EBay Sales Tax????

[neil poulsen]

Without getting into any politics, what's going on with EBay sales tax? I just sold a camera on EBay, and EBay itself tagged 8.8% sales tax onto the invoice. It may help to know that we have no sales tax in Oregon.

Amazingly, EBay has no help nor explanation (that I can find) of this in their help pages. So, I'm wondering . . .

Do I end up paying this sales tax, or does EBay pay it automatically? (Seller hasn't yet paid the invoice, and I don't blame him.)

Legally, I wonder how this affects our sales on the Lf Forum? Are we obligated to collect sales tax, know that that might be in each state, have to do the book keeping and pay each state at the end of the tax year? Etc., Etc., Etc.

In short, GOOD LORD!

[Larry Gebhardt]

https://smallbiztrends.com/2019/01/l...sales-tax.html

My guess is because ebay does more than the threshold they are required to collect sales taxes. I would assume the buyer must pay like any store.

I don't think the LF forum will be affected since all sales are personal. Maybe some of the larger sellers should collect on their own if they pass the thresholds.

[j.e.simmons]

The Supreme Court decided a couple of years ago that sales tax is charged based on the buyer’s location, not the seller’s. That works for big sellers like Amazon, but not well at all for small sellers. I think it should be the other way around but have been unable to get any interest from politician.

[koh303]

The Supreme Court decided a couple of years ago that sales tax is charged based on the buyer’s location, not the seller’s. That works for big sellers like Amazon, but not well at all for small sellers. I think it should be the other way around but have been unable to get any interest from politician.

That was only one year ago (less actually).

For those who sell on Ebay, like the OP, but cannot be bothered to read the annual and casual announcements they make, things might catch you by surprise. Using google can help but i understand not everyone has access to this wonder. So let me google this for you:

In the grand scheme of things - the Supreme court passed what was called the "amazon" law, that means that in order to level the playing field, online retailers would need to collect sales tax from their buyers respective state. The immediate problem that arose is that this is doable for companies with a battery of CPA's and lawyers who know and can file the different required paperwork for each county, city or state in the US where the tax is being collected on behalf of, but for a small business, or private person the burden is unmanagable.
As a result, a threshold was set (something like 1M$USD of business, annually, between a seller and any specific state/county/city) above which, they are expected to collect and remit sales tax in every out of state transaction.
The law however has only been adopted by handful of states at the moment due to the extreme complexity, and the fact that really big companies (IE the government), have not yet figured it all out, and still need some adjusting time.
For those states that have rolled out the laws, most "large" retailers (who do not already have a physical presence in that state, which would have required them to collect sales tax anyways), have started to comply with these laws (which vary widely from state to state), if they pass the "nexus" threshold.
In Ebay's case - any transaction where the buyer is located in one of the states that already has rolled out their amazon law, will be charged sales tax, automatically, by Ebay. Ebay will then make the sales tax filing on the behalf of the transaction to the respective buyers state/locale. As the OP must have noticed, the sales tax was grayed out in the invoicing/payment pages - this is because it is not paid into the sellers account, not can he modify it. It is directly collected by Ebay, and disbursed by Ebay, neither the seller or the buyers need to do anything, nor do they need to be concerned about this.
Is anyone being hoodwinked by being compelled to pay a tax they should have always been paying, but was not enforceable in the age of cash and hand written invoice (and so no one actually paid), but which is enforceable in the age of information?

[pendennis]

That was only one year ago (less actually)...

There are approximately 10,000 separate sales/use tax collecting jurisdictions in the U.S. Further complicating things are the various items which are/aren't taxable among jurisdictions. For instance, in some jurisdictions labor is taxable, as are periodical publications, and software. If you have a something repaired, parts are generally taxable, but if Moe's doesn't break out parts for your repair, how do you know if you owe taxes if you live in Monkey Bend.

Some states, as koh303 states have set a minimum for retailer collection. However, that doesn't relieve the buyer of remitting the use or sales tax to their unit of government. States still rely on voluntary remittance of those taxes. The number that was thrown around last year was around $250 million in additional sales/use tax revenue. For states with the resources to chase this boon, it's well worth the effort.

There are companies out there who are, or already have, created their own version of "Amazon" sales tax collection. The matrix isn't that difficult. However, the exceptions are an entirely different beast.

[DonJ]

That was only one year ago (less actually).

Taxation based on the buyer's location has been the rule for years. The recent SC decision overruled the "physical presence" rule, which made Internet purchases tax-exempt unless the seller had a physical presence in the buyer's state. The ruling also allows the states to require "marketplace facilitators" such as eBay to handle state taxation on any state that elects to take advantage of the ruling, shifting the burden of "policing" millions of sellers across the country to the venues where they sell.

[Tin Can]

Use Tax

https://www.investopedia.com/terms/u/use-tax.asp

Which my accountant forced me to pay backwards, then she stopped.

eBay has erased a lot of past sales and purchases.

[BrianShaw]

Neil... if a seller isn’t equipped and registered to collect sales tax (which is a MAJOR headache for a small business) then the buyer is generally obligated to self-report and pay on their annual (or quarterly) tax forms. This has been “the rule” for private party sales and, in the past for Internet sales, for a very long time.

BTW, sales tax collection was a large part of what drove me out of small business ownership. The level of resolution was per County, and in some cases per City. It was just too much work for the low level of sales we had. Collecting “a nominal average sales tax amount” was easy... but reporting the tax to the authorities ate us up. We loved “out of state” sales because we could simply state on the invoice that the buyer was responsible for reporting and paying any tax imposed by their state/local government.

I actually appreciate eBay and other internet sales platforms taking that burden off my back... as both a buyer and seller.

Did your buyer complain or are you just being aware of this?

Generally speaking.
When applicable.
May vary by local, state, or federal laws.
Your mileage may vary.
Past performance is not an indicator of future gains (or losses)
Sometimes, it depends.
Etc

[Leigh]

Neil... if a seller isn’t equipped and registered to collect sales tax (which is a MAJOR headache for a small business) then the buyer is generally obligated to self-report and pay on their annual (or quarterly) tax forms. This has been “the rule” for private party sales and, in the past for Internet sales, for a very long time.

Read Post #3 above.

- Leigh

[BrianShaw]

Read Post #3 above.

- Leigh

Why? Please use you words.