eBay sales tax issues

[Aaron O]

As many of you are aware, the wayfair case introduced new nexus concepts that states have almost all adapted to in order to collect sales tax on internet sales (in many cases this will expand as states and localities apply this for other taxes as well). eBay collects sales tax on behalf of sellers...

In PA, clothes are exempted from sales tax, but eBay is still collecting, and I assume remitting, sales tax on these exempt purchases. Since it’s been happening for nearly a year, I’d assume they’re aware of the issue.

Has anyone else noticed eBay inappropriately charging sales tax when it doesn’t apply? Also wondering if they have any liability (though consumers can file for a refund with the DOR in PA) for their erroneous collections.

[bjf]

Yes, I just bought a used item that should be exempt from sales tax.

[Marlin]

I don't know what state you are in, but in Illinois. sales taxes are assessed on used items. Probably in many other states as well.

[gbcoupe]

This is what I found for Ohio

https://www.tax.ohio.gov/taxeducation/selling_your_stuff.aspx

Selling Your Stuff:

Do you have some things you would like to sell for some extra cash? There are many ways to sell your personal items these days; whether it’s through an internet sale, an advertisement in the paper, or a yard sale, they are all considered to be the same type of transaction: a casual sale. Casual sales are not taxable transactions, as sales tax was paid on these items the first time they were purchased.

For example, if you decide to sell your old mp3 player on an online auction/shopping website then you would not need to charge the buyer any sales tax. In this example, you are selling a personal item that you originally purchased for your personal use, therefore you are not required to charge sales tax. This would also be the case if you were selling the mp3 to a friend, at a yard sale, etc. On the other hand, if you purchase an mp3 player at a very low price with plans of reselling it to try and make some extra money, you would need to charge sales tax. In this case, the item was not purchased for your personal use.

There's really no way for eBay to know if you're flipping or selling personal items.

[NYCfixie]

MA is the same for "casual sales" in that no sales tax should be charged or collected:
https://www.mass.gov/regulations/830-CMR-64h61-casual-and-isolated-sales

eBay has no way (or desire) to figure out if it should (or should not) charge sales tax on items you list as a seller. As mentioned in other eBay related threads on this forum, eBay could care less about the individual seller as most of their income now comes from professional and commercial sellers. As such, they collect tax on all sales to keep in the good graces of the states knowing they may need to use that Good Karma some day with state/political officials if any laws are passed that might actually affect eBay's profits.

So, the states and eBay are basically saying bend over and take it where the sun don't shine to the individual seller making a "casual sale".

Do you see anyone going after craig's list? No, because the tax revenue is not worth it for the states. Most of them are in-person cash-based "casual sales" which cannot be tracked as easily and would not result in tax revenue aanyway.

[Aaron O]

MA is the same for "casual sales" in that no sales tax should be charged or collected:
https://www.mass.gov/regulations/830-CMR-64h61-casual-and-isolated-sales

eBay has no way (or desire) to figure out if it should (or should not) charge sales tax on items you list as a seller. As mentioned in other eBay related threads on this forum, eBay could care less about the individual seller as most of their income now comes from professional and commercial sellers. As such, they collect tax on all sales to keep in the good graces of the states knowing they may need to use that Good Karma some day with state/political officials if any laws are passed that might actually affect eBay's profits.

So, the states and eBay are basically saying bend over and take it where the sun don't shine to the individual seller making a "casual sale".

Do you see anyone going after craig's list? No, because the tax revenue is not worth it for the states. Most of them are in-person cash-based "casual sales" which cannot be tracked as easily and would not result in tax revenue aanyway.Every other online retailer has managed it. Amazon has third parties, and they collect on sales tax according to state law. It’s sort of your obligation post-wayfair. I’m very curious over whether eBay could be found liable in a class action suit for collecting on items they know to be exempt. The buyer can petition for a refund, so I’m not sure how damaged could be assessed.

Your CL argument isn’t apples - apples because there are no fees, typically there are local sales, and CL has no role in facilitating a purchase. Many states certainly do have folks that go out and collect at flea markets. If CL was facilitating purchases, states would be sending them notices.

When you do business in a state, and wayfair extended nexus, you’re on the hook for their laws.

[likebikes]

i would report them to the irs. that'll straighten up in no time.

[rowebr]

MA is the same for "casual sales" in that no sales tax should be charged or collected:
https://www.mass.gov/regulations/830-CMR-64h61-casual-and-isolated-sales

eBay has no way (or desire) to figure out if it should (or should not) charge sales tax on items you list as a seller. As mentioned in other eBay related threads on this forum, eBay could care less about the individual seller as most of their income now comes from professional and commercial sellers. As such, they collect tax on all sales to keep in the good graces of the states knowing they may need to use that Good Karma some day with state/political officials if any laws are passed that might actually affect eBay's profits.

So, the states and eBay are basically saying bend over and take it where the sun don't shine to the individual seller making a "casual sale".

Do you see anyone going after craig's list? No, because the tax revenue is not worth it for the states. Most of them are in-person cash-based "casual sales" which cannot be tracked as easily and would not result in tax revenue aanyway.

If you know the sales tax will be collected by Ebay from you as the seller, you have the option to bump your asking price up a bit to try to cover some of the tax assuming you are still able to sell the item. Of course that makes the buyer pay for the erroneous collection of tax as well...

[prototoast]

If you know the sales tax will be collected by Ebay from you as the seller, you have the option to bump your asking price up a bit to try to cover some of the tax assuming you are still able to sell the item. Of course that makes the buyer pay for the erroneous collection of tax as well...

As a seller on eBay, you get whatever your listing was. eBay adds a tax based on the buyer's location and remits that to tax authorities without the seller ever seeing it.

[NYCfixie]

Therein lies the problem, if one lowers their selling price to make the listing more attractive knowing eBay collects sales tax, you get less on the sale so once again eBay now favors commercial sellers.


If you know the sales tax will be collected by Ebay from you as the seller, you have the option to bump your asking price up a bit to try to cover some of the tax assuming you are still able to sell the item. Of course that makes the buyer pay for the erroneous collection of tax as well...

As a seller on eBay, you get whatever your listing was. eBay adds a tax based on the buyer's location and remits that to tax authorities without the seller ever seeing it.

[unterhausen]

if they collect sales tax from everyone, it's not really an advantage to commercial sellers. I don't see any reason to report them to anyone, the state gets sales tax revenue, not ebay, so there is no tax fraud. I think ebay looks at private sellers as just being a pita and would rather become alibaba for the U.S. I know they have discouraged me from selling much.

[merckxman]

Interesting topic about "casual sales" . I just read NJ law on this and says:
"The Sales and Use Tax Act allows a casual sale exemption under N.J.S.A. 54:32B-2(u). The Sales and Use Tax Act defines a casual sale as one which is "... an isolated or occasional sale of an item of tangible personal property... by a person who is not regularly engaged in the business of making retail sales of such property… where the item of tangible personal property… was obtained by the person making the sale, through purchase or otherwise, for his or her own use.”

[Aaron O]

Disagree with the sales tax arguments as part of price...

There’re applied after the bidding/buy now price. Everyone understands how sales tax works (and it’s invoiced as a separate line item). I doubt that many people are subtracting sales tax from what they’re willing to pay, and the eBay market is rarely competing with garage sales avoiding sales tax anyway.

People can, and have, challenge sales tax as a regressive form of taxation, but if bricks and mortars are abiding by it, not applying it to online sales is privilege and anti-competitive.

What is interesting is that the wayfair nexus standards have an element of scope...a fixed number of sales, or a price threshold. If an eBay seller is under that threshold, and were selling on their own, they’d have no obligation to collect sales tax. Logistically, it would be a nightmare for eBay to make that determination, but it is interesting that not all sellers are required to collect sales tax. How eBay fits in as a facilitator under those nexus standards, I have no idea.

I’m not a SME, but I’d think that if eBay is collecting exempt sales tax, knowingly (and it has been going on long enough that they know), they’re liable to the buyers for what they incorrectly collected. I’d also love to see if it was actually remitted.

I have an attorney friend who heads up sales tax for a firm - I’m going to ask him. I think a clever lawyer could collect a pay day on class action fees.

[unterhausen]

I feel like ebay could have a check box saying that it is a casual sale, one time, of an item purchased at retail. Granted, they would have to know if the seller's state had casual sales exemption. Some states will let you sell without tax in certain circumstances, but not at others. For example, at a consignment shop.

[ultraman6970]

I was thinking a few weeks ago in what the op is asking about. Some states charge taxes, other ones dont... ebay or paypal have no idea if you are selling use (they have the check mark at the time of listing the product tho) and other details which make them in short to just charge everybody evenly.

Yes they can be reported to the IRS because at the time to pay or send that money to PA as the OP says, PA will return that money to them but is sure ebay/paypal wont reinburse the money back to you at all. Maybe for 1 seller is like 10 cents but doubt PA has only 1 seller, they might have millions of them and maybe 10 of millions if we add other states that have the same tax regulations, which IMO is fraud at the ebay side.

Will be interesting if some .ORG is willing to fight this one for US for free.

[rowebr]

As a seller on eBay, you get whatever your listing was. eBay adds a tax based on the buyer's location and remits that to tax authorities without the seller ever seeing it.

Ahh right, the buyer sees the tax being added to their bill. I've never sold on Ebay, only purchased. Guess I wasn't paying attention to the tax!

[unterhausen]

Yes they can be reported to the IRS because at the time to pay or send that money to PA as the OP says, PA will return that money to them but is sure ebay/paypal wont reinburse the money back to you at all.
PA (or any other state) doesn't decide if there is a problem with the sales tax collection, they just deposit the money and move on. Ebay gets nothing out of it other than the expense of collecting and remitting the tax. Some small percentage of buyers will realize they were incorrectly assessed sales tax and ask for it back. I'm sure that nobody at the state governments involved will really care how often this happens or doesn't happen.

[prototoast]

PA (or any other state) doesn't decide if there is a problem with the sales tax collection, they just deposit the money and move on. Ebay gets nothing out of it other than the expense of collecting and remitting the tax. Some small percentage of buyers will realize they were incorrectly assessed sales tax and ask for it back. I'm sure that nobody at the state governments involved will really care how often this happens or doesn't happen.

The particular challenge in this situation is that eBay collects and remits the sales tax from the buyer, based on the buyer's location, but the casual sales exemptions are based on the seller's condition. On eBay, a buyer generally won't know if the seller is making a "casual sale" or not.

[Aaron O]

The particular challenge in this situation is that eBay collects and remits the sales tax from the buyer, based on the buyer's location, but the casual sales exemptions are based on the seller's condition. On eBay, a buyer generally won't know if the seller is making a "casual sale" or not.

They do know, or should know, that PA exempts food and clothing from sales tax. The casual sale issue can definitely be confusing, and I understand why they wouldn't go near that; my default position would be collect as well.

I'm not sure what responsibilities a third party like ebay has under Wayfair (which level is Nexus applied, ebay or seller?), but I've reached out to some smart people and asked.

[Aaron O]

Got some answers...

First, it's an area of frequent litigation...I'd bother pursuing more, but apparently being lead plaintiff isn't remunerated well, and there are no finder fees. That's complete BS, but I digress. I understand the ethics issue that justifies it...and after being in some legal issues the past two years, I'm somewhat skeptical of ethics and the legal process.

Second, most states use the market when applying thresholds and liability, so the state tests...nexus or bright line...are applied to ebay, not the vendor.

[ultraman6970]

Technically speaking is easier to paypal just tax everybody the same or could be a nightmare for them to fix the problem. And IMO there is a slight to big chance that they know and since the system is programed the same for everybody but with some exceptions, they wont touch jack till somebody has to make them to fix it.

Threat this problem with PA as a having thousand of gift cards with 50 cents remaining, they wont give the money back and after a couple of years they can pocket it...

Hope some organization gets involved.

They do know, or should know, that PA exempts food and clothing from sales tax. The casual sale issue can definitely be confusing, and I understand why they wouldn't go near that; my default position would be collect as well.

I'm not sure what responsibilities a third party like ebay has under Wayfair (which level is Nexus applied, ebay or seller?), but I've reached out to some smart people and asked.

[HenryA]

Some thoughts and things here:

First, the IRS has nothing to do with state sales taxes.

Second, each state makes its own sales tax laws and regulations. There are commonalities, and many, many differences.

One thing that comes to mind is that in some states, collecting sales tax and not paying it on to the state is a crime. Ebay will have to sort out the propriety and lawfulness of its collection techniques one state at a time.

Buffering that is that the states generally won’t question someone sending them money. My thought is that likely they will take money from ebay gladly - not caring if the purchaser or seller try to reclaim taxes paid but not owed.

This is all pretty complicated compliance and I suspect has been a huge pain to implement for all sellers. The only good part (and really what makes it possible) is that its doable because of the nature of internet marketplaces and the relative ease with which the data can be accessed and used to make sales tax collection possible on this scale and magnitude.

It probably cost ebay a good bit of money to develop and deploy this solution. But not even close to the amounts that will be collected by state governments all over the country. And we all know how carefully and well they use our money. :p

[Davist]

Could be a massive (if uncollectable) class action suit here. What could be an easy fix is if the item is checked as "used" no need to collect sales tax, right? I'm in PA but this should apply everywhere.

[quattro]

As a seller on eBay, you get whatever your listing was. eBay adds a tax based on the buyer's location and remits that to tax authorities without the seller ever seeing it.

Just hoping to confirm the above is correct.
I live in MA., so for example, if I list an item for $1,000, I will get the full sale price minus eBay and paypal % for the sale, and buyer will pay 6.25% MA. Sales Tax in addition to the sale price, is that correct?

Thanks,
quattro

[Aaron O]

That’s correct. eBay is collecting on behalf of buyers/sellers as per state thresholds developed post-wayfair. If eBay made an error, it would be on the buyer to pay use tax, state law dependent, or on eBay itself as the market place.

There are some states that have the vendor in the hook under wayfair, but mass isn’t one of them, and I’m not sure what eBay does for those states. Where that is the case, most non-retail eBay Sellers will be well below the sales tax triggers.

[ultraman6970]

If gets worse will be better to get all the stuff from europe and done with the problem.

Will take longer but sometimes you even get better quality than the stuff bought at this side, specially in european brands.

[LJohnny]

I was looking to get a pair of shoes from overseas and tax was added as well.

[ultraman6970]

REALLY??? What in the world!!!!

Networking with friends looks like a great idea, same forums....

[peanutgallery]

The marketplace has changed and The Man still wants his piece. Wayfair will eventually flesh out, I believe everyone should pay the taxes applicable in their area on NEW items regardless of where it comes from - this includes out of state and overseas. Used items, not so much

You guys like schools, roads and public services, right? I particularly appreciate clean water and safe food

[denapista]

Ahh right, the buyer sees the tax being added to their bill. I've never sold on Ebay, only purchased. Guess I wasn't paying attention to the tax!

So I'm still confused... I bought a pair of S-Works Hell of the North Tubular tires. Total was $140 for two tires, free shipping. I saw on my cart, after tax added the total was now $159. I checked my bank statement and I was only charged $140. So the buyer sees the tax on checkout, but we don't actually pay it?

[ultraman6970]

You will see another charge later... check your paypal. It sucks because they itemize the tax as a separate item, so for that you will see a magical transaction of a couple of bucks later on.

[denapista]

You will see another charge later... check your paypal. It sucks because they itemize the tax as a separate item, so for that you will see a magical transaction of a couple of bucks later on.

Ahhh... I see it now. Damn that kind of kills my ebay purchasing going forward. There's a bike online that I was thinking of buying, but the tax situation adds almost another $200 on top of the price. That's insane!

[ultraman6970]

This going to suck, have my eye in a couple of things from europe, they charge taxes to them and I wont be able to pay for the items at all.

[denapista]

I purchased a pair of shoes from a guy with 37 feedback and he's been a member since 2011. He sells hiking gear from time to time.. I just got charged $16 tax on the shoes, on top of his $19 USPS shipping. I'm over ebay if this is going to be the way it works going forward.

My buddy bought a Campy record chain and wasn't charged tax. This is confusing..

[Lanternrouge]

As a buyer, this is going to make me less inclined to buy things on eBay. As a seller who drops hints about where else the items are listed for sale, it's a good thing since prospective buyers have a motivation for using a search engine to find the listings.

[peanutgallery]

If the 6% local tax is the difference maker in your ability to acquire something for a leisure activity.... you should probably consult with Suze Orman

This going to suck, have my eye in a couple of things from europe, they charge taxes to them and I wont be able to pay for the items at all.

[nublar]

If the 6% local tax is the difference maker in your ability to acquire something for a leisure activity.... you should probably consult with Suze Orman

6% of the price of a Campy Record Crank from PBK means I get to eat next week

[ultraman6970]

6% over 600 bucks is not the same than 6% over 10 bucks chain... 6% over those 600 bucks means a lot for some people.

Im not a millionaire, probably im in the wrong sport??? Who knows at this point but many here count the dimes to get their stuff and the taxes will hurt everybody, will help the lbs thats for sure but the problem many of uss have is that lbs dont have in stock even the socks we like. I do not mind going to a LBS and sometimes I do to get cables and tiny stuff but for example shoes... nobody around has lake... only option is web and heck i have to look between the used shoes between 100 and 150 bucks because I cant pay for used 500 ones... socks for example... every lbs around has those sockguy ones but I do not like them so i have to go to the web for descent socks and actually believe it or not i have 3 pairs of socks rotating this year.... with jerseys, I get used stuff from friends because usually are a lot better than what I can get in the shops around but anyways...

Im not saying taxes is a bad thing but as you guys can see it is killing it for some of us because every dime counts and we are talking about used "Shytt". Wish to have a 80k+ job again and I wouldnt care... but is not the case and for many of us is not the case at all.

[peanutgallery]

Get a Centaur and you'll eat for months:)

6% of the price of a Campy Record Crank from PBK means I get to eat next week

[Hilltopperny]

Well I did some investigating today after having to pay around $70 in tax on a used frameset I purchased this morning. I called ebay to find out why I have to pay tax on a used item from a private seller.

Needless to say they did not have an explanation as to why.
I then decided to contact the NYS department of taxation and finance to see what laws have changed as for 20 years this was not standard procedure. The rep didn't have a very good answer either and said "well you have to pay tax on a vehicle". I responded with the item purchased was a used bike frame and does not require a license and registration to operate. He seemed flabergasted and said that any tangible item will be taxed in NYS to which I replied that I do not pay tax on any other used tangible item I buy on Craigslist or a garage sale. He went back to the tangible items line and brought up amazon, etsy and eBay again. I asked if the law had changed and his response was no.

I will no longer waste my time purchasing from eBay as 8% added to items that have already been taxed negates any perceived deal I would have got on the item. This seems like a scam to collect more money and if it is the buyers responsibility to pay tax on used items then why is it taken directly from eBay instead of sending me some sort of invoice?

The funny thing is that I just purchased some spurcycle bells from an actual retailer and did not have to pay any tax at all. Go figure!

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[denapista]

That's my issues with ebay... It's hit or miss. Paying taxes on a pair of shoes that were worn once doesn't seem right at all. I think there's some sort of stipulation that's supposed to be implemented, but ebay hasn't done it yet. There should be a check mark ox on what type of items are taxable and which aren't. So how does buying a car from ebay work? You pay taxes on the vehicle and taxes when you register it?

Just saying "Who cares and pay the tax" is crazy to me. What's right is right and what's wrong is wrong. At the bare minimum define what's taxable and what isn't, as buyers are getting charged here and there on the most random items.

[Hilltopperny]

I am going to write my local representative about this situation and see if I get a response because I do not understand how a corporation can tax used items from non retail sales or pick and choose what they tax?

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[ultraman6970]

This...!!!

We have to start making mailing lists with stuff and start dealing between us IMO... or... get together by areas and make a tiny swap meet once a month.

Maybe?

I am going to write my local representative about this situation and see if I get a response because I do not understand how a corporation can tax used items from non retail sales or pick and choose what they tax?

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[Hilltopperny]

This...!!!



We have to start making mailing lists with stuff and start dealing between us IMO... or... get together by areas and make a tiny swap meet once a month.



Maybe?I was discussing something like this with my Sister in law as she is a jeweler and with changes made by Etsy this year is seeing sales tank as she is one person shop and not a huge corporate entity. Between etsy, eBay and the like small business owners are no longer thriving paving the way for larger corporate entities to take over even more of the general sales and $#!ting on the little guy.

There needs to be a new way to do e-commerce that is mutually beneficial to the small shops and the consumers IMHO. This is what these sites used to be, but the algorithms have changed as well as the policies which are starting to cripple the market for the small business owner and the consumer alike.

I filed a complaint with PayPal over the tax issue. I doubt that it will go anywhere, but I do a lot of business through them and would like a better explanation as to why I paid tax on a used item and was taxed on the shipping as well...

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[tbike4]

If the 6% local tax is the difference maker in your ability to acquire something for a leisure activity.... you should probably consult with Suze Orman

Does she ride street or dirt? Honestly I might not take advice from her. Put this in google; Suze Orman bad advice... Just my 2¢ worth. YMMV.

Back to the matter at hand. Will this be cleared up/explained by this weekend? I need a new frame.

[unterhausen]

I was discussing something like this with my Sister in law as she is a jeweler and with changes made by Etsy this year is seeing sales tank as she is one person shop and not a huge corporate entity. Between etsy, eBay and the like small business owners are no longer thriving paving the way for larger corporate entities to take over even more of the general sales and $#!ting on the little guy.
I was thinking about getting an Etsy account to sell some specialized bike tools and then they drained a batch of their seller's bank accounts by "mistake." Paypal is also a bit dangerous on this score, although mostly from scammers and chargebacks. Both ebay and etsy want to be Amazon, so that's bad for small vendors and individuals.

[Hilltopperny]

I was thinking about getting an Etsy account to sell some specialized bike tools and then they drained a batch of their seller's bank accounts by "mistake." Paypal is also a bit dangerous on this score, although mostly from scammers and chargebacks. Both ebay and etsy want to be Amazon, so that's bad for small vendors and individuals.Yes, I think its time for some sort of reset button to be pushed and something new to pop up and replace what was initially set up for the small business. I wish I knew exactly what it entailed so I could try and develop something for this specific purpose.



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[Mark McM]

Well I did some investigating today after having to pay around $70 in tax on a used frameset I purchased this morning. I called ebay to find out why I have to pay tax on a used item from a private seller.

Needless to say they did not have an explanation as to why.
I then decided to contact the NYS department of taxation and finance to see what laws have changed as for 20 years this was not standard procedure. The rep didn't have a very good answer either and said "well you have to pay tax on a vehicle". I responded with the item purchased was a used bike frame and does not require a license and registration to operate. He seemed flabergasted and said that any tangible item will be taxed in NYS to which I replied that I do not pay tax on any other used tangible item I buy on Craigslist or a garage sale. He went back to the tangible items line and brought up amazon, etsy and eBay again. I asked if the law had changed and his response was no.

Based on New York State Tax Bulletin ST-807 (TB-ST-807), (https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/sales_from_your_home.htm)published about 10 years ago, your statement, "I replied that I do not pay tax on any other used tangible item I buy on Craigslist or a garage sale." is wrong in this case on several counts. While some goods and services are exempt from sales tax, no goods are exempt just because they are used. At an 8% tax rate, a sales tax of $70 means the item's sales price was $875. According to the bulletin, any seller in New York who sells goods or services with a value of $600 or more (even for casual one time sales from a residence) is required to collect sales tax. What seems to have changed now is the state's ability to enforce this tax collection - or more to the point, what has changed is the ability of buyers and to evade collection.


I will no longer waste my time purchasing from eBay as 8% added to items that have already been taxed negates any perceived deal I would have got on the item. This seems like a scam to collect more money and if it is the buyers responsibility to pay tax on used items then why is it taken directly from eBay instead of sending me some sort of invoice?

As explained in the bulletin, it is the responsibility of the seller to collect the tax, so in this case it appears that ebay is acting as an agent for the seller to collect the tax. Any "deal" or "scam" involved here is the previous ease in committing tax evasion.

[Hilltopperny]

Based on New York State Tax Bulletin ST-807 (TB-ST-807), (https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/sales_from_your_home.htm)published about 10 years ago, your statement, "I replied that I do not pay tax on any other used tangible item I buy on Craigslist or a garage sale." is wrong in this case on several counts. While some goods and services are exempt from sales tax, no goods are exempt just because they are used. At an 8% tax rate, a sales tax of $70 means the item's sales price was $875. According to the bulletin, any seller in New York who sells goods or services with a value of $600 or more (even for casual one time sales from a residence) is required to collect sales tax. What seems to have changed now is the state's ability to enforce this tax collection - or more to the point, what has changed is the ability of buyers and to evade collection.









As explained in the bulletin, it is the responsibility of the seller to collect the tax, so in this case it appears that ebay is acting as an agent for the seller to collect the tax. Any "deal" or "scam" involved here is the previous ease in committing tax evasion.The item was bought from Ohio. I always have paid tax on any item I purchased within NY state as I was required to pay sales tax. What has changed is having to pay tax on used goods or just goods in general from other states which isnt explained.

They also charged tax on shipping...
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[Aaron O]

There is a difference between not being charged sales tax, not paying use tax, and not being obligated to pay sales/use tax. I don't know what NY's laws are on used goods...PA has an exemption for "isolated sales", but if you were a retailer of used goods, you'd owe sales tax for sales in PA, subject to state nexus. If you buy them as a PA resident, and aren't charged sales tax, you owe the use tax.

Whether you're an isolated seller of goods probably has a fair bit of gray area, and ebay has other vendors making it likely taxable in PA. I haven't researched case law and am going only off of the code that I'm familiar with. My reading is used items purchased for sale on ebay in PA are taxable.

CL is likely to be seen as being more akin to an exempt garage sale, and in terms of practical application, it's not something it would be profitable to pursue either way.

To reiterate, there is potential liability on the part of ebay if their collections are negligent, and I think it's very apparent that they are. If there's an attorney looking to make some dollars, this looks like a winner to me, and I'd assume they're messing it up elsewhere (other than PA) too.

[unterhausen]

The item was bought from Ohio. I always have paid tax on any item I purchased within NY state as I was required to pay sales tax. What has changed is having to pay tax on used goods or just goods in general from other states which isnt explained.
I have mentioned this before in one of these threads, but Pennsylvania always required buyers to pay sales tax on internet purchases (or mail order purchases BITD) if it wasn't already collected. It's just that nobody did it. I went to a business seminar where they said that Pennsylvania was really good at catching businesses not paying sales tax on internet purchases. I can't imagine that wasn't true in NY as well. Consignment shops are a lot like ebay, private sales of used items through a storefront. Those sales have always required paying sales tax.

[Aaron O]

I have mentioned this before in one of these threads, but Pennsylvania always required buyers to pay sales tax on internet purchases (or mail order purchases BITD) if it wasn't already collected. It's just that nobody did it. I went to a business seminar where they said that Pennsylvania was really good at catching businesses not paying sales tax on internet purchases. I can't imagine that wasn't true in NY as well. Consignment shops are a lot like ebay, private sales of used items through a storefront. Those sales have always required paying sales tax.

I still don't understand how the businesses that air those "come buy it in Delaware tax free" ads aren't essentially guilty of criminal conspiracy.

[Mark McM]

I still don't understand how the businesses that air those "come buy it in Delaware tax free" ads aren't essentially guilty of criminal conspiracy.

If you buy it in person in Delaware, only use the product in Delaware, and don't bring it to another state (which has a use/sales tax), then you don't owe any sales/use tax.

[Mark McM]

The item was bought from Ohio. I always have paid tax on any item I purchased within NY state as I was required to pay sales tax. What has changed is having to pay tax on used goods or just goods in general from other states which isnt explained.

They also charged tax on shipping...
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This is a bit confusing. Your username information says "Lassellsville NY", and you were directed to the New York tax authority, but you say the item was bought from Ohio? You are not a New York state resident, but reside in Ohio? If so then New York state should have no authority to tax you - that would be authority of the state you reside in. Did you used to live in New York state? If so, maybe ebay still thinks you're a New York state resident (and applied tax accordingly).

[Hilltopperny]

This is a bit confusing. Your username information says "Lassellsville NY", and you were directed to the New York tax authority, but you say the item was bought from Ohio? You are not a New York state resident, but reside in Ohio? If so then New York state should have no authority to tax you - that would be authority of the state you reside in. Did you used to live in New York state? If so, maybe ebay still thinks you're a New York state resident (and applied tax accordingly).any seller in New York who sells goods or services with a value of $600 or more (even for casual one time sales from a residence) is required to collect sales tax.

It states any seller is required to collect taxes, but the seller is in Ohio. I was the buyer and am in NY state.

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[Mark McM]

any seller in New York who sells goods or services with a value of $600 or more (even for casual one time sales from a residence) is required to collect sales tax.

It states any seller is required to collect taxes, but the seller is in Ohio. I was the buyer and am in NY state.

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Ah, that makes sense now. Although the seller is in Ohio, due to the S. Dakota v Wayfair Supreme Court decision, New York can compel an Ohio seller to collect taxes according to New York tax laws. Blame the Supreme Court, not ebay, for this situation.

[Aaron O]

If you buy it in person in Delaware, only use the product in Delaware, and don't bring it to another state (which has a use/sales tax), then you don't owe any sales/use tax.

The ads I'm thinking of expressly suggest avoiding sales tax by buying it in Delaware. They are very clearly selling smuggling.

I'm sure that those ads are only intended for Delaware residents who might inadvertently make a major jewelry purchase in PA.

[Hilltopperny]

Ah, that makes sense now. Although the seller is in Ohio, due to the S. Dakota v Wayfair Supreme Court decision, New York can compel an Ohio seller to collect taxes according to New York tax laws. Blame the Supreme Court, not ebay, for this situation.Is this the new Supreme Court decision that is being used to constitute yet another tax? I am in no way trying to evade taxes and pay quite a hefty share of them living here in NY state with multiple properties and a personal business, but piling more tax on purchases from eBay is a huge deterrent for me.

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[Mark McM]

Is this the new Supreme Court decision that is being used to constitute yet another tax? I am in no way trying to evade taxes and pay quite a hefty share of them living here in NY state with multiple properties and a personal business, but piling more tax on purchases from eBay is a huge deterrent for me.

The decision was in the middle of last year, but the states were given a year or so to implement it, so many buyers are only recently seeing its affects. But I'm not sure why you are saying it is a new tax? Its not a new tax at all, it's just a new way to enforce an existing tax. Before the Wayfair decision, you would still have been required to pay the tax. The differences now are: New York now has a way to know that you owe the tax; New York can force the seller to collect the tax. If you did not pay use tax on goods bought out of state before, you were simply evading the tax, plain and simple.

If you google South Dakota vs Wayfair, you'll find lots to read about the decision, its implement and affects, and plenty of opinions on it (for and against).

[Hilltopperny]

The decision was in the middle of last year, but the states were given a year or so to implement it, so many buyers are only recently seeing its affects. But I'm not sure why you are saying it is a new tax? Its not a new tax at all, it's just a new way to enforce an existing tax. Before the Wayfair decision, you would still have been required to pay the tax. The differences now are: New York now has a way to know that you owe the tax; New York can force the seller to collect the tax. If you did not pay use tax on goods bought out of state before, you were simply evading the tax, plain and simple.



If you google South Dakota vs Wayfair, you'll find lots to read about the decision, its implement and affects, and plenty of opinions on it (for and against).So if I physically go to say New Jersey and purchase a used good from somebody I am required to pay NYS?

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[Mark McM]

So if I physically go to say New Jersey and purchase a used good from somebody I am required to pay NYS?

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Yes.

Out of state purchases (for tax purposes) are supposed to be reported on your annual income tax return. Here are the instructions for Form IT-201 Full-Year Resident Income Tax Return (https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf). Below the text under "Line 59 - Sales or use tax" (Note the examples for a purchase over the internet, or in person in another state, and also the last paragraph that mentions penalties for not paying this tax). What did you enter on this line when you filed your tax return?

Line 59 – Sales or use tax
Report your sales or use tax liability on this line.
You owe sales or compensating use tax if you:
• purchased an item or service subject to tax that is delivered to
you in New York State without payment of New York State and
local tax to the seller; or
• purchased an item or service outside New York State that is
subject to tax in New York State (and you were a resident of
New York State at the time of purchase) with subsequent use
in New York State.

Note: You may be entitled to a credit for sales tax paid
to another state. See the exact calculation method in the
instructions for Form ST-140, Individual Purchaser’s Annual
Report of Sales and Use Tax.

For sales and use tax purposes, a resident includes persons who
have a permanent place of abode in the state. Accordingly, you
may be a resident for sales tax purposes even though you may
not be a resident for income tax purposes. See the instructions
for Form ST-140 for more information.

You may not use this line to report:
• any sales and use tax on business purchases if the business is
registered for sales and use tax purposes. You must report this
tax on the business’s sales tax return.
• any unpaid sales and use tax on motor vehicles, trailers,
all-terrain vehicles, vessels, or snowmobiles. This tax is paid
directly to the Department of Motor Vehicles (DMV). If you
will not be registering or titling it at the DMV, you should remit
the tax directly to the Tax Department using Form ST-130,
Business Purchaser’s Report of Sales and Use Tax, or
Form ST-140.

An unpaid sales or use tax liability commonly arises if you made
purchases through the Internet, by catalog, from television
shopping channels, or on an Indian reservation, or if you
purchased items or services subject to tax in another state and
brought them back to New York for use here.

Example 1: You purchased a computer over the Internet
that was delivered to your house in Monroe County,
New York, from an out-of-state company and did not
pay sales tax to that company.

Example 2: You purchased a book on a trip to
New Hampshire that you brought back to your residence
in Nassau County, New York, for use there.

You may also owe an additional local tax if you use property
or services in another locality in New York State, other than the
locality to which you paid tax. You owe use tax to the second
locality if you were a resident of that locality at the time of
the purchase, and its rate of tax is higher than the rate of tax
originally paid.

Failure to pay sales or use tax may result in the imposition of
penalty and interest. The Tax Department conducts routine audits
based on information received from third parties, including the
U.S. Customs Service and other states.

[Hilltopperny]

Yes.



Out of state purchases (for tax purposes) are supposed to be reported on your annual income tax return. Here are the instructions for Form IT-201 Full-Year Resident Income Tax Return (https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf). Below the text under "Line 59 - Sales or use tax" (Note the examples for a purchase over the internet, or in person in another state, and also the last paragraph that mentions penalties for not paying this tax). What did you enter on this line when you filed your tax return?I don't typically do my own return or buy out of state goods.

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[ultraman6970]

So, i got something that was 5 bucks but is in the UK... ebay charged me 6% (aprox) taxes in the trasaction, 6% is virginia tax... is that actually legal?

My thing is... they are charging apparently virginia tax in an item that was bought from the UK... ebay will send those 5 cents to the state of virginia?? that doesnt make that much sense to me...

Anybody has an idea if this is actually legal? because 5 cents here, 2 cents there, with the amount of transactions ebay can get millions for stuff w/o even send the money (tax) to the right person, or just forget about it.

[Aaron O]

Yes.

Out of state purchases (for tax purposes) are supposed to be reported on your annual income tax return. Here are the instructions for Form IT-201 Full-Year Resident Income Tax Return (https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf). Below the text under "Line 59 - Sales or use tax" (Note the examples for a purchase over the internet, or in person in another state, and also the last paragraph that mentions penalties for not paying this tax). What did you enter on this line when you filed your tax return?

Potentially incorrect for his example, since NY does have exceptions for home/garage sales, and if there’s a no sales tax exception, there should also be no use tax exception, in state or out.

So it depends on what was purchased where.

[Mark McM]

So, i got something that was 5 bucks but is in the UK... ebay charged me 6% (aprox) taxes in the trasaction, 6% is virginia tax... is that actually legal?

My thing is... they are charging apparently virginia tax in an item that was bought from the UK... ebay will send those 5 cents to the state of virginia?? that doesnt make that much sense to me...

Anybody has an idea if this is actually legal? because 5 cents here, 2 cents there, with the amount of transactions ebay can get millions for stuff w/o even send the money (tax) to the right person, or just forget about it.

Yes, ebay is collecting the Virginia sales/use tax to remit it to the state of Virginia. As the link below shows, Virginia residents have always been required to pay use taxes for goods and services bought from out-of-state. In the past, the states did not have the authority to force out-of-state sellers to collect this tax - but it has always been the responsibility of residents to pay this tax (even if most did not). However, since the Wayfair Supreme Court decision, the states now have the power to force out-of-state sellers to collect the tax. So not only is it legal for ebay to collect the tax, they are required by law to.

https://www.tax.virginia.gov/consumers-use-tax

[Mark McM]

Potentially incorrect for his example, since NY does have exceptions for home/garage sales, and if there’s a no sales tax exception, there should also be no use tax exception, in state or out.

So it depends on what was purchased where.

It also depends on the value of the sale. The NY exemption on sales from the home is only up to $600, but in the OPs case the purchase price of the frame was over $600.

[Aaron O]

It also depends on the value of the sale. The NY exemption on sales from the home is only up to $600, but in the OPs case the purchase price of the frame was over $600.

Wasn't aware of the over $600 threshold...

Apparently you can subtract that piece out, so the frame, if purchased from CL, would be taxable on the overage of $600.

Regardless, I'm pretty sure the partners I worked with would say there won't be a note, so don't worry about it :banana:

I know NJ would send out field people to flea markets a couple of times a year and hit every vendor there. Basically the key was to send NJ a little money, and not to argue with the field person assessment when they came over. The more you sent them in advance, the less aggressive they were. If you sent them nothing, and started arguing over values, they'd smack you.

Actually very reasonable people.

I had one client in PA...has a pizza shop. His register broke for a while, and the PA DOR is up his rear sideways. He was definitely greedy/aggressive, but the DOR's assessment is loony tunes. Don't taunt the bull. PA has gotten AGGRESSIVE.

Cash businesses are always going to be a target because of weak controls and resulting chicanery.

[Aaron O]

This one is interesting...it's always easier going after people out of state.

California is going after people pre-wayfair over the Amazon warehousing...which has always been contentious as far as physical presence:

https://www.inquirer.com/business/california-sales-tax-amazon-seller-philadelphia-business-20191105.html?__vfz=medium%3Dsharebar

[ultraman6970]

Yeah but what when you buy overseas??? this was a 5 bucks for a piece of metal I got from a seller in the UK... i mean is ridiculous... i do get taxes in the US, is fair but when you are buying outside for something that is just penies is just ridiculous to pay taxes...

When you go overseas and buy stuff you can fill up a form to get the taxes back.

[Mark McM]

Yeah but what when you buy overseas??? this was a 5 bucks for a piece of metal I got from a seller in the UK... i mean is ridiculous... i do get taxes in the US, is fair but when you are buying outside for something that is just penies is just ridiculous to pay taxes...

The tax has nothing to do with where the product originated from - its about where the purchaser resides and where the product is used.

Many products are produced overseas, and then sold by retailers in the US. How would it be different if the exact same product you bought was instead imported by a local retailer, and then you bought it from the local retailer?Same product, same end user, same tax.

[Aaron O]

This really isn't that difficult in terms of sales vs. use

In most states, if the seller doesn't collect sales tax, and the item is taxable, you owe use tax. That's not the issue that causes complexity.

The trick is the varying state exceptions on tax-ability. It also used to be in determining physical presence/nexus. The other trick is when you are buying items that you use to provide a service (a contractor installing an AC), you have to determine if the tax is collected at point of sale of the service, or when the contractor purchases. Usually it's a mix, and that's where it gets messy. It gets more confusing when some of the services are taxable, and some aren't.

Example - NY has a lot of different rates for a lot of different products/services, and it can get confusing. I had a hair dresser client, and product used in the hair did not get assessed a tax in NY, but the same products sold over counter did. I can't remember if she also had to split how tax was paid when buying product.

As far as my post - the question was:

Have others noticed ebay collecting sales tax on exempt items?

Are the market places potentially liable for negligent collections?

Answer to both is yes - I just handed someone a nice class action suit.

[denapista]

I'm just more puzzled as to what gets charged and what doesn't get charged.. My buddy bought a chain, and he wasn't charged tax. I wanted to buy a set of wheels (Bontrager xxx aelous4 tubular), but adding tax on top of the shipping, meant I might as well buy new from a store. Adding tax on top of the price you pay for things, is dumb. Especially if you're buying high dollar bike items.

It basically rules ebay out for me, unless you direct message the seller and deal outside of ebay.

[Aaron O]

I'm just more puzzled as to what gets charged and what doesn't get charged.. My buddy bought a chain, and he wasn't charged tax. I wanted to buy a set of wheels (Bontrager xxx aelous4 tubular), but adding tax on top of the shipping, meant I might as well buy new from a store. Adding tax on top of the price you pay for things, is dumb. Especially if you're buying high dollar bike items.

It basically rules ebay out for me, unless you direct message the seller and deal outside of ebay.

A: It depends on state law, but it also seems to depend on eBay's policies and/or negligence in determining an exemption. If it's new, it's PROBABLY taxable. If it's used, it depends on state law, at least on principle. You may be able to file a petition with your state DOR if you disagree with the tax-ability of the good.

As far as whether sales tax is a good idea, they are regressive taxes that punish consumption. A lot of taxation is political...and the less people vote in an election, the more influence lobbying has.

No one likes taxes that they have to pay, but they also don't want cuts to services that they use. A rather large part of politics today is selling "it's their fault! They should pay more/get less". Always stated with cherry picked data. Or, in the case of some elected officials today, made up tweets not backed by any data.

My opinion...on balance...compromise tax positions, like that in 86', end up pretty fair from a high level perspective.

I would argue that the form of tax we're under using the most is estate tax...I'm a fan of estate tax since that transfer of assets tends to be the least beneficial, and the least invested. It tends to be more stagnant. I also think that we've become something of a modern economic nobility, with status handed down.

In my perfect world, we'd have more estate tax, and lower taxes on income. Others will disagree and claim it's already been taxed. So has almost every other tax.

One more thought...the people who complain about how complicated our code is are missing the point...it's complicated because what we do works. We get competing interests with different needs fighting it out, and the monster we've ended up with is, to me, beautiful in its compromises and attempts to represent so many varied interests. My estate tax comments above? Real world, they'd require exceptions and changes, and different rates for different entities.

[mcc21]

I live in Vancouver, Canada. I buy a lot from Ebay and have it shipped to Point Roberts, WA. After they started taxing since 2019 i think my purchasing went down by 50%. I used to average 5-8 purchases a month, now its down to maybe 2 or so a month from ebay. And since they been taking taxes I started shopping from other online companies that take the taxes regardless before but have lower sale prices such as Amazon.com or other online companies. Sucks CC and BC have sales taxes, but lucky Glorycycles and JensonUSA still don't take taxes.

I talked to the shipping/receiving companies in Point Roberts. The guys there even said their business went down since the change.