Taxes

[trejo402]

Hello everyone, I am a relatively new seller on ebay and trying to get into the business of selling. I completed a couple sales and used paypal to collect my money. On paypal there were 2 taxes that were taken off. One was listed as "Fee" which i figured out was 2.9% of total purchase +.30 but i couldn't figure out the formula for the "Tax Collected By Ebay". If anyone could help me out it would be greatly appreciated. Thanks!

[mtgraves7984 · Accepted solution]

There's no 'formula' for tax collection. It varies... and is designated by the state your buyer lives in.

[fern*wood]

The sales tax varies and is based on the location of your buyer.

[soh.maryl]

By state law, in 39 US states, eBay is now required to collect state sales tax and remit those funds to the treasury of the affected state.  The state sales tax is based on the tax rate in the state to which the buyer's purchase is delivered.

You, the seller, have nothing to do with this.  eBay collects and remit the tax.  You do not receive it, but it will rest very briefly in your Paypal, before eBay removes it.

Although this requires no particular action on the part of the seller, the seller should be knowledgeable about it, because it's still a surprise to some buyers and you may receive questions.  

[whippled1]

I get the tax charges... Death and Taxes, right!?

What I am most perturbed about is that novice/new/ignorant buyers and sellers aren't aware until the auction is OVER?? I've lost 3 bidders after close on this issue because Ebay refuses to make it transparent to bidders that they will ALSO be paying tax. How hard would it be to include a "Bid Cost" calculator on the auction page? Even if it were a manual process that would help bidders choose what their REAL max out of pocket would be. Once upon a time Ebay was a service that benefitted both buyers, sellers and Ebay... it seems like Ebay is more interested in their piece of the pie versus equal benefit by all. As evidenced by hiding additional costs on final payment AND giving advice to start bids lower that ensure bidding will occur vs meeting a minimum required price. Frustrated

[nobody*s_perfect]

Retailers generally don't show the sales tax until the buyer is in checkout, since the amount of the tax depends on the shipping address.  Every eBay listing has a shipping and payments tab which alerts buyers that there might be a tax, and even provides a link to an extensive explanation.  That's more than what most retailers (such as Amazon) will show.

[dlg01]

I agree, it is frustrating.  I find the universal policy of charging/collecting state tax in some states by eBay a bad move.  Although it is true that if I go into a store and buy a used item, that business will add and collect state sales tax.  However, if I were to sell my used car from my driveway to someone, I do not charge them sales tax.  They have to pay tax when they go to register the vehicle, etc.  Businesses should collect taxes, not individuals.  I (just my opinion here) have always viewed eBay as a sort of virtual flea market or garage sale.  A place where you can find all kinds of unusual things at a good price. Similarly, a place that allows you to sell a few things that you may otherwise, toss or donate to GoodWill.  It would be nice if they had a two tier system in which the seller who is not a business or professional seller, could use eBay as that virtual garage sale and ONLY collect tax for the actual businesses that operate on eBay.  It's getting hard to give or get a fantastic deal now that taxes are uniformly administered.  Finally, I agree with the above that eBay should be more transparent about the tax collection being added to the final sale price.  I also had someone opt out of a sale because of the added tax.

[nobody*s_perfect]

---

@dlg01 wrote:

I agree, it is frustrating.  I find the universal policy of charging/collecting state tax in some states by eBay a bad move.  Although it is true that if I go into a store and buy a used item, that business will add and collect state sales tax.  However, if I were to sell my used car from my driveway to someone, I do not charge them sales tax.  They have to pay tax when they go to register the vehicle, etc.  Businesses should collect taxes, not individuals.  ..

---

That's why these 39 states' "marketplace facilitator" laws require eBay to collect and submit sales taxes.  eBay (not individual sellers) is the responsible business.

[soh.maryl]

So that eBay message that "taxes may be applicable" does not give the buyer at least a clue that taxes may be charged? Seems fairly transparent to me.  

Also, all sellers need to be aware of the fact that the buyers in 42 states are charged state sales tax.  This has been announced by eBay several times.

[soh.maryl]

Although your message is almost 4 months old, I wanted to respond.

There were several eBay announcements that this was going to happen.  Sorry you missed them.

The buyer also sees a message that says something like "state sales tax may be charged on this purchase" before he makes the purchase.  Personally, I thought that was pretty transparent.  And I guess eBay could insert a blurb: "If you pay state sales tax on your WalMart purchases, then expect to pay it on this one."

AND furthermore, may I reiterate that eBay collects the state tax FROM the buyer, not the seller, and remits it to the appropriate state, it does not go back to eBay.  

[berthaley]

Could you please explain this: "eBay collects and remits the tax.  You do not receive it, but it will rest very briefly in your Paypal, before eBay removes it."  I can't figure this out.  Every time I sell an item, the sales tax rests in my Paypal far from "briefly".  I simply transfer all the money from Paypal to my bank account and that includes the sale tax.  I never see any "remittance" at all, but you say Ebay removes it.  Ebay only takes its fee once a month.  Here's an example.  I sold a pair of shoes for $19.99, Paypal took 0.91c, Ebay took $2, the buyer paid 0.92c in sales tax.  I transferred $20 from Paypal to my bank account.  Where is the remittance to the state by Ebay?  To make things more complicated, I only sell my personal items like clothes, footwear, housewares, etc, which is the same as having a garage sale with no financial gain - a loss rather.  These sales aren't required to be reported to IRS,  but what do I do about those cents that the buyers pay as a sales tax? There is no way to turn it off.  I'll greatly appreciate if you could explain where I'm wrong and what I have misunderstood.  

[postid]

Reply to berthaley

"$19.99, Paypal took 0.91c, Ebay took $2, the buyer paid 0.92c in sales tax. "

Ebay was paid $19.99 + 92¢ or $20.91. PayPal was paid 91¢ leaving $20.00. Ebay took the 92¢ and remitted it to the state leaving you $19.08. They didn't take $2.00 but billed you the $2.00 which they will receive when your monthly statement is due. At least that how it works for me.  You should have only $19.08 to transfer, not $20.00. 

[arbiter42]

Starting in December,  eBay has been dumping the sales tax in my Paypal account... not briefly, either. It just sits there. Also the invoice they send ME shows them paying the sales tax into my account. Basically Ebay bumped up the price of the item and paid it all to me.

I think someone at eBay screwed up.

Even if they did "briefly" put the sales tax into the seller's PayPal account then remove it, that means PayPal is collecting their fees ON THE SALES TAX ... FROM THE SELLER.

I've been selling on eBay for several years, and Etsy is looking better every day.

[arbiter42]

OK so the forum would not let me post the edit to my comment, here is my updated comment. Clarified and added additional info.

<><><>

Starting in December 2020,  eBay has been dumping the sales tax into my Paypal account... not briefly, either. It just sits there. Also the invoice they send ME shows them paying the sales tax into my account. Basically Ebay bumped up the price of the item and paid it all to me.

I think someone at eBay screwed up.

Even if they did "briefly" put the sales tax into the seller's PayPal account then remove it, that means PayPal is collecting their fees ON THE SALES TAX ... FROM THE SELLER... possibly twice, once for the initial collection, and again to transfer to Ebay.  Also, since when does Ebay have the authority to grab money from our PayPal accounts?

I've been selling on eBay for several years, and Etsy is looking better every day.

Also just got off the phone with Ebay "support", it was someone with a thick accent and a thick skull. I tried 3 times to explain what was happening, but they kept repeating the procedure/policy to me like I just graduated 1st grade.

I also called the Idaho State Tax Commission and they agreed with me, that Ebay should be remitting those taxes to the TaxCommission, not to me (the seller).