Trying to understand sales tax liability...need help.

[funnybookaddict]

I haven't sold anything on eBay for quite a while and before I do I am trying to understand the sales tax collection policies and my responsibility. When I sell something to to a buyer that resides in a state that is a Marketplace Facilitator eBay will collect the tax on my behalf and I do not have to worry about those sales in terms of tax collection but for the states that eBay does not act in that regard (example: Oregon) I must collect the appropriate sales tax based on my states rate ( TN 9.50%).

So, if the above information is correct my question(s) are : Is there an auto generated report that will list the sales tax that I collected? How do I send the sales tax to the appropriate agency in TN? (we are not required to file a state return in Tennessee).

Any help would be appreciated.

[duffy4444]

    Most of your post has been adequately answered already.

   Ebay charges the buyer for the buyer's state sales taxes, if any, takes care of collecting all sales taxes FOR YOU, and remits them to the hundreds, if not thousands, of state, county, and local sales tax authorities who demand their share of internet sales taxes. You have to do nothing for this service except pay a very small FVF on the tax itself.

   I live in Idaho and have a resale permit. I am required to file a yearly sales tax report and submit payment to the state for all the sales taxes charged to other Idaho residents throughout the year. Since Ebay is automatically doing it now for all my sales to my fellow Idaho residents, this year I will be contacting the Idaho State Taxing Authority to see if I need to file the sales tax form anymore. That's the only responsibility I will have going forward. My guess is that there may be new line on the form for those of us who have online sales venues like Ebay, Amazon, etc., doing it automatically for us. We'll see...      

   By the way, regarding Ebay charging sellers a FVF on the sales tax that the buyer pays:

   This is one of the topics over which many sellers emotionally get their knickers in a twist and throw a tantrum and rant on this forum. You may even see some pipe in on your post here. I, and some others, are not very popular with them because I calmly assess the big picture and see the huge benefit of Ebay handling it for us.

   As often as I can, I counter their concerns with the fact that Ebay, as well as Amazon and other venues, has hired many workers to handle sales taxes (and UK VAT as well)  automatically for us sellers. Ebay is the entity on the hook legally because it has a nexus in every state in the US, and it stays on top of all the changing state, county & local sales tax rates, then the payment of sales taxes to them, maybe even quarterly to some. That small FVF sellers pay on the sales tax for the service Ebay provides is a bargain, so we as sellers don't have to be on the hook for doing it ourselves full-time to each and every tax authority across the country.

   I use GoDaddy.com for my automatic Ebay, Amazon, Etsy and PayPal accounting, and it breaks down paid sales taxes in real time automatically. My year-end report is complete, including each state's sales taxes paid for me. I just had it over to my CPA at the end of the year... So to answer your last question, I don't know if Ebay breaks down sales taxes or not, as I have no need to access that information on Ebay. Perhaps another seller or two can chime in on that...

Cheers,

Duffy

[Anonymous]

@funnybookaddict  You are overthinking this...relax

[lacemaker3 · Accepted solution]

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@7606dennis wrote:

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@simba6 wrote:

Yes. eBay collects for them all now.

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Are you sure about that?  I believe that there are a couple of states that do not currently have facilitator laws in place and thus eBay couldn't collect and remit to them unless the seller is registered to collect sales tax in that state.  Even then the seller would have to remit the tax themselves rather than eBay.  

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@7606dennis, currently eBay is collecting sales tax for 44 states and territories, including the District of Columbia and Puerto Rico, so that is 42 states. There are 5 states that don't have state-wide sales tax (Alaska, Delaware, Montana, New Hampshire and Oregon),  so 50 - 5 - 42 = 3 states that eBay doesn't collect for (yet), and eBay doesn't collect for Guam either:

Florida, Kansas and Missouri

Sellers in those states (and Guam) have to comply with their state's laws about collecting sales tax for purchases that are delivered to their own state.

I have heard rumors that Florida may pass an MF legislation soon.

[lacemaker3]

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@funnybookaddict wrote:

Last question.

If no tax needs to be collected or paid for by buyers in states without the MF laws I do not need to fill out the tax tables on eBay? I appreciate everyones help.

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That's correct, you don't need to fill out the tax tables. They would only be needed by a seller in Florida, Kansas, Missouri or Guam. It's best to leave the tax tables completely blank, unless a seller in one of those areas has a sales tax license.

Buyers in those areas who purchase from an out-of-state seller and are not charged sales tax, are responsible for paying use tax on their purchases. Compliance with paying use tax is historically very low, which is why most states are now requiring marketplaces to collect sales tax.

[nobody*s_perfect]

FYI, Florida and MO have new marketplace facilitator laws which go into effect on July 1.

[nobody*s_perfect]

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@funnybookaddict wrote:

Last question.

If no tax needs to be collected or paid for by buyers in states without the MF laws I do not need to fill out the tax tables on eBay? I appreciate everyones help.

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You do not have to do anything at all about ANY state's sales tax. Nothing at all!

[lacemaker3]

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@nobody*s_perfect wrote:

FYI, Florida and MO have new marketplace facilitator laws which go into effect on July 1.

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I had heard about Florida, but didn't remember the date.

eBay hasn't added them to the help page yet. Odd, they usually gave more notice than that when the other state's laws were going into effect.

[rock.star]

Florida and Missouri have both passed MF legislation both to start on July 1 I believe 

Kansas can't get out of its own way 😲

[nobody*s_perfect]

Here's an update on FL, KS and MO:

https://www.mtc.gov/getattachment/Nexus-Program/Nexus-Committee-Agenda/Nexus-Committee-Agenda-4-2021...

[dnasilver]

How would there be profit on "sales tax"? There is a cost since eBay charges you fees on sales tax.

[nobody*s_perfect]

There's no profit on sales tax of course. That post was generalizing about income tax on a seller's overall profit. Just to point out that you still have to think about income tax even though you don't have to do anything about sales tax.

[varebelrose]

"You have to do nothing for this service except pay a very small FVF on the tax itself."

I think it is debatable whether or not 12.5% is a very small fee, especially on money that the seller literally never sees.

[7606dennis]

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@funnybookaddict wrote:

So is a seller from TN is required to collect taxes from all buyers from states that do not have those laws in place or is the buyer solely responsible?

Sorry in advance for being a bit dense. I used to sell quite a bit but its gotten a lot more complicated.

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Unless the seller is required to collected them in the buyer's state because they have a nexus in that state, I don't believe that the seller would be required to collect the sales tax.  However, there are only two or three states that tax their residents that haven't yet passed facilitator laws.  But that doesn't negate the buyer's responsibility for paying such taxes to their state just because the seller doesn't collect it at the time of sale.

[7606dennis]

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@mr_lincoln wrote:

@funnybookaddict   I have a PA Sales tax ID and prior the market place laws I was ONLY responsible to collect and remit Sales tax to the State for IN state purchases.  Anything from out of state no taxes were charged.  Once eBay took over collecting taxes the state contacted ALL Tax ID holders that on future State Reporting they were to put ZERO for the amount of IN state sales.  The burden for collecting and remitting switched to eBay. 

I have no other "nexus" in any other state to collect and remit their sales tax, any states that have laws in place to do so rely on the venue (eBay-Etsy-Walmart-Target-Bonanza, etc) to collect and remit those because in all likely hood the venues stand a better chance of meeting each states thresholds for tax collection purposes then individual Sellers.  In this way each state stands a better chance of collecting MORE sales tax then if they relied on individual Selling accounts, many of which have NO nexus anywhere for sales tax purposes.

So, I did nothing different when these laws started to roll in from all the states ... nor have I been contacted by any state that I needed to do something ... so until such time that that changes I simply pay any fees on sales tax when and if it applies (5 states don't have sales tax) and move on ...

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If you have no nexus in the states that haven't passed a facilitator law, it is most likely that the buyer will be responsible for paying the sales tax owed to their state as they were suppose to have been doing.  However, since most buyers tended to ignore that part of their state's tax laws, is it any wonder that most states jumped on the bandwagon to pass marketplace facilitator laws as soon as they found out they could do so? 

[7606dennis]

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@funnybookaddict wrote:

Last question.

If no tax needs to be collected or paid for by buyers in states without the MF laws I do not need to fill out the tax tables on eBay? I appreciate everyones help.

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Actually, not having a MF law does not relieve buyers from those states from having to pay their state's sales/use taxes.  By not having a MF law in place, those states merely give those buyers a way to illegally evade those taxes.