Need Help; What is ebay doing and do I account for it

[cardsnstuff]

OK, let me preface I get a 1099 from paypal, I declare my income and deduct my expenses and pay taxes. So now in there infinate wisdom, ebay collects and pays sales tax for me I'm guessing. This has been going on for a while but I am trying to figure this out. Here is my latest transaction:

Purchase Total $20.00 USD
Sales Tax $1.20 USD
Shipping Amount $4.00 USD
Handling Amount $0.00 USD
Insurance Amount $0.00 USD
Gross Amount $25.20 USD
PayPal Fee -$1.03 USD
Tax collected by eBay -$1.20 USD
Net Amount $22.97 USD

1) Is my 1099 from paypal going to reflect the gross amt? My guess is yes.
2} I am not concerned that I am paying a paypal fee on the sales tax; nbd and it's an expense anyway
3) How do I account for this 1.20, which is probably going to be reported in my gross income? x # transactions/year
4}What are they doing???????????????/