eBay and Sales Tax

[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]

Originally Posted by 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.

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]

Originally Posted by 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.

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]

Originally Posted by oliver1850

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]

Originally Posted by Dave

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]

Originally Posted by 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.

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.