Whine about a South Dakota v Wayfair charge collected by eBay

[Brian Van Horn]

Originally Posted by Bigshot69

Not sure if you were buying for your own PC or for resale but based on this link it looks like Ebay might be able to exempt your account from sales tax if you provide them with a resellers certificate or vendors license.

https://www.ebay.com/help/buying/pay...=4771#section2

*Disclaimer-I’m not an accountant but sharing so anyone with questions can run by theirs👍

Adam,

Thank you, but my focus is on nexus regardless of personal collecting or resale.

[canjond]

I have gotten charged sales tax on every international purchase Ive made since the new tax rules went into effect. It's probably 25+ transactions at this point. UK, China, France, Italy, Canada, etc. Doesn't matter.

[birdman42]

Brian, my understanding is that after the Wayfair decision the idea of nexus is pretty much gone. States call it a "use tax" rather than a "sales tax." Their position is that one should pay a tax on all items of personal property you use in your state of residence, no matter where you purchased it. (With some exceptions, of course, such as food.)

Now I live in Maryland. If I want to drive a couple hours to Delaware, where there is no sales tax, then fine. But if I sit at my screen and buy from a Delaware vendor, then I'm supposed to pay MD tax. Many states have a "use tax" question on their income tax form. I've never seen anybody say "Yes, I do owe use tax," but really they are supposed to.

So the fact that the seller isn't even in the US is irrelevant. You are in the US, in your state, and that's what matters. Wayfair didn't change any laws. What it did do was shift enforcement from voluntary disclosure by the buyer to mandatory collection by the seller.

While I hate to bring them into yet another thread, P--- located their Vault in Oregon because the state has no sales tax.

Bill

[Jim F]

I am in Canada. Sometimes when I sell something the tax will automatically come up on the buyers invoice. It is happening more often recently. I change the invoice to zero tax. I don't know if I'm supposed to but I do not have any license to collect American tax. It would seem that if someone actually paid the invoice before I changed it, it would go into my Paypal account.

[Brian Van Horn]

Well, my problem is that, in my opinion, that if you have a US Supreme Court ruling which never mentions the word international in its opinion, how can you have an argument for Nexus? The US Supreme Court, in my gullible opinion, can't issue a ruling that covers international trade in this area because it isn't in its jurisdiction and the international part simply wasn't part of South Dakota v Wayfair. This, again in my opinion, is an over reach. Just because your seller is eBay doesn't do it for me if the actual seller and product is outside the US. Yes, I am aware I am opening up a whole new can of worms/cottage industry with this argument.

[MW1]

Can an experienced accountant comment on this?

[bnorth]

Originally Posted by Jim F

I am in Canada. Sometimes when I sell something the tax will automatically come up on the buyers invoice. It is happening more often recently. I change the invoice to zero tax. I don't know if I'm supposed to but I do not have any license to collect American tax. It would seem that if someone actually paid the invoice before I changed it, it would go into my Paypal account.

I would highly recommend you quit doing that. YOU ARE NOT collecting American tax and you will never see that money. eBay IS THE ONE collecting the tax that the buyer does owe.

Originally Posted by MW1

Can an experienced accountant comment on this?

It has been explained several times on this forum. Post #8 pretty much covers it. Some people seem to have a huge problem paying a tax they really owe and probably have not been paying for years.

[frankbmd]

Originally Posted by MW1

Can an experienced accountant comment on this?

If not, an inexperienced accountant?

Or perhaps someone who is just “okay” with numbers?

[MikeKam]

As a Canadian seller, I'm supposed to only charge Canadian customers tax and do not charge or collect any American taxes. However, as has been mentioned, "use" tax on most purchases for some states has come into effect where no matter what you buy, you will/should be paying taxes on it.

It does make sense when you consider buying/selling pre-internet was typically done physically within a region close to you and taxes could be collected rather easily. Now, with so much interstate/international commerce, a lot of governments have been losing out on sales tax proceeds. Can't say I enjoy it though

[BobC]

Originally Posted by MW1

Can an experienced accountant comment on this?

Been an accountant for 40+ years, and as Ben said, this has been written about in other threads already. I'll try to give you a condensed recap.

Sales tax is a state level tax, not federal. Along with sales tax, every state has what is also called "use tax" and the laws in each state are referred to as sales and use tax laws, which work on the same basis. Sales/use tax is charged on sales based on the point of sale, where it takes place. When you drive to the store and buy something there, that location you bought it at is the point of sale, regardless of where you live and end up taking the item back to use. The sales tax rate being charged at the store location you bought the item at is what they charge you. When you don't drive to a store to purchase an item yourself, and buy it online and have it shipped to you instead, the point of sale generally becomes the location the item is shipped/delivered to, such as your home. In that case the sales tax to be charged is for the location of your home where there item was sent to, not where it was shipped from. Sales/use tax is not based on where the item was shipped from, whether it was a domestic or foreign seller, it is based on where the item is considered sold/delivered to, and ultimately put to use.

Before there was an internet and people bought so many things online, there used to be catalog sales companies that would ship items to sellers. Older folk will remember things like the Sears, Montgomery Ward and JC Penney catalogs, or companies like Speigels that sold strictly through catalog sales alone with no brick and mortar stores at all (some of which are still operating today). Back in those earlier times, the rule was that a retail seller was not required to collect and remit sales tax to any state they made such catalog or remote sales to customers in unless they also had a physical presence in that state. And by physical presence they meant that the seller had to have employees, inventory, stores, assets, sales and so on in that same state. So if a catalog company had none of those physical items in a certain state, they were not required by law to collect and remit sales tax to that state for sales to residents of that same state. So that the states didn't get screwed on sales taxes by everyone just starting to buy things from out of state sellers, they pretty much all had enacted "use" tax laws in conjunction with sales tax laws. The "use" tax laws basically said that if any resident or business in that state purchased something that should have been subject to sales tax, but the seller was not required to charge and collect the sales tax from them because they did not meet the physical presence nexus test, under the "use" tax laws the resident/business customer is supposed to voluntarily report and remit the sales tax they would have otherwise been charged and paid to the seller. As another poster pointed out, most individuals (and many businesses) do not report and pay this "use" tax to their states. The Supreme Court had previously confirmed this "physical presence" nexus requirement and test in the case of North Dakota Vs. Quill back in 1992.

Fast forward to the jump in online sales and marketing, and the way commerce has dramatically changed the past few decades. Retailers now are more than ever likely to sell things online and not have a physical presence in a lot of state they make sales to customers in. Those states were losing out on more and more sales tax and started to fight back regarding the "physical presence" test being the determinant as to whether a retailer has nexus in a particular state to collect sales tax. So instead, the states started to argue that as opposed to a "physical presence" nexus test, there should be a new "economic presence" test to determine nexus for sales tax purposes. And that new test was confirmed last year in June, 2018 when the Supreme Court updated their thinking in the South Dakota Vs. Wayfair case when they changed the definition of necessary presence a company must have in a particular state for them to be considered to have sales tax nexus and therefore be required to start charging and collecting/remitting sales tax. Under the South Dakota sales and use tax laws, the Supreme Court recognized and confirmed that any person/company, foreign or domestic, that makes such online or other indirect sales to customers in South Dakota that end up totaling $100,000 or more in any calendar year, OR have 200 or more such sales transactions to South Dakota customers in a calendar year (regardless of the sales volume) shall be deemed to have sales tax nexus in South Dakota and is required to start collecting and remitting sales tax on all sales thereafter made to South Dakota customers, whether the seller has an actual physical presence in South Dakota or not.

And now that the Supreme Court has ruled and set the bar for what constitutes economic nexus for sales tax purposes by confirming the South Dakota laws, most other states that have sales and use tax laws are changing and adjusting their own laws to coincide with South Dakota so they can also begin to enforce sales tax collections on out of state sellers. Here is a link to an article that outlines the current economic nexus rules for remote/online sellers in all the states. You'll notice that pretty much every effective date for these comes after the Supreme Court's June, 2018 decision in the South Dakota Vs. Wayfair case. It also includes a map showing the states that do and do not have a specific economic nexus law currently on the books for sales tax, which also includes the five state that do not currently have any sales/use taxes at all; Alaska, Delaware, Montana, New Hampshire and Oregon.

For sales tax purposes it does not matter if the seller is shipping you an item from outside the U.S. or not.

As for Ebay collecting sales tax, they technically are not the actual sellers, but I believe they tried to get in front of this sales tax issue and decided to start taking responsibility for the collection and remittance of sales taxes in certain states on behalf of their sellers. This way the sellers, especially the smaller ones, wouldn't suddenly be faced with the additional burden of having to now register in all these states and start keeping track of records and filing sales tax returns and everything else that is involved. Actually, it is probably a smart move on Ebay's part as they can tout it as a service preformed on behalf of their customers and save them the time and hassle of having to do all this sales tax work. I imagine over time Ebay will start mandatory collections and remittance of sales tax for more and more states.

And as one poster already pointed out to another, as a seller I would not be overriding invoices and removing sales tax charges that Ebay is automatically adding to the customer bills. Those sales taxes are supposedly being collected and remitted by Ebay, to save the sellers the hassle of having to do so. Now I do not sell on Ebay so I'm not sure how they are working this in conjunction with sellers if someone decides to pay by check or other means, and not through a credit card or Paypal through Ebay. By a seller removing the sales tax charges from their customer invoices though, they could be inadvertently circumventing sales tax laws for a particular state. I would not recommend doing that.

Hope this helps some people better understand. And remember, this is only a general overview. Each state has their own specific sales and use tax laws and rules, and the specifics can vary greatly from state to state. If this overview doesn't convince some Ebay sellers to just let Ebay handle the sales tax collections, I don't know what will.

https://www.google.com/search?q=stat...hrome&ie=UTF-8

[Taxman]

Based on destination not origination. IF your resident State has sales tax it will be applied.