State Sales Tax and where it's leading ...

[mr_lincoln]

The state sales tax issue is only the beginning of taxes to come.  Why? Because there's still money on the table.  Just be glad our President is going after taxes from foreign shippers or it could be worse from a competitive standpoint.  While it took states a while to get their sales tax collection laws in place it may not take as long for them to get their income tax laws in place.

The immediate windfall for each participating state for Sales Tax is suddenly realizing sales tax on ALL internet transactions, meaning all those Sellers who dodged reporting internet sales or didn't have a Tax ID for wholesale purchasing and reporting will now have sales tax levied on their transactions.  Now, as long as they don't get a PayPal or future eBay Managed Payments 1099K the government will be hard pressed to collect tax on their income from online sales ... THIS is where the future tax push is heading, and don't think anyone in state government hasn't thought this far ahead.

At some point the venues will be tasked by the state and or federal government to generate 1099Ks for ALL members of the venue and there will be a minimum dollar threshold and my guess is it will be well below the current $ 20,000 on PayPal.  And why do I think this?  Its because the states will do the math after a couple venue sales tax reporting cycles and compare that with their registered Tax ID citizens and see what I am guessing to be a rather large difference.  All they have to do is some simple math to see that they are getting far and away more sales tax on what their Tax ID holders are reporting in actual sales ... this will gave them a general idea of the dollar amount many people are NOT reporting anything for either Sales Tax or Income tax purposes.  In our state it means another 3.07% on the table for Income tax not to mention the Federal Government's cut on that increased income tax.

[pburn]

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@mr_lincoln wrote:

@lacemaker3   So are you saying that if I am a Buyer and have a shipping address in one of the 5 states that has NO sales tax that I will NEVER have to pay State Sales tax on an internet purchase? 

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BINGO!

That's exactly what @lacemaker3 is saying--unless and until, of course, one or all of those five states promulgate sales/use tax laws. Until then, if your shipping address is in one of those five states, you will not be charged sales tax.

It's the same theory for people who live in Canada, but near enough to the U.S. border to have their eBay purchases shipped to MN or one of the other border states, since shipping from the U.S. to the U.S. is less expensive than shipping from the U.S. to Canada. Now, of course, if their packages are being sent to a border state that collects sales/use tax, there probably isn't much of an advantage . . .

[rktoyandhobby]

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@mr_lincoln wrote:

In our state it means another 3.07% on the table for Income tax not to mention the Federal Government's cut on that increased income tax.

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Pennsylvania's dirty little secret is that we're being robbed on IT "upgrades," sold via no-bid contracts to foreign owned and operated body shops, that never work right and always end up costing more than what they replaced.  Nobody wants to take responsibility for shutting the graduates of state colleges out of state technology work, so they're doubling and tripling down on squeezing us for every penny even though it'll never be enough.

[mr_lincoln]

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@gracieallen01 wrote:

With all due respect, you may have an incorrect perception, though I may be mistaken.

Yes, ebay is collecting a tax, however, it isn't a sales tax - even though it is a tax created from a sale.  ebay  is collecting a USE tax from the buyer that purchases the item, no matter where they live - according to the amounts and criteria of the buyer's home state.  This is to close the loophole for the buyer that avoids paying tax locally by purchasing online and doesn't report it on their state's income tax forms as a "USE TAX".

From cdfta.ca.gov - "Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state."

This does not preclude the seller being responsible for collecting sales tax for the state in which they live and have their business.

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Thanks and I understand Use tax, a number of years ago it was voluntary to report and I did once.  In the case of the collected Sales tax and in conversation with my States Tax department last week I was informed that I will no longer have to record the IN state sales tax shipments since the internet venue was collecting and remitting it.  I further understood that the venue would also be collecting and remitting sales tax on my out of state sales shipments (which is in line with the last two paragraphs of the above reply only it would apply to my state not CA) and the tax rate would be based on my state not the addressee's state.  In other words, the tax "rate" is determined by the state where the item originates not where it will ship to.  If the State Rep got that wrong then you are right, I am not clear on that point. 

Now, based on the explanation posted above (yours) ... there are 5 states that do not have a state sales tax ... if I purchase form a Seller in one of those states I am not charged sales tax because they don't have any right? ... but am I suddenly charged a "Use" tax based on MY state's sales tax rate?  I just don't think that's how it works based on my conversations with my state rep.

[csbbct]

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@mr_lincoln wrote:

@lacemaker3   So are you saying that if I am a Buyer and have a shipping address in one of the 5 states that has NO sales tax that I will NEVER have to pay State Sales tax on an internet purchase? 

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I think gracieallen01 explains it best in post #28 by saying, although it's called a Sales Tax when collected, it's really closing a loophole on Use Tax.  For states with sales taxes, each year on their state income tax return there would be a place for Use Tax where residents of that state were supposed to report items purchased outside their state where they didn't pay sales tax on it.  This includes internet purchases or purchases where they paid a lower sales tax to a neighboring state where in that case they needed to pay the difference in that lower tax and their own state's tax.  I'd be surprised if states had even 1% of their population pay Use Tax and it was almost impossible for states to audit it.  So, now with this change to internet sales, states can receive that Use Tax by having eBay collect it for them up-front.

So for states that do not have sales tax (so would also not have a Use Tax), buyers will have no sales tax to pay on internet sales.

[luckythewinner]

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@mr_lincoln wrote:

The state sales tax issue is only the beginning of taxes to come. 

{snip}
While it took states a while to get their sales tax collection laws in place it may not take as long for them to get their income tax laws in place.

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Income taxes are not "taxes to come". Income taxes are already here, and income tax laws are already "in place".

IMHO what is really "to come" is income tax compliance.

And I'm all for that, since I have been reporting my eBay income ever since I started selling here almost two decades ago.

[southern*sweet*tea]

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@mr_lincoln wrote:

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... there are 5 states that do not have a state sales tax ... if I purchase form a Seller in one of those states I am not charged sales tax because they don't have any right? ... but am I suddenly charged a "Use" tax based on MY state's sales tax rate?  I just don't think that's how it works based on my conversations with my state rep.

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If you purchase from a state that does not have sales tax, but your state does, you still pay your sales tax amount if the seller is selling on a market facilitator site, or if they otherwise meet their state's criteria to collect online sales tax.

If you live in a state that has sales tax, you are supposed to have been reporting all out of state purchases ALL ALONG for the calculation of sales/use tax. Now, you don't have to.

[pjcdn2005]

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@mr_lincoln wrote:

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@gracieallen01 wrote:

With all due respect, you may have an incorrect perception, though I may be mistaken.

Yes, ebay is collecting a tax, however, it isn't a sales tax - even though it is a tax created from a sale.  ebay  is collecting a USE tax from the buyer that purchases the item, no matter where they live - according to the amounts and criteria of the buyer's home state.  This is to close the loophole for the buyer that avoids paying tax locally by purchasing online and doesn't report it on their state's income tax forms as a "USE TAX".

From cdfta.ca.gov - "Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state."

This does not preclude the seller being responsible for collecting sales tax for the state in which they live and have their business.

---

Thanks and I understand Use tax, a number of years ago it was voluntary to report and I did once.  In the case of the collected Sales tax and in conversation with my States Tax department last week I was informed that I will no longer have to record the IN state sales tax shipments since the internet venue was collecting and remitting it.  I further understood that the venue would also be collecting and remitting sales tax on my out of state sales shipments (which is in line with the last two paragraphs of the above reply only it would apply to my state not CA) and the tax rate would be based on my state not the addressee's state.  In other words, the tax "rate" is determined by the state where the item originates not where it will ship to.  If the State Rep got that wrong then you are right, I am not clear on that point. 

Now, based on the explanation posted above (yours) ... there are 5 states that do not have a state sales tax ... if I purchase form a Seller in one of those states I am not charged sales tax because they don't have any right? ... but am I suddenly charged a "Use" tax based on MY state's sales tax rate?  I just don't think that's how it works based on my conversations with my state rep.

Your State Rep did get it wrong.  If your state has a sales tax, any ebay purchase that you make will be charged tax, regardless if the seller is related in a non sales tax or another country.

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[csbbct]

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@mr_lincoln wrote:

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Now, based on the explanation posted above (yours) ... there are 5 states that do not have a state sales tax ... if I purchase form a Seller in one of those states I am not charged sales tax because they don't have any right? ... but am I suddenly charged a "Use" tax based on MY state's sales tax rate?  I just don't think that's how it works based on my conversations with my state rep.

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eBay will call it Sales Tax, but it technically is a Use Tax they're collecting and will replace the need for what is shown on the PA Dept of Revenue website:

Out-of-state businesses and Internet vendors often falsely advertise that they sell taxable items “tax free”. However, Pennsylvania law requires the payment of use tax by any person who purchases taxable goods or services delivered into or used in Pennsylvania if sales tax is not collected by the vendor. Use tax is the counterpart of the state and local sales taxes.

When Pennsylvania sales tax is not charged by the seller on a taxable item or service delivered into or used in Pennsylvania, the consumer is required by law to report and remit use tax to the Department of Revenue. The use tax rate is the same as the sales tax rate: 6 percent state tax, plus an additional 1 percent local tax for items purchased in delivered to or used in Allegheny County and 2 percent local tax for Philadelphia.

[lacemaker3]

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@gracieallen01 wrote:

With all due respect, you may have an incorrect perception, though I may be mistaken.

Yes, ebay is collecting a tax, however, it isn't a sales tax - even though it is a tax created from a sale.  ebay  is collecting a USE tax from the buyer that purchases the item, no matter where they live - according to the amounts and criteria of the buyer's home state.  This is to close the loophole for the buyer that avoids paying tax locally by purchasing online and doesn't report it on their state's income tax forms as a "USE TAX".

From cdfta.ca.gov - "Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state."

This does not preclude the seller being responsible for collecting sales tax for the state in which they live and have their business.

---

I don't want to quibble about the terminology, but technically I don't think this interpretation is correct. As I understand it:

A Sales Tax is charged on the purchase at the time of sale. 

• This would include eBay purchases where eBay collected the sales tax at the time of sale. 
• This is why eBay lists it as "Sales Tax" on the checkout page and on buyer invoices.

A Use Tax is owed on any taxable purchase where sales tax was not collected at the time of sale.

• There are other circumstances than out-of-state sellers, that make Use Tax due. In many states, residents are expected to submit Use Tax anytime they make a taxable purchase without sales tax for any reason (garage sale, craigslist, online purchase, purchase from another state), or even if they pay less sales tax on the purchase than their state would charge in which case they owe Use Tax for the difference.
• I believe they call it a "Use Tax" because it applies on purchases that will be used (or stored) in the state, and for which Sales Tax was not collected at the time of sale.

So, the important part of your quote above would be: use tax applies when you make a similar purchase without tax ...

Basically, with the Marketplace Facilitator laws, the states have greatly increased the number of sales where sales tax is being collected, with a corresponding decrease in the number of sales where use tax would have been owed.

[pjcdn2005]

slightly off topic...What I find interesting is the many posts that I've seen over the years as to how buyers in other countries shouldn't complain about having to pay duty and tax on their ebay purchases when it's likely that many of those same posters never paid the user tax in their own state.

[mr_lincoln]

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@luckythewinner wrote:

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@mr_lincoln wrote:

The state sales tax issue is only the beginning of taxes to come. 

{snip}
While it took states a while to get their sales tax collection laws in place it may not take as long for them to get their income tax laws in place.

---

Income taxes are not "taxes to come". Income taxes are already here, and income tax laws are already "in place".

IMHO what is really "to come" is income tax compliance.

And I'm all for that, since I have been reporting my eBay income ever since I started selling here almost two decades ago.

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Me too ... along with income from other venues ...

[southern*sweet*tea]

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@pjcdn2005 wrote:

slightly off topic...What I find interesting is the many posts that I've seen over the years as to how buyers in other countries shouldn't complain about having to pay duty and tax on their ebay purchases when it's likely that many of those same posters never paid the user tax in their own state.

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Yep.

Everyone wants the benefits without having to pay the price for those benefits.  The money for the roads, the schools, the fire departments, the police departments, the county hospitals, etc. has to come from somewhere. 

There's no such thing as a free lunch...someone (or everyone) has to pay for it.

[csbbct]

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@lacemaker3 wrote:

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@gracieallen01 wrote:

With all due respect, you may have an incorrect perception, though I may be mistaken.

Yes, ebay is collecting a tax, however, it isn't a sales tax - even though it is a tax created from a sale.  ebay  is collecting a USE tax from the buyer that purchases the item, no matter where they live - according to the amounts and criteria of the buyer's home state.  This is to close the loophole for the buyer that avoids paying tax locally by purchasing online and doesn't report it on their state's income tax forms as a "USE TAX".

From cdfta.ca.gov - "Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state."

This does not preclude the seller being responsible for collecting sales tax for the state in which they live and have their business.

---

I don't want to quibble about the terminology, but technically I don't think this interpretation is correct. As I understand it:

A Sales Tax is charged on the purchase at the time of sale. 

• This would include eBay purchases where eBay collected the sales tax at the time of sale. 
• This is why eBay lists it as "Sales Tax" on the checkout page and on buyer invoices.

A Use Tax is owed on any taxable purchase where sales tax was not collected at the time of sale.

• There are other circumstances than out-of-state sellers, that make Use Tax due. In many states, residents are expected to submit Use Tax anytime they make a taxable purchase without sales tax for any reason (garage sale, craigslist, online purchase, purchase from another state), or even if they pay less sales tax on the purchase than their state would charge in which case they owe Use Tax for the difference.
• I believe they call it a "Use Tax" because it applies on purchases that will be used (or stored) in the state, and for which Sales Tax was not collected at the time of sale.

So, the important part of your quote above would be: use tax applies when you make a similar purchase without tax ...

Basically, with the Marketplace Facilitator laws, the states have greatly increased the number of sales where sales tax is being collected, with a corresponding decrease in the number of sales where use tax would have been owed.

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These definitions are quite correct.  eBay is collecting it as a Sales Tax and is making the Use Tax no longer necessary for those kind of purchases.

[mr_lincoln]

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@csbbct wrote:

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@mr_lincoln wrote:

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Now, based on the explanation posted above (yours) ... there are 5 states that do not have a state sales tax ... if I purchase form a Seller in one of those states I am not charged sales tax because they don't have any right? ... but am I suddenly charged a "Use" tax based on MY state's sales tax rate?  I just don't think that's how it works based on my conversations with my state rep.

---

eBay will call it Sales Tax, but it technically is a Use Tax they're collecting and will replace the need for what is shown on the PA Dept of Revenue website:

Out-of-state businesses and Internet vendors often falsely advertise that they sell taxable items “tax free”. However, Pennsylvania law requires the payment of use tax by any person who purchases taxable goods or services delivered into or used in Pennsylvania if sales tax is not collected by the vendor. Use tax is the counterpart of the state and local sales taxes.

When Pennsylvania sales tax is not charged by the seller on a taxable item or service delivered into or used in Pennsylvania, the consumer is required by law to report and remit use tax to the Department of Revenue. The use tax rate is the same as the sales tax rate: 6 percent state tax, plus an additional 1 percent local tax for items purchased in delivered to or used in Allegheny County and 2 percent local tax for Philadelphia.

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Thanks and put that way (and to anyone else who pointed out "Use" and "Sales" tax points to me) then it makes sense they can levy "a" tax (Sales or Use) against any online purchase from any state to any other state and as someone else stated it closes the loop so that EVERY online transaction can be charged a tax (sales or use).  So, I either misunderstand our state's rep or it was not explain in quite that way using the term "use" tax.

[buyselljack2016]

How about this?

Does PA charge sales tax on take out food?

If they do, then a PA resident traveling out on the road, returning home, must consume those chicken nuggets that they bought in Delaware before crossing the state line back into PA, or those bird parts would be subject to "use tax":)