What we Need as Members to Enhance the Sales Tax Collection process by Ebay.

[mam98031]

In an effort to assist Ebay in seeing and knowing the issues we see with Ebay collecting sales tax for certain states I thought we could have a discussion about it so that Ebay knows our thoughts and concerns.

This is something Ebay has to do, so that isn’t the issue.  We may not like it, but they still have to adhere to the new laws.  Sellers and some buyers have specific needs that aren’t being met.  These needs have to be addressed as they are important factors.

Ebay is very much aware that there is room for improvement and I believe they are actively working on improving the process.  But just in case they haven’t thought of some issues, this discussion may help.

Here are some of the things I see in no specific order.

1. We need a way to submit our Resale Certificates so that Ebay has them on file.
2. We need a way to flag a purchase on Ebay to be for Resale so that we are not charged Sales Tax.
3. We need a report that shows by state what taxes were collected on our behalf. Some states require us to report this information.  Some of us have to report the full sale amount as a retail sale and then we can take a deduction for that sale because Ebay has taken the sales tax from the customer and remitted it to the appropriate state.  This report needs to give us the ability to get it by date range.  Some of us report to our states monthly, some quarterly and some yearly.  So we need flexibility in the report.

What do you see as an improvement or enhancement specific to Ebay collecting sales tax in various states?

[mam98031]

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@millcreekrescue909 wrote:

Same in California.  In addition to the state tax rate there are district taxes and local taxes.

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This is true in most states.  In the Sales tax makeup there are state, city and county taxes.  I can only speak for the state of WA, but we do not collect separately for those taxes, it is all rolled into the sales tax collected at the time of sale.

The retailer when reporting their sales and sales tax collected then breaks this down on the form submitted to the state.  It is from this information that the city and county get their portion of the taxes collected.

[millcreekrescue909]

That's true and eBay will have to deal with this.  But currently there is no way on eBay to vary the sales tax collected for counties and cities in a particular state.

[mam98031]

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@millcreekrescue909 wrote:

That's true and eBay will have to deal with this.  But currently there is no way on eBay to vary the sales tax collected for counties and cities in a particular state.

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There should be no need for them to do that if it is by the direction of the state they are collecting taxes for.

I am assuming this, but I suspect that the State has given Ebay [and other facilitators] the rates in which they need to charge.  I don't know if the states are giving them one rate to charge for all sales [I suspect this to be what they are doing] or if they have given them multiple rates depending on where in the state the item got shipped to.

The laws do read that it can't be overly burdensome on the tax collector.  So IMHO it would stand to reason that the states may be giving Facilitators one rate to charge for all sales in the state.  But I have no idea if this is correct or not.  Just a thought.  I don't know how, why or what rates have been given to Ebay by any state.

[the*dog*ate*my*tablecloth]

No, I asked if there was a box to check and the answer was no.

If you cannot list a listing without sales tax, how do all the "small" sellers do it who keep saying they don't collect tax even in-state?  What about sellers who sell in a State where clothing and/or food is not taxable? Ebay forces them to collect it in violation of the law?

Just in case anyone is curious, this part of the thread started with this comment. California is not yet an MF State, they are collecting seller sales tax only:

How about they follow the laws of the state they are collecting for?  I am in California. There are things that should not be charging tax for yet ebay being ebay is broad brushing it and collecting tax on it anyways.

[mam98031]

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@the*dog*ate*my*tablecloth wrote:

No, I asked if there was a box to check and the answer was no.

If you cannot list a listing without sales tax, how do all the "small" sellers do it who keep saying they don't collect tax even in-state?  What about sellers who sell in a State where clothing and/or food is not taxable? Ebay forces them to collect it in violation of the law?

Just in case anyone is curious, this part of the thread started with this comment. California is not yet an MF State, they are collecting seller sales tax only:

How about they follow the laws of the state they are collecting for?  I am in California. There are things that should not be charging tax for yet ebay being ebay is broad brushing it and collecting tax on it anyways.

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There is a schedule that can be filled out to state what percentage of taxes a seller wants to collect in what state or states.  It will apply to ALL sales within that state.

Yes there certainly are some sellers that should have been collecting sales tax all along for their respective states and have not.

There are also lots of sellers that sell here on a regular basis and don't report their income to IRS.  

Neither are right, but it happens.

[the*dog*ate*my*tablecloth]

OK please bear with me, I'm about to start selling my clothing again.

I just looked at the advanced listing form and it allowed me to put 0% on a particular listing for my State. That won't override the tax table?

I'm not complaining about sellers not doing their taxes right. I'm wondering how Ebay as a publicly traded US entity can force sellers to collect sales tax on non-taxable items on in-State sales in violation of tax laws.

[mam98031]

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@the*dog*ate*my*tablecloth wrote:

OK please bear with me, I'm about to start selling my clothing again.

I just looked at the advanced listing form and it allowed me to put 0% on a particular listing for my State. That won't override the tax table?

I'm not complaining about sellers not doing their taxes right. I'm wondering how Ebay as a publicly traded US entity can force sellers to collect sales tax on non-taxable items on in-State sales in violation of tax laws.

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I was just about to post again.  Dang my bad.  You are right.  There is a spot in the listing set up where you can designate if Sales tax would apply per your preferences you have set up on the Sales tax schedule.

Sorry, I was wrong on this and I sincerely apologize.  I forgot all about this function, you have been right all along.

Just a note, for states where Ebay is now collecting sales tax, that box will not matter.  Checked or unchecked, the seller will not be able to collect sales tax.

[the*dog*ate*my*tablecloth]

That’s ok, lol. So any time a seller initiates sales tax in State or out they can decide whether or not to collect sales tax for that item. So for whoever asked about CA, blame the seller. I had sales tax wrongly  collected on a shirt a few months ago, contacted the seller who blew me off. It was just not worth pursuing. 

We still have the issue of whether EBay is collecting sales tax in MF States by category but that is under their name and any consequences will be theirs.

[twnpopcards]

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@mam98031 wrote:

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@millcreekrescue909 wrote:

That's true and eBay will have to deal with this.  But currently there is no way on eBay to vary the sales tax collected for counties and cities in a particular state.

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There should be no need for them to do that if it is by the direction of the state they are collecting taxes for.

I am assuming this, but I suspect that the State has given Ebay [and other facilitators] the rates in which they need to charge.  I don't know if the states are giving them one rate to charge for all sales [I suspect this to be what they are doing] or if they have given them multiple rates depending on where in the state the item got shipped to.

The laws do read that it can't be overly burdensome on the tax collector.  So IMHO it would stand to reason that the states may be giving Facilitators one rate to charge for all sales in the state.  But I have no idea if this is correct or not.  Just a thought.  I don't know how, why or what rates have been given to Ebay by any state.

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California has specifically stated that the Sellers or facilitators are responsible for the local and district taxes if they sell over $200k annually in a district.  So it is Ebays responsibility to design their program to collect the proper amount of tax or be liable to pay it when they are audited and shown to not have collected the correct amount.  The state will also deem any overcharges as due to the State also so if Ebay has not remitted all the taxes collected properly the State will go after them for that also.  Ebay does not get an easy out on this one.  They wanted to be the facilitator and manage all the money so they also get to manage ALL the tax headaches that come with it.  As I remember California has something like 63 different district taxes and many of them change every 3 months as some expire and new ones come into play.  Once all the states require this I believe I read that there are something like 10,000 different districts and Parrish taxes in the US that Ebay would be responsible for tracking and paying timely along with doing timely reporting to the States.

[dtexley3]

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@mam98031 wrote:

I have my own database built in Microsoft Access.

The way I track it personally is not the issue.  

Ebay is now taking on the tax collection function there is no reason at all that we can't have a report that we can access when we need to on the details.

That isn't exactly how the form format goes, but the end result is the same.

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There is a report available.  It's been discussed in at least 2 threads now.  Using File Exchange you can download the Paid and Shipped report.  On that report any line where eBay collected the sales tax the item total will not include the amount in the sale tax column.  You can import the file into a spreadsheet and determine which orders eBay paid sales tax on by adding a calculated column that retotals the orders and see which ones eBay collected the tax.

Of course I thought I had bookmarked  the post with the instructions, but it's not in my list of bookmarks.

[slippinjimmy]

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@dtexley3 wrote:

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@mam98031 wrote:

I have my own database built in Microsoft Access.

The way I track it personally is not the issue.  

Ebay is now taking on the tax collection function there is no reason at all that we can't have a report that we can access when we need to on the details.

That isn't exactly how the form format goes, but the end result is the same.

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There is a report available.  It's been discussed in at least 2 threads now.  Using File Exchange you can download the Paid and Shipped report.  On that report any line where eBay collected the sales tax the item total will not include the amount in the sale tax column.  You can import the file into a spreadsheet and determine which orders eBay paid sales tax on by adding a calculated column that retotals the orders and see which ones eBay collected the tax.

Of course I thought I had bookmarked  the post with the instructions, but it's not in my list of bookmarks.

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That's true but I still don't understand why anyone needs it. I WA at least the only thing sellers need to report is their Gross Sales via a marketplace, they can calculate the tax collected by the Marketplace by the STATE Wide rate. Local rates don't matter because sellers don't include Marketplace sales in the local section of the return.

I asked the OP what "details" they needed eBay to provide, never got an answer.

As far as it being complicated for eBay to determine the local rates (where they exist), it isn't, a simple table with zip+4 is all they need.

[myjunqueyourtreasure]

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@lacemaker3 wrote:

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@lacemaker3 wrote:

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@the_fancy_fox wrote:

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@mam98031 wrote:

...

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But it does appear that eBay is collecting the sales tax correctly by item category (type).

1. ...
    
2. For the states where eBay is collecting sales tax as MF, they are collecting the sales tax based on the primary category the item is listed in.
   For example, in WA, food items are not taxable, but dietary supplements are taxable. If an item (for example, honey) is listed in  Supplements for the first category, and in Food as the second category, it will be subject to sales tax. If it is listed in Food as the first (or only) category, it will not be taxed. Another example: if a sports jersey is listed under Clothing (first or only), it will not be taxed. If it listed under Collectibles(first or only), it is taxable. These are real examples from members who asked about the sales tax here in the community.
   It is possible that eBay may have some categories that are coded incorrectly, but I'm not aware of any at this point. These two examples are the only ones I have seen reported.

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Too late to edit ... I checked into the sales tax exemptions for sales to WA, and I believe ^^this information^^ is wrong.

It appears that there is conflicting information online about whether clothing sales in WA are taxable or not. eBay recommends Avalara and TaxJar for information, but they contradict each other:

Avalara says "Some goods are exempt from sales tax in Washington regardless of who the buyer is or what the goods will be used for. Examples include most non-prepared food items, everyday clothing items, and medical supplies and drugs."

But TaxJar says "Tangible products are taxable in Washington , with a few exceptions. These exceptions include certain groceries, prescription medicine, sales to nonresidents and newspapers."

So, I went to the Washington State Department of Revenue website, and found that clothing is not exempt from sales tax in Washington. From what I can see looking at one of @the_fancy_fox's listings, it is charging sales tax for clothing, which appears to be correct .

https://dor.wa.gov/find-taxes-rates/retail-sales-tax/retail-sales-and-use-tax-exemptions

However, Dietary Supplements are exempt from tax (under Health-Related Purchases)

@Anonymous, can you check why the Supplement category appears to be incorrectly coded as taxable in WA?

Also, there's a lot of confusion about whether shipping is or is not taxable. From checking on the state websites, shipping is taxable for sales to WA, but shipping is not taxable for sales to IA if the shipping is a separate line item (charged separately, not free shipping). However, eBay is charging sales tax on the shipping for sales to IA.

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I think taxjar is wrong on that one. Sales to non residents ARE taxable if they occur in Washington. Regardless of all the Oregon people that think by showing their OR dl they can get out of paying it (happens a lot). Unless you have a Tax Exempt # you're paying it.

[dtexley3]

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@slippinjimmy wrote:

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@dtexley3 wrote:

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@mam98031 wrote:

I have my own database built in Microsoft Access.

The way I track it personally is not the issue.  

Ebay is now taking on the tax collection function there is no reason at all that we can't have a report that we can access when we need to on the details.

That isn't exactly how the form format goes, but the end result is the same.

---

There is a report available.  It's been discussed in at least 2 threads now.  Using File Exchange you can download the Paid and Shipped report.  On that report any line where eBay collected the sales tax the item total will not include the amount in the sale tax column.  You can import the file into a spreadsheet and determine which orders eBay paid sales tax on by adding a calculated column that retotals the orders and see which ones eBay collected the tax.

Of course I thought I had bookmarked  the post with the instructions, but it's not in my list of bookmarks.

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That's true but I still don't understand why anyone needs it. I WA at least the only thing sellers need to report is their Gross Sales via a marketplace, they can calculate the tax collected by the Marketplace by the STATE Wide rate. Local rates don't matter because sellers don't include Marketplace sales in the local section of the return.

I asked the OP what "details" they needed eBay to provide, never got an answer.

As far as it being complicated for eBay to determine the local rates (where they exist), it isn't, a simple table with zip+4 is all they need.

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Just because you may trust eBay to handle this, not everyone does.   And if I'm understanding things correctly the sales taxes between WA,MN,IA buyers and in-state sellers may have different rates than out-of-state sellers.  The reporting rules are also seem to be unclear at the moment.  SO, sellers want to KNOW what eBay is collecting in sales tax.  I just pointed out that there IS a way to get the information.  My personal opinion is that every seller should be downloading the Paid and Shipped report each month with their invoice.  It's better to proactive now than under the gun trying to meet an audit request later..

[slippinjimmy]

The only thing you would need to show in an audit is what portion of your reported sales were made via a Marketplace Facilitator and be able to back that up. Surely anyone but the most casual seller can provide that information from the reports currently available since sellers who are registered to collect sales tax have always had to report that number.

I trust eBay is paying the proper Federal Income Taxes, their property taxes, payroll taxes etc. I don't know if they are but if not the IRS isn't coming after me about it.

[dtexley3]

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@slippinjimmy wrote:

The only thing you would need to show in an audit is what portion of your reported sales were made via a Marketplace Facilitator and be able to back that up. Surely anyone but the most casual seller can provide that information from the reports currently available since sellers who are registered to collect sales tax have always had to report that number.

I trust eBay is paying the proper Federal Income Taxes, their property taxes, payroll taxes etc. I don't know if they are but if not the IRS isn't coming after me about it.

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Actually they have to pull the same relatively unknown File Exchange report in order to report the number of sales for each state.  That's not available anywhere else either.  

As for the other taxes Ebay is NOT paying income, property or payroll taxes ON MY BEHALF.  Personally I want proof that when someone from a state where eBay is collecting the sales tax, that they did.  You may not care, but there's many of us that do.

Read the thread regarding MN taxes. Any seller there that sells over 10k on other sites, but less than 10k on eBay can't setup tax tables and eBay is not collecting those sales taxes.  eBay is not performing due diligence in design, implementation or review in their coding.  So I prefer to err on the side of caution, and hope that others do so as well.