eBay sales tax issues

[rowebr]

Originally Posted by prototoast

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]

Originally Posted by ultraman6970

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]

Originally Posted by unterhausen

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]

Originally Posted by prototoast

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.

Originally Posted by Aaron O

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.

[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]

Originally Posted by prototoast

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]

Originally Posted by rowebr

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?