eBay Fees on Buyer-Paid Sales Tax

[BobC]

Originally Posted by Gusturd

Well the whole thing is very convoluted. On the one hand, your saying sales tax shouldn't be triggered unless you exceed $100K and 200 transactions (I realize it may vary by state) and on the other your saying every sale made online is a business sale and should have tax collected. If the government really wanted to boost tax revenue for this country, they'd simplify or at least clarify the rules so people knew what they were supposed to do. The whole thing is one big gray area that simply compels people to pay tax 100% of the time, whether it's really required or not. Maybe that's intentional.

You don't really understand this at all, do you? It all starts with the Supreme Court saying decades ago that a seller wasn't liable to collect and remit sales tax to a state in which they had sold/shipped something to the buyer, unless that seller had a physical presence in that same state. That means they have a building, inventory, employees, something in that same state as where they just made the sale to. The recent Supreme Court ruling from 2018, setting the $100K or 200 transactions thresholds, only has to do with a seller that does NOT have a physical presence in a particular state. It now makes a seller who surpasses those sales threshholds in a state they do not have a physical presence in liable for now having to collect and remit sales tax in that state, the same as if they had a physical presence in it. A seller is still always liable to collect and remit sales tax in states they have a physical presence in. So in your example, the 10-20 items per year your wife may sell on Ebay, if she sells something to a person that lives in the same state she lives in, your wife is physically present in that state and technically should be collecting sales tax on those same state sales if those sales are deemed as being retail business sales and the items she is selling are subject to sales taxes for that state. The sales she makes to people who live in a different state than where she physically lives are counted in determining if she meets the $100K/200 transaction threshhold for any of those other, non-resident, states then. She would only be liable to start collecting sales taxes for those other non-resident states that her sales volume/quantity hits either of the threshholds then. That is not a grey area, you are always going to be liable to collect sales taxes on taxable business/retail sales in the state in which you live and have a physical presence in, if that state has a sales tax. The grey area I was referring to had to do with whether or not 10-20 sales per year could be argued as being exempt from sales tax as casual/occasional sales, depending on the state you are in and if they even allow such an exemption, and what their specific rules and definition of casual/occasional sales are.

I was then saying that in light of the courts in now looking at online sales more rigorously in regards to taxes and all, the courts and tax authorities may view parties selling items online with someone like Ebay as a true business as opposed to having a garage sale. And by the way, are you familiar with Ebay's current reporting requirement to tell the IRS how much your wife may have sold on Ebay each year? It is currently set at $20K AND 200 or more transactions. So I'm assuming your wife doesn't currently get a 1099 for her 10-20 sales a year. But guess what, starting in 2022 the IRS reporting threshhold for sending them a 1099 to show how much your wife had in Ebay sales for the year is being lowered to just $600, with no minimum number of transactions. So it is possible you may have to start reporting her "business" on your income tax returns if she hits $600 in sales for a year. And if the IRS is going to consider that level of activity as a retail business, what do you think a state sales tax authority is going to do? Now do you see the difference between a garage sale and selling on Ebay?

I need to start charging you people for all the free advice tax advice I keep giving on here, especially when I get questioned like I don't know what I'm talking about and have to explain even further to get some to understand.