eBay sales tax issues

[Mark McM]

Originally Posted by Hilltopperny

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. 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]

Originally Posted by Mark McM

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. 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]

Originally Posted by Mark McM

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. 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]

Originally Posted by 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.

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]

Originally Posted by Aaron O

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]

Originally Posted by Mark McM

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

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/ca...ium%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]

Originally Posted by 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...

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]

Originally Posted by 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.

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.