a few years.  Then they will most likely start auditing the facilitators is 3 or 5 year chunks of time.

[mam98031]

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@southern*sweet*tea wrote:

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@pburn wrote:
You know, somewhat off topic, but can you imagine the different states' revenue/commerce departments receiving all these bazillions of documents (electronically, I imagine) from all the online sellers in the known world? I mean, think of the data they'll receive from eBay, Amazon, Alibaba, Bonanza, et al, with the names and transaction details from what would have to be thousands (or tens of thousands, maybe) of individual sellers who've made sales to residents of any given state. Add to that any free-standing online vendors (not marketplace facilitators) that have started collecting tax in 2019.

The only online vendors I buy from that have been collecting sales tax for awhile are the ones that have b & m stores in my state: Williams-Sonoma, Pottery Barn, Barnes & Noble, et al. Amazon started collecting sales tax maybe at the beginning of 2018 or so, but I also think of all the dozens of other sites I buy from that haven't been collecting tax up until now.

Maybe I'm wrong, but I'm sure glad I don't work in my state's revenue/commerce department.

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I've thought about that, too. I imagine that's why MS has the high threshold that we do - no transaction minimum but a total of $250,000 in sales per year. I can't picture any small seller anywhere online having that many sales into Mississippi. Shoot, I've only had seven sales to my own home state in the past 16 years.  By having it set this high there won't be that much more extra work lol

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The sales taxes that Ebay is required to collect in certain states is NOT based on those minimum thresholds.  They look at Ebay as a whole which in other words the facilitator.  The individual sellers bear no responsibility in collecting these taxes nor are they subject to any threshold amount of sales.  It is all about Ebay as a whole.  

Do ALL the sellers active on Ebay ship $250,000 into your state or more.  Highly likely.

That is why they did the facilitator laws.  It bypasses the small sellers and it gains the states more tax money because they put it on the Facilitators instead of individual sellers meeting their threshold requirements.