mam98031 • Volunteer Community Member • Buyer/Seller since 1999
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You should be registered in your state as a small business. And report your sales to them. It is unlikely that you owe your state any business taxes as you would be exempt because of your size, but you still should be reporting. You also need to make sure you keep good business records as you should be reporting your income to IRS too.
As to the sales tax. Below is an announcement that Ebay made a couple months ago. This may help to clarify things for you a bit. If you look at your detailed records in PP, you will see that the sales tax amount is being removed almost immediately from your account and transferred to Ebay for remittance to the appropriate state. You are not responsible to remit the sales tax at all.
Now for sales tax when you sell to someone in your state of Texas. Ebay didn't take that over until October 1, 2019. So for the first nine months of the year, you were responsible for collecting, reporting and remitting that sales tax to your state. It is only AFTER October 1st that you are no longer responsible for collecting the tax.
As you may be aware, 11 new states have adopted Internet Sales Tax policies as of October 1, bringing the total to 34 states that now require the collection of sales tax. As the impact of this tax law becomes more apparent, PayPal and eBay are making changes that will make Internet Sales Tax collection less complex for buyers and for you.
Starting in November 2019, the way taxable transactions are processed and how taxes are collected for remittance will change, as follows:
- In states where eBay is required to collect Internet Sales Tax from buyers, order totals sent for processing will reflect the gross order amount inclusive of tax.
- Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.
- A record of the sales tax portion of the order will be available on the Seller Hub Order details page and through our Download order report.
Please note the applicable tax will continue to be paid by the buyer and you do not need to take any action.
We understand that the holiday selling season is nearly upon us and we are working to make this transition as smooth as possible.
Learn more about Internet Sales Tax in the eBay Seller Center. If you have questions about how Internet Sales Tax may affect you, we recommend consulting with your tax advisor, or our partners Avalara and TaxJar.
Note: These changes do not apply to sellers in managed payments.
You should be registered in your state as a small business. And report your sales to them. It is unlikely that you owe your state any business taxes as you would be exempt because of your size, but you still should be reporting. You also need to make sure you keep good business records as you should be reporting your income to IRS too.
As to the sales tax. Below is an announcement that Ebay made a couple months ago. This may help to clarify things for you a bit. If you look at your detailed records in PP, you will see that the sales tax amount is being removed almost immediately from your account and transferred to Ebay for remittance to the appropriate state. You are not responsible to remit the sales tax at all.
Now for sales tax when you sell to someone in your state of Texas. Ebay didn't take that over until October 1, 2019. So for the first nine months of the year, you were responsible for collecting, reporting and remitting that sales tax to your state. It is only AFTER October 1st that you are no longer responsible for collecting the tax.
As you may be aware, 11 new states have adopted Internet Sales Tax policies as of October 1, bringing the total to 34 states that now require the collection of sales tax. As the impact of this tax law becomes more apparent, PayPal and eBay are making changes that will make Internet Sales Tax collection less complex for buyers and for you.
Starting in November 2019, the way taxable transactions are processed and how taxes are collected for remittance will change, as follows:
- In states where eBay is required to collect Internet Sales Tax from buyers, order totals sent for processing will reflect the gross order amount inclusive of tax.
- Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.
- A record of the sales tax portion of the order will be available on the Seller Hub Order details page and through our Download order report.
Please note the applicable tax will continue to be paid by the buyer and you do not need to take any action.
We understand that the holiday selling season is nearly upon us and we are working to make this transition as smooth as possible.
Learn more about Internet Sales Tax in the eBay Seller Center. If you have questions about how Internet Sales Tax may affect you, we recommend consulting with your tax advisor, or our partners Avalara and TaxJar.
Note: These changes do not apply to sellers in managed payments.
@texatrade wrote:
Thank you! Much appreciated! This explains most of what I needed to know. I sold an item a week ago to someone in Florida and no tax was collected and then, bang, to Utah it was.
Florida doesn't have an MFL [marketplace facilitator law], well at least not yet. That is why the buyer wasn't charged sales tax. Utah has had one since October 1, 2019.
Below is a link that will give you an explanation for this as well as a list of the affected states. For the list just scroll down a bit, you will see it.
https://www.ebay.com/help/selling/fees-credits-invoices/taxes-import-charges?id=4121
@texatrade wrote:
Thank you for the detailed response! And so fast! Extremely helpful! I had read the ebay tax info but I was still quite confused. All good here now.
I'm glad I could be of assistant.
Happy Holidays and I hope your new year is the best ever !!!!
@perfumenmore wrote:What if you only sell occasionally and you don't want to be a registered as a small business? I'm lucky if I sell 5K a year. Most years just 2-3K. Mostly selling to sell things I already own. Am I still required to register as a small business?
You just sign up as sole proprietorship. It is most likely free. At least it was here in my state. You fill out the reports, but I've never paid any business taxes I always am below their thresholds. But you are responsible for sales tax in your state on any sales make to someone that is also in your state. Now Ebay recently took over your responsibility for this if you sale was on Ebay. But if you have sales outside of Ebay, you may still be responsible for collecting and remitting sales tax.
As for IRS, that should absolutely be claimed as income.
