Sales and Use Tax in Texas

[goodstuff4sale2u]

I sell from Texas to customers in Texas annd  other states in the lower 48.   Before starting sales on eBay, I registered with the State of Texas, reviewed eBay sales and use tax policies, and contacted the State of Texas— I was advised by the state comptrollers sales and use tax department to file a sales and use tax report, indicating “no taxes due”, because of the eBay process of adding any applicable sales tax to my sales and collecting the sales tax and remitting the collected sales tax directly to the applicable states.  I’m now receiving notices from the state of Texas that I need to report and pay sales tax on my eBay sales—and a pay a penalty for not remitting the tax.  I contacted eBay, but did not receive any assistance—I was advised to have the state of Texas “call eBay”. I responded to tye State of Texas with a copy of the sales I’d made, by quarter that CLEARLY shows that eBay collected and is responsible for paying the tax—and that I did not receive the funds, the eBay sales and use tax policy, and asking what I need to do differently to keep this from continuing to happen each quarter.  Now, I have received a notice for a hearing to revoke my sales and use tax permit.  I’m hoping some other eBay seller has had a better experience with the State of Texas Comptroller and can offer advice on how to get this resolved.  Thanks in advance for specific guidance.

[714ricki]

There must be some confusion somewhere. Please keep us posted on this matter! It would make sense that the State of Texas already has received the sales tax collected on your behalf by Ebay. Especially since the seller never receives one penny of the sales tax amount. You just have to report the sales tax amount in your paperwork. 

Good luck!

[stainlessenginecovers]

You have a resale sales tax license. You have to file a report every year with your state. If you had sales at other locations besides eBay (which the state would have no idea or way of knowing) you would collect/remit those taxes. If all you have is eBay, then you show the gross sales done, and then the taxes collected by eBay and then you would show 'NO TAXES OWED' as the state told you. 

But...you have to file every year (or close that resale license after the year is up if you are not going to use it to a.) purchase things b.) sell nowhere else but eBay. 

[goodstuff4sale2u]

I agree. I can’t be the only eBay seller in Texas, so I’m hoping one or more of the others can provide how they handle sales and use taxes  in Texas.  I’m calling next week to try and talk to someone at the Comptroller’s office.

[slippinjimmy]

Every State seems to handle this differently, on this page there is some information specific to Marketplace sellers and how they are supposed to file returns.

https://comptroller.texas.gov/taxes/sales/marketplace-providers-sellers.php

[rfmtm · Accepted solution]

You must be filling out the form incorrectly.  You also should file quarterly.  

For online sales, most all states still require you to file your quarterly return whether you owe tax or not and even though ebay or other venues have remitted the tax for you.

You need to run the ebay report for all gross sales for the quarter, not just for what was sold in your state.

https://www.ebay.com/sh/fin/report

Add this ebay total gross sales to any other gross sales you may have made other than on ebay for the quarter, and enter it under Gross Sales.

Also add this ebay total gross sales to any other marketplace gross sales or other deductions for the quarter, and enter it under Exempt Sales.

Note, you do not have to report the actual sales tax amount collected by marketplace venues like ebay, that only applies to tax you or your company collected directly from other sales in your state.

Then fill out the rest of the return as you normally would.

[creativecrisis]

I'm a seller from Texas. Most years I collect tax on both local and eBay sales. I've found the guidance from the state confusing, so I just pay the tax from eBay sales (usually $5 or $6) along with whatever else is due.  That's not good advice, but I'm lazy and have heard too many horror stories about dealing with the comptroller's office.  If my eBay sales from TX ever involved than minimal tax, I'd get on the phone to Austin and then I'd verify what they told me with an accountant I trust.

[r_lresale]

@goodstuff4sale2u 

Are you going every quarter and web filing a 0 return? Even if you had sales in which Ebay collected for you or even if you had no taxable sales at all you still have to file a return every quarter (or your assigned filing date). Otherwise you will get these letters and can loose your business over not filing those no tax due reports.

[goodstuff4sale2u]

I am filing a zero tax due return each quarter.  After the first filing, I received a notice that included an estimate of taxes due, which should have been zero, but had a figure the state estimated.  Because there was an estimated tax due, the notice included a penalty and interest.  I provided a response with the listing of all sales for the quarter, with the eBay policy, and the column that shows eBay collected all the taxes.  I asked specifically what I needed to do differed to avoid having the same issue each quarter and got a notice for a hearing.

[goodstuff4sale2u]

Here’s another story…

[goodstuff4sale2u]

I agree that I must be doing something incorrectly.  I’ve got a hearing soon to find out.

[rfmtm]

Glad you got a hearing, as the Sales Tax people are not to be ignored.  Unfortunately when the Market Place collections started there was a good bit of confusion and bad information.

[rubystormed]

Hi. I was just wondering if you had your hearing or have any updates. Next month will be my first time submitting for the quarter. I'm trying to learn as much as possible before then. Thanks in advance if you respond. 

[braschme0]

"Total Texas Sales" should represent the total sales you made on eBay (not counting taxes -- so "item sales" in the eBay report I was able to generate in my seller dashboard). But then "Taxable Sales" on line 2 of the form should equal 0 because eBay has certified that they remit sales tax to the state of Texas. (If you sell also via your own website, then this number will not be 0.) Hope this helps!

[duffy4444]

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@goodstuff4sale2u wrote:

...I’m now receiving notices from the state of Texas that I need to report and pay sales tax on my eBay sales—and a pay a penalty for not remitting the tax.  I contacted eBay, but did not receive any assistance—I was advised to have the state of Texas “call eBay”...

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@goodstuff4sale2u:

   Keep eBay out of this. Their Customer-No-Service is not staffed by eBay employees, but rather by contractors who will give you bad advice or say anything just to get you off the phone. The tipoff is that you were told to have the state of Texas "call eBay". The State of Texas will laugh at that. They want to hear from you, the permit holder, not eBay.

   I would guess that you either filled out your Texas Sales Tax return incorrectly, or perhaps missed some kind of deadline, or you have sales taxes owed for some reason other than online eBay sales to Texas residents.

   I live in Idaho and have an Idaho State Tax Commission Seller's Permit. When eBay and Amazon began facilitation the payment of sales taxes to the states that require it, I contacted the Idaho Tax Commission and was told to NOT include anything from my online sales at eBay and Amazon. I still have to file a report with a lot of zeros in it before the deadline each January, but that keeps my permit still valid and Idaho is happy with me. The only time I need to report and send in sales taxes is if I sell at venues that do not automatically pay the State of Idaho for me... Texas may be a little different, but I believe they probably handle your eBay online sales taxes in a similar manner.

   Good luck at your hearing, if you still need to go to it. The bottom line is that eBay already submitted Texas sales taxes for you, and you can show that in the hearing, if that's what they may need. Not to worry...

Cheers, Duffy