eBay and Sales Tax

[Plum Hill]

Sorry if this has been covered.
What is going on with the sales tax on the auction site?
I just purchased an item from an individual and got hit with 6.75% sales tax.
This is an old item that had been previously purchased by the seller. I’d venture to say he paid sales tax on it. Now I get hit with sales tax again.
Isn’t this double taxation?
I can see internet sales tax if I were buying from a retail company but not an individual selling purchased merchandise.

[AngryScientist]

lol.

you were where i was 6 months ago.

yep, it sucks, and has significantly decreased the amount i use ebay for. sales tax can be a big hit on larger ticket items and decreases the deal factor for sure.

[ColonelJLloyd]

What is going on with the sales tax on the auction site?

https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.

[yngpunk]

This link provides links to relevant state tax code regarding sales tax collection by marketplace facilitators:

https://www.ebay.com/help/buying/paying-items/paying-tax-ebay-purchases?id=4771#section3

You're in luck if you ship to Georgia, and have until March 31st, 2020 to avoid getting sales tax collected automatically

[NHAero]

I'm noticing I am paying MA sales tax on 2020 purchases. All three were from real vendors as opposed to individuals selling the odd item. Are there any MA residents buying stuff who see sales tax on some items and not on others?

On MA state income tax forms there is a place to add sales tax for items bought online and there is a safe harbor calc based on income to put in there if you don't want to actually total up your online purchases. Now that eBay and Amazon are collecting sales tax, I wonder if that will go away?

[Mark McM]

On MA state income tax forms there is a place to add sales tax for items bought online and there is a safe harbor calc based on income to put in there if you don't want to actually total up your online purchases. Now that eBay and Amazon are collecting sales tax, I wonder if that will go away?

It probably won't go away anytime soon. There are still internet sellers not collecting sales tax, plus overseas vendors don't collect sales tax. Not to mention that a lot of Massachusetts residents make many purchases in New Hampshire (which doesn't collect sales tax).

[dpdan93]

lol.

you were where i was 6 months ago.

yep, it sucks, and has significantly decreased the amount i use ebay for. sales tax can be a big hit on larger ticket items and decreases the deal factor for sure.


It’s a huge turn-off with big ticket items.


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[oliver1850]

Retailers in IL must collect sales tax on used items even if they are personal items not part of their business. The state has evidently extended that to all internet sales. What I don't understand is that IL residents must pay sales tax on the shipping charges as well. Not sure but I don't think retailers collect sales tax on shipping.

[unterhausen]

assuming part of the cost of an item reflects shipping costs, retailers certainly are required to collect sales tax on that.

[weaponsgrade]

I don't use eBay much, but I recently sold a used frameset there. I was surprised to see eBay charge the buyer sales tax. I paid sales tax on the original purchase. It seemed like the state is double dipping. I was curious enough to do a little research and apparently that's the new law for most states.

[wc1934]

I'm noticing I am paying MA sales tax on 2020 purchases. All three were from real vendors as opposed to individuals selling the odd item. Are there any MA residents buying stuff who see sales tax on some items and not on others?

On MA state income tax forms there is a place to add sales tax for items bought online and there is a safe harbor calc based on income to put in there if you don't want to actually total up your online purchases. Now that eBay and Amazon are collecting sales tax, I wonder if that will go away?

Yup - me too. Just purchased bibs from Performance and was charged a sales tax. But MA doesnt charge a sales tax on clothing. Performance doesnt have any stores in MA so I am totally confused.

[C40_guy]

Yup - me too. Just purchased bibs from Performance and was charged a sales tax. But MA doesnt charge a sales tax on clothing. Performance doesnt have any stores in MA so I am totally confused.

"While apparel designed solely for athletic or protective use is taxable, items that are also suitable for everyday use are exempt."

linkey (https://www.mass.gov/guides/sales-and-use-tax)

[Hilltopperny]

I started one of these threads back a few months ago after purchasing a frameset. I no longer purchase used items on eBay as usually it was for things that were hundreds if not thousands of dollars. No thanks!


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[Ralph]

Can't blame E bay.

[pinoymamba]

It definitely slowed down my eBay usage. Can’t believe I’ve been a user since early 2000s as a high schooler!

[Dave]

I mainly sell my old stuff on e-bay, so my buyers get hit with the sales tax. If I buy something, I only have to pay Colorado state tax, which is 2.9%. If I buy something locally, it's more like 6%.

[Steve in SLO]

What irks me is Paying tax for items bought from overseas sellers. I get that eBay is a facilitator, but the actual seller is in a nontaxable region. Seems a bit wrong to me.

[oliver1850]

What irks me is Paying tax for items bought from overseas sellers. I get that eBay is a facilitator, but the actual seller is in a nontaxable region. Seems a bit wrong to me.

IL has what is called "use tax", which is assessed on anything we purchase, at the same rate as sales tax. You are required to pay it no matter where the item comes from, and whether the item is new or used. This tax has been in place for years to discourage residents from buying out of state, but was hard to enforce and often not collected. Not sure how many other states have a similar tax.

[Mark McM]

What irks me is Paying tax for items bought from overseas sellers. I get that eBay is a facilitator, but the actual seller is in a nontaxable region. Seems a bit wrong to me.

While it is ebay that is collecting the tax, the tax liability is determined by your home state and the money collected is paid to your state. The location of the seller is not involved. In fact, it is likely that by buying from an overseas vendor, you are avoiding paying taxes on it that buyers in the vendor's own country would be liable for (for example, if you are buying from Europe, you are not liable for the VAT that European sellers would have to pay).

Like sales tax, the money is used to pay for the services that your state provides to you. If you have an issue with this tax, you can take it up with your state, and if your state ever decides not to charge this tax for out-of-state purchases by its residents, ebay will no longer collect it from you.

[blueridge]

I did not realize about the sales tax either. I sold a bike on eBay last month but the buyer backed out because of the added sales tax.

[Zmony]

Ebay sales tax is surely causing some bigger ticket sales to occur outside eBay (with buyer protection afforded by Paypal goods/services payments). Not that I have any direct knowledge of this nefarious and prohibited activity.

[flying]

Isn't this all because each State now has the option to request sales tax be collected on their behalf by online sellers?

So truth is it has nothing to do with Ebay but your State has requested Ebay collect it on their behalf

[Dave]

Try to find any online store that doesn't add your state's sales tax to the bill.

[ColonelJLloyd]

IL has what is called "use tax", which is assessed on anything we purchase, at the same rate as sales tax. You are required to pay it no matter where the item comes from, and whether the item is new or used. This tax has been in place for years to discourage residents from buying out of state, but was hard to enforce and often not collected. Not sure how many other states have a similar tax.

Correct. The individual annual income tax form for states with use tax have a line for self reporting of tax on items purchased over the internet, mail order, or out of state. On most forms you cannot leave this blank. I'd suspect an incredibly high percentage of these returns show a goose egg on this line.

[Steve in SLO]

Thanks oliver1850 and MarkMcM, that clarifies it. After years of misunderstanding I still feel gypped, though.

[Plum Hill]

Try to find any online store that doesn't add your state's sales tax to the bill.

Competitive Cyclist charges sales tax.
Excel Sports doesn’t.
I buy online or via phone from a hobby shop in St. Charles, Missouri, <an hour drive from me. No sales tax on shipped orders.
I added all my online/no sales tax orders a few years back, furnished the figures to my tax guy, and requested him to report and pay. He refused. Still doesn’t figure it when doing my taxes. He signs those returns, too.

[pfr]

Just bought something yesterday and was charged sales tax for the first time. Will definitely affect my buying in the future.

[Dave]

I've discovered a shipping issue on E-bay that's ripping off buyers of large-box items like wheelsets or frames. Long ago when I shipped this type of product with UPS, they priced a 10 pound box at 50 pounds, due to the large size. Shipping cost of $50-75 were not unusual.

I just sold two sets of wheels that both shipped to far eastern states, about half way across the USA. Both paid E-bay about $30 more than it cost me, to buy the shipping labels through E-bay. That's great for the seller, but rips off the buyer, so I refunded the excess to both buyers.

Potentially high shipping costs lowers the chance of a sale, so I changed the shipping to free on the two frames I have for sale, rather than reduce the selling price. Most buyers love free shipping.

FWIW, Excel Sports now charges sales tax, like nearly everyone else.

Nashbar didn't charge me any sales tax on my recent orders.

[jwin]

I've discovered a shipping issue on E-bay that's ripping off buyers of large-box items like wheelsets or frames. Long ago when I shipped this type of product with UPS, they priced a 10 pound box at 50 pounds, due to the large size. Shipping cost of $50-75 were not unusual.

I just sold two sets of wheels that both shipped to far eastern states, about half way across the USA. Both paid E-bay about $30 more than it cost me, to buy the shipping labels through E-bay. That's great for the seller, but rips off the buyer, so I refunded the excess to both buyers.

Potentially high shipping costs lowers the chance of a sale, so I changed the shipping to free on the two frames I have for sale, rather than reduce the selling price. Most buyers love free shipping.

FWIW, Excel Sports now charges sales tax, like nearly everyone else.

Nashbar didn't charge me any sales tax on my recent orders.

I always price in shipping when selling. Either through free shipping or fixed rate. I don't like eBay setting the shipping cost for me.

[Dave]

Ebay has made another change, where your sales money is sent directly to your bank account, rather than to paypal, if you sign up for the new payment method. When you purchase postage thru ebay, the amount is deducted from your bank account, by paypal.

I've had great luck selling two rim brake frames, two wheelsets and all of the other parts that I didn't need when I switched my two bikes to disc brakes. My gross sales were about $2600.

One odd thing though was the customers who bought my wheelsets both paid a lot more for shipping than ebay charged me, with the discount that they provide with UPS. I refunded each buyer over $30 in excess shipping fees. It wasn't right for me to keep it. The same thing occurs to a lesser extent, when small items are shipped by USPS. The buyer may pay $1-3 more for shipping than ebay charges me.

The big discount on large frame and wheelset boxes allowed me to offer free shipping on the two frames I sold and still get a decent price for them. Buyers love free shipping.

The sales tax charge may suck, but very few places don't charge sales tax now. I saved over $75 in sales tax on just over $2,000 that I paid for my two Cinelli Superstar frames, since Nashbar still does not charge sales tax. Jenson didn't charge sales tax on the parts I bought from them either.