eBay and Amazon updated sellers this month about how they collect sales tax across the US as states enact new laws, while the Wall Street Journal chided the states, characterizing sales tax legislation as a money grab that harms small-business owners.
The newspaper’s editorial board said in an opinion piece on Monday that the Supreme Court’s Wayfair ruling last year unleashed a “revenue grab” on small businesses. “States are now testing the limits of their taxing power and creating a web of regulatory trip-wires for small businesses,” it wrote.
Online sellers are likely to agree. Even the marketplaces don’t appear to be on the same page when it comes to their policies, and because of different state laws, the marketplaces can’t implement a single policy around how they deal with collection and remittance of state sales tax when dealing with third-party transactions.
eBay recently noted two bills at the federal level designed to simplify online sales tax, but they come after years of unsuccessful efforts by some lawmakers to pass legislation of different flavors:
- The Senate’s Online Sales Simplicity and Small Business Relief Act of 2019 seeks to help small businesses by providing a $10 million national small business exemption, prevent retroactive taxation, and drive states toward tax simplification structures.
- The House of Representatives’ Online Sales Simplicity and Small Business Relief Act of 2019 (H.R. 1933) was introduced in March.
Below you’ll find excerpts of eBay and Amazon’s August updates (be sure to click through and read the fulltext of their announcements), along with links to more information.
Excerpt of eBay’s August 9th Update:
“Though a majority of state legislatures have adjourned for the year, several states passed legislation in requiring marketplaces like eBay to collect and remit sales tax. With the enactment of bills in Massachusetts, Ohio, and Wisconsin, 37 states and the District of Columbia have marketplace facilitator laws that will take effect over the coming months. As the remaining states consider extending sales tax collection requirements to remote sellers and marketplaces, eBay will continue to advocate for workable tax policies which provide reasonable small business protections and streamline collecting and remitting standards across the states to avoid confusion, mistakes, and costly penalties.”
Where eBay Seller Can Learn More:
“If you have questions or need additional information on sales tax collection, please visit this eBay Customer Service site which contains guidance for individual states.”
Excerpt of Amazon’s August 13th Update:
“23 states have passed legislation that transfers the tax responsibility from you to Amazon for the products that you sell in Amazon’s store. In these 23 states 116, Amazon calculates, collects, and remits tax. Amazon’s tax collection in these states is based strictly on state legislation and there is currently no option for selling partners to opt-out. In July 1, 2019, based on changes to Arkansas, Indiana, Kentucky, New Mexico, Rhode Island, Virginia, West Virginia, and Wyoming State tax laws, Amazon began calculating, collecting, and remitting sales and use tax for all orders shipped to customers in these eight states 48. Beginning September 1, Ohio will also join the” mix.
Where Amazon Sellers Can Learn More:
“You can learn about new tax collection updates by following the stories published in the “tax” category of Seller News and in the Marketplace Tax Collection FAQ.”
Etsy Sales Tax Policy
Etsy also complies with states’ sales tax laws, it updated sellers in June. The following excerpt helps explain the challenges the marketplaces themselves have in trying to comply with legislation:
“States in the US are hoping to bring in more revenue through new taxes on their residents’ online purchases. Some have passed legislation that require online marketplaces like ours to either calculate, collect, and remit taxes on purchases made within their state, or notify purchasers by mail of their tax obligation and report information about purchasers to the State’s Department of Revenue.
“These laws continue to be introduced in various states, creating a patchwork of requirements for us and our buyers and sellers. Because each state has their own set of rules and requirements, Etsy must make a determination about how to proceed on a case-by-case basis.
“In Washington state and Pennsylvania, we were required to begin collecting and remitting state sales tax while the states simultaneously implemented these new rules. Our experience in these states so far has shown us how hard it is to properly classify the 50 million handmade, craft, and vintage goods available on our marketplace into taxable item categories. For example, sales of yarn in Pennsylvania are subject to tax, but not if the yarn is for use in clothing. Washington exempts candy from tax, but not if that candy needs to be refrigerated.”
Etsy sellers can learn more on this page of the Etsy website.