Ebay Sales Tax on Everything Now?

[SteveMitchell]

I believe the culprit in all of this is not eBay - except as eBay has insufficiently advised "members" of what has transpired and how it will all play out. As a non-lawyer I will leave it to those among us who are to explain but the tax-on-eBay (and not just eBay) stems from a 2018 Supreme Court decision.

See: https://www.scotusblog.com/case-file...v-wayfair-inc/

This decision seems to have opened the floodgates to every state (except the few that, blessedly, do not have state sales taxes) collecting taxes on internet sales whether the business has a presence in the state or not.

As Washington State residents who collect and pay WA state's very variable tax rate, we note that the original statement regarding collecting WA state tax has been removed from our eBay listings and the standard line (which seems to appear in all listings we've seen lately) has replaced it. That statement reads: "Sales tax may apply when shipping to: MN, WA." And with likely many more to come.

Steve Mitchell
TheBaseballHobbyist

[BobC]

Originally Posted by thecatspajamas

Without knowing for sure, I would hypothesize that eBay is now adding sales tax for specific states when out-of-state purchases are being shipped to that state (i.e. Use Tax), but is still leaving it up to sellers who reside in those states to collect and remit Sales Tax to their state as before. This would make it appear hit-and-miss for application of sales tax for in-state buyers. Did the Wayfair court ruling that all of this was based on even speak to application of in-state sales tax for internet purchases?

I haven't tested this theory. Just throwing it out there for consideration.

The Supreme Court case wouldn't directly go into that as they were looking primarily at the issue of what gives state #1 the right to make someone in another state, state #2, have to collect and remit sales tax on sales to customers in state #1. The U.S. Supreme Court gets involved in multi-state issues or those that specifically deal with federal law. A specific state sales tax rule about in-state sellers and how they charge and collect such sales tax from in-state buyers wouldn't necessarily have any federal implications that would require or even permit U.S. Supreme Court involvement. That South Dakota vs. Wayfair case was all about what causes a seller that does not otherwise have any physical presence in a particular state to now have enough presence so they are required to comply with that state's rules as far as charging and remitting sales tax on sales to customers in that state is concerned.

[BobC]

Originally Posted by SteveMitchell

I believe the culprit in all of this is not eBay - except as eBay has insufficiently advised "members" of what has transpired and how it will all play out. As a non-lawyer I will leave it to those among us who are to explain but the tax-on-eBay (and not just eBay) stems from a 2018 Supreme Court decision.

See: https://www.scotusblog.com/case-file...v-wayfair-inc/

This decision seems to have opened the floodgates to every state (except the few that, blessedly, do not have state sales taxes) collecting taxes on internet sales whether the business has a presence in the state or not.

As Washington State residents who collect and pay WA state's very variable tax rate, we note that the original statement regarding collecting WA state tax has been removed from our eBay listings and the standard line (which seems to appear in all listings we've seen lately) has replaced it. That statement reads: "Sales tax may apply when shipping to: MN, WA." And with likely many more to come.

Steve Mitchell
TheBaseballHobbyist

While all this current concern and discussion regarding Ebay now collecting sales tax in certain states is most assuredly a result from last year's South Dakota vs. Wayfair case that went before the U.S. Supreme Court, there's one thing that no one has really addressed about this entire issue that has me scratching my head. That case was all about what makes a seller from one state suddenly subject to sales tax laws of another state, which is what the Supreme Court primarily addressed. Now I admit i have not actually read the complete findings and opinions from the court on this case, but what I didn't hear or see anywhere was if the Supreme Court also offered any ruling or opinion on what constituted a "seller" subject to their findings.

This is where I'm wondering a little bit why Ebay itself is stepping up and taking control and responsibility for collecting and remitting sales tax in certain inter-state sales situations. I always was under the impression that Ebay operated as a platform to provide a virtual marketplace for buyers and sellers to get together and complete transaction online. But Ebay itself doesn't actually own or sell anything and each of the individual account holders that use Ebay are considered as independent entities/sellers. That is markedly different than how other online retailers like Amazon, Wayfair and Rock Auto operate to my knowledge. In those cases, the big online retailers are the sellers, and they should be the ones responsible for charging, collecting and remitting sales tax. In Ebay's case though, I'm actually surprised they are stepping in on behalf of all these independent sellers and starting to collect and remit sales taxes for certain states. I had not heard anywhere that what Ebay does suddenly elevated them to the position of responsibility and liability in regards to state sales taxes. And the fact that certain sellers who were already charging and remitting sales taxes before this recent Supreme Court case are still doing so independently of Ebay seems to go along with that thinking as well. If nothing else, this can become real convoluted for the parties involved. For example, if there was a seller on Ebay who was previously charging sales tax in one of these states Ebay is now handling, what does that seller now do to report those sales if Ebay took over the collection and remittance of sales tax? Especially if that seller also has sales tax obligations to that same state from other venues and platforms they also use to sell to customers in such states?

And I would have thought that Ebay would fight being given such a sales tax responsibility tooth and nail before taking it on like they apparently have. I have seen and heard nothing as to why this is suddenly Ebay's responsibility. Unless Ebay is taking a proactive position that these recent sales tax changes for online retailers is just the beginning and they figure these states will eventually start coming after them as the responsible party so they simply decided to get out in front of it, otherwise I don't get it. For these states to go after each individual seller on Ebay is going to be difficult, time-consuming and not very effective in my opinion. To only have to go after Ebay itself, they can focus on just one huge entity and get the most cost-effective results possible. But then the states would have to be able to prove that Ebay is the seller with the ultimate sales tax responsibility to begin with, which I'm not so sure they really are.

Now I could also then see a particular state going to Ebay and demanding sales information on all their retail activities in that particular state so they can start going after the individual sellers themselves. Ebay should have all the buyer and seller information and activity in their system so it isn't like they could just say no, they didn't have it. Maybe this was something else Ebay saw would be coming and decided that rather than providing such information and pissing off and alienating their sellers, it would be less of an issue with sellers if Ebay just took this on themselves. I'm guessing on this, but it could be a valid explanation as to why they are now doing what they are doing in these certain states in taking on the sales tax collection and remittance functions and responsibilities. It could even be construed as a selling point for Ebay I guess in that they could let people selling on their platform know that by doing so, they don't have to worry about sales tax and all the issues involved. I am fairly certain that Ebay has tons of sellers that are relatively small and as such, don't bother reporting their Ebay sales activity for income or any other tax purposes. By suddenly having state sales tax agents looking at these individual sellers, such information can then get shared between federal, state and local taxing authorities as well. And in this digital age, don't think they don't share information, and plan to do even more of it in the future.

Several years back when Ebay split with Paypal and stopped directly owning them, I actually thought that was a smart, preemptive move on Ebay's part in regards to sales tax issues as it would make it less likely that someone down the road could have argued and said Ebay should be deemed responsible for things like collecting sales tax on transactions through their venue because even if they don't actually own and control the inventory and items being sold, they do control the collection and remittance of the monies from all the activity due to their ownership of Paypal. So if anyone has any factual information as to why Ebay would so quickly and willingly jump in to take on sales tax collection and remittance responsibilities, I'd like to hear and/or see it.

[ramram]

I haven't read every post on this thread so my apologies if already covered but -

Is ebay letting these sellers opt in to the sales tax collecting (by ebay) or is ebay just applying it to all of them in these particular states? It sounds like not all sellers from these states are having the tax collected by ebay so this could explain why.

Rob M

[perezfan]

Originally Posted by ramram

I haven't read every post on this thread so my apologies if already covered but -

Is ebay letting these sellers opt in to the sales tax collecting (by ebay) or is ebay just applying it to all of them in these particular states? It sounds like not all sellers from these states are having the tax collected by ebay so this could explain why.

Rob M

Nope... it is the latter. Ebay is automatically applying the sales tax to all transactions in the states listed earlier in this thread. WA and MN for now, and various others to follow shortly.

[savedfrommyspokes]

Can anyone from Iowa confirm if ebay is now adding sales tax to their out of state ebay purchases?

I had a recent buyer from IA that appears to have had a 6% sales tax added to their order. Ebay appears to now be collecting and remitting sales tax the same way as they do with orders from WA state. On my end, nothing shows in PP, however, when viewing my ebay orders on the ebay Manage Orders screen, the "total" sale amount is 6% more than what shows up on the order in PP.

[Leon]

I think eventually taxes will be all of the states. The tax issue is one of many to be the downfall of brick and mortar retail, imo.

Originally Posted by perezfan

Nope... it is the latter. Ebay is automatically applying the sales tax to all transactions in the states listed earlier in this thread. WA and MN for now, and various others to follow shortly.

[Lorewalker]

Originally Posted by savedfrommyspokes

Can anyone from Iowa confirm if ebay is now adding sales tax to their out of state ebay purchases?

I had a recent buyer from IA that appears to have had a 6% sales tax added to their order. Ebay appears to now be collecting and remitting sales tax the same way as they do with orders from WA state. On my end, nothing shows in PP, however, when viewing my ebay orders on the ebay Manage Orders screen, the "total" sale amount is 6% more than what shows up on the order in PP.

Yes ebay is now withholding for IA, MN, WA and it appears that tax is imposed on shipping and handling as well.

As Leon stated, soon it will be all states.

[savedfrommyspokes]

Originally Posted by Lorewalker

Yes ebay is now withholding for IA, MN, WA and it appears that tax is imposed on shipping and handling as well.

As Leon stated, soon it will be all states.

I had an order two days ago to MN and there appears to be no sales tax yet on that order. This MN order did not show any extra funds collected as the IA and WA state orders do.


Oregon does not charge sales tax....PWCC's vault service may become a work around for paying sales tax on higher dollar items for those buyers located in the growing number of states collecting sales tax on ebay purchases.

[joed25]

I have a New Jersey State resale Certificate. Does that exempt me from paying sales tax on all ebay purchases (even out of state)? Thank you. Joe

[glchen]

Originally Posted by joed25

I have a New Jersey State resale Certificate. Does that exempt me from paying sales tax on all ebay purchases (even out of state)? Thank you. Joe

Yes, but you need to submit your reseller info to ebay. Details are here: Link. (I have not tried this.)

[perezfan]

Originally Posted by conor912

Ahhh. This explains the mystery charge to my PP account. The other day I bought a PC for $7.75/dlvd. The charge showed as $7.75, but then there was a wierd separate mystery charge of $.78, which is WA sales tax (10.1%). I guess the party's over. Tax in HA, now tax on eBay...soon tax everywhere.

Yup.... Etsy is now doing the same (in WA anyway). Not sure about other states, but pretty sure that many others will follow.

[BobC]

Originally Posted by joed25

I have a New Jersey State resale Certificate. Does that exempt me from paying sales tax on all ebay purchases (even out of state)? Thank you. Joe

It depends! If you buy something on Ebay that is actually going to be re-sold by you/your business then, YES, that purchase is generally sales tax exempt to you/your business. But if you buy something that is for you personally and/or used in your business and not necessarily going to be re-sold by you/your business then, NO, that purchase would generally not be sales tax exempt to you/your business.

Just having a resale certificate doesn't automatically exempt you from sales tax on all purchases. And as mentioned by an earlier poster, you would also have to prepare and supply to Ebay, or whomever would otherwise be charging and collecting sales tax from you, a signed copy of any sales tax exemption certificate or form you have that is applicable.

And here's where it can start to get sticky. What if over time you/your business make some Ebay purchases that are sales tax exempt and some that are not. I'm not exactly sure how Ebay will be able to discern between which purchases are or aren't subject to sales tax then. And if a state ever goes back to Ebay to review and audit the sales taxes they are and are not collecting, Ebay will likely turn over their file of any and all sales tax exemption forms they've received for people/businesses. And that helps to show Ebay has no liability for having not collected sales tax from those people/businesses that gave them sales tax exemption certificates. But it also then gives the state a listing of people/businesses to possibly further investigate to see if they are truly sales tax exempt or merely trying to get out of paying sales tax.

[joed25]

Thanks guys for the replies

[thecatspajamas]

Originally Posted by BobC

And here's where it can start to get sticky. What if over time you/your business make some Ebay purchases that are sales tax exempt and some that are not. I'm not exactly sure how Ebay will be able to discern between which purchases are or aren't subject to sales tax then. And if a state ever goes back to Ebay to review and audit the sales taxes they are and are not collecting, Ebay will likely turn over their file of any and all sales tax exemption forms they've received for people/businesses. And that helps to show Ebay has no liability for having not collected sales tax from those people/businesses that gave them sales tax exemption certificates. But it also then gives the state a listing of people/businesses to possibly further investigate to see if they are truly sales tax exempt or merely trying to get out of paying sales tax.

You're right that I don't see a way for a buyer to convey to eBay which purchases fall into which category. In these cases, one would presumably still have to remit the applicable tax to their state as before. Or would have to establish a separate eBay account for such non-for-resale purchases (probably not a bad idea anyway). This would still be preferable to the previous situation though of eBay not having any way for resellers to avoid eating the sales tax on ALL purchases, regardless of whether intended for resale or personal use.

[BobC]

Originally Posted by thecatspajamas

You're right that I don't see a way for a buyer to convey to eBay which purchases fall into which category. In these cases, one would presumably still have to remit the applicable tax to their state as before. Or would have to establish a separate eBay account for such non-for-resale purchases (probably not a bad idea anyway). This would still be preferable to the previous situation though of eBay not having any way for resellers to avoid eating the sales tax on ALL purchases, regardless of whether intended for resale or personal use.

And that is only the tip of the iceberg. It can get way more complicated and worse than that. Each state with sales taxes has their own unique set of rules of what is and isn't taxable and so on. Not sure how good of a job Ebay is going to do in implementing and then keeping track of the specific rules for each and every state, and then also keep track and make updates as those laws may change. For example, I seem to remember someone saying that in Minnesota they don't charge sales tax on clothing. So what do you do when someone lists say an autographed baseball jersey for sale on Ebay to a buyer in Minnesota? Technically since the jersey can be considered as a wearable piece of clothing, I would guess it should be exempt from Minnesota sales tax, right? But if it is listed in the sports or autographed memorabilia section of Ebay, where it rightly should be, will Ebay be able to detect and properly not charge a resident of Minnesota sales tax on it if they did buy it? See how easily and quickly this can get complicated and difficult to keep track of. And if Ebay is going to assume and take on the responsibility for the collection of these state sales taxes, that is also going to open them up for these states to come in and audit there sales tax collection and remittance activities. And with the sheer size and volume of sales activity on Ebay and potential amounts of sales tax to be collected, it is truly a question of when they will start to get audited by various states, not if.

[D. Bergin]

Originally Posted by glchen

Yes, but you need to submit your reseller info to ebay. Details are here: Link. (I have not tried this.)

I don't buy much on Ebay anymore, but I submitted for it, and it went through pretty quickly. It says 7-10 days but it was more like 1 or 2. I made the mistake of first sending them my Sales & Use tax permit, but what they needed was the Sales & Use Tax Resale Certificate exemption form that is filled out for each individual seller you are doing business with (in this case "Ebay").

Supposedly once you submit this, it should be good for 3 years before they request it again.

[steve B]

Originally Posted by D. Bergin

I don't buy much on Ebay anymore, but I submitted for it, and it went through pretty quickly. It says 7-10 days but it was more like 1 or 2. I made the mistake of first sending them my Sales & Use tax permit, but what they needed was the Sales & Use Tax Resale Certificate exemption form that is filled out for each individual seller you are doing business with (in this case "Ebay").

Supposedly once you submit this, it should be good for 3 years before they request it again.

Another thing they'll have to track, here in Mass, the exemption forms should be filed each year. (Which doesn't always happen in practice)

[dio]

Anyway to avoid sales tax from ebay?
I guess i'll stop buying from ebay and just go with fb/net54 from now on