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Fri Jan 4 2019 23:23:08

eBay Sellers Deal with Sales Tax Monkey Wrench

By: Ina Steiner

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Online sellers continue to struggle with state sales tax issues, and Minnesota just threw a monkey wrench into the mix. We encountered a thread on the eBay boards that shows how Minnesota's well-meaning provision is causing additional headaches for small sellers.

On January 1, 2019, eBay began collecting sales tax to comply with Marketplace Facilitator laws in Washington and Minnesota and will expand compliance to additional states with similar laws in the coming months.

For most states, the Marketplace Facilitator laws make it easier for marketplace-only sellers, since it is the marketplace that deals with calculating, collecting, and remitting the tax, not the sellers. (Sellers who also sell on their own websites or other platforms are still burdened with compliance, however.)

Of the 8 states for which eBay said it would begin collecting sales tax this year (so far), only Minnesota added a qualifier. From eBay's help page:

"Small business exemption - Minnesota has enacted a small business exemption for out of state unregistered sellers whose taxable retail sales into Minnesota are less than $10,000 in the previous 12-month period. These sellers are not subject to the Minnesota marketplace tax laws, and eBay will not be collecting sales tax on these transactions."

That sounds good, however, it complicates things.

Sellers had lots of questions in this thread on the eBay boards, but the Minnesota question initially flummoxed even the eBay moderator.

First he said, "regardless of a seller's potential eligibility for exemptions eBay will collect sales tax for all purchases and remit this to the state. A seller can request credits they may qualify for, however, we will not be making adjustments based on the seller's business size. Not only would this be difficult to calculate and predict for throughout the year, but a seller very reasonably could be doing additional business in that state that would put them over the limit."

But he later posted that the above statement was incorrect and added the following clarification:

"To clarify, we would monitor a seller's sales to determine if they qualify for exemptions and will adjust accordingly. We are aware that reporting is needed for seller's review and are working on future improvements. 

"While we are working to collect and remit taxes on the seller's behalf where we can determine this is required, a seller my need to make adjustments if they have revenue outside of eBay that puts them over this threshold. This is something on our radar and enhancements may come in the future to further support a seller's business."

Let that sink in. eBay is forced to collect and remit sales tax as a marketplace hosting online sellers, but it's unable to determine if it should be collecting on behalf of a seller since he or she may or may not be exempt - and it lacks reporting capabilities for sellers that it acknowledges they need.

States say the Supreme Court ruling in Wayfair in which it overturned Quill's physical nexus precedent allows it to make such laws, but the Supreme Court also said the laws could not create "undue burdens upon interstate commerce." It sure looks like there are some significant burdens impacting small businesses around the country as each state creates its own laws and exemptions.

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Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: The End

Fri Jan 4 23:53:00 2019

Small business sellers should NEVER have to deal with another state's sales tax. Should be a totally hands off operation.
We have things called COMPUTERS now that can deal with collection and disbursement.

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: sasikat9 This user has validated their user name.

Sat Jan 5 05:38:05 2019

Ebay is so messed up even they don't know what the hell they are doing.

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: notfunanymore This user has validated their user name.

Sat Jan 5 07:17:20 2019

Oh boy, another way to clamp down further on sellers. No pressure here, they got your back...
he posted the comment was incorrect... they can’t even get their comments correct, but don’t worry, they will remit for you and credit you.  

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: ebayout This user has validated their user name.

Sat Jan 5 09:34:22 2019

So...they're officially no longer a tech company?

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: plcombs This user has validated their user name.

Sat Jan 5 10:17:35 2019

The reality is, in the antiques, art and collectible arena on eBay a very large percentage of buyers are DEALERS and are Sales Tax Exempt.

This must be dealt with.  Tax Exempt Numbers for dealers are accepted in virtually all states reciprocally.  The impact on sellers in high sales tax states will be brutal.  The five states with the highest average combined state and local sales tax rates are Louisiana (10.02 percent), Tennessee (9.46 percent), Arkansas (9.41 percent), Washington (9.18 percent), and Alabama (9.10 percent).

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: Soconik This user has validated their user name.

Sat Jan 5 10:59:44 2019

I am curious also, I buy my shipping supplies on ebay and shipping supplies in MN are tax exempt. That could add up to $100s in overcharged taxes for me.  

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: iheartjacksparrow

Sat Jan 5 11:05:34 2019

I got an e-mail yesterday from the California Department of Tax that beginning April 1, 2019, anyone with sales to California of $100,000 OR 200 transactions in the state have to collect sales tax pursuant to the Wayfair decision. So expect an announcement from eBay that they will now be collecting tax for California.

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: val2525 This user has validated their user name.

Sat Jan 5 12:35:29 2019

EBay already announced the CA decision about 2 weeks ago. eBay is NOT at this time collecting for CA. If you go to the FAQ page for CA internet sales tax, you'll understand why eBay CAN'T collect it. CA placed too many qualifiers on the tax collection and when a seller needs to enroll for a sales tax number. For the time being, sellers will have to monitor their own CA sales.  I hope an online business group sues CA for their new tax law, as it's burdensome on small and medium sellers. It's very easy to hit the 200 item threshold, and CA is a DESTINATION based sales tax, with over 260 taxing jurisdictions.  

Meanwhile, why are sellers upset about eBay collecting taxes?  It's being collected from the buyer so the seller isn't paying anything.  Considering that some states charge a fee to get a sales tax #/account, I'm very happy to let eBay handle this for now.  

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: b86fiero This user has validated their user name.

Sat Jan 5 12:36:56 2019

Apparently the "Supreme's" were not smart enough to consider the hot mess they would create by legislating from their lofty positions.

The Supreme Court is not allowed to legislate.  But legislate they did when they overturned Wayfair and encouraged the States to willy-nilly enact tax laws that they expect the entire USA to understand, apply and fill their coffers with.

Congress had better get off their lofty duffs and enact legislation at the federal level regarding interstate commerce and the collection of sales taxes.

I have no problem paying taxes but for the love of God, this mess spells trouble for every e-commerce business out there.

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: val2525 This user has validated their user name.

Sat Jan 5 12:38:25 2019

I'm not an eBay cheerleader, but cut eBay some slack. The states are churning out new internet sales tax laws so fast, and with so much variety, that even the experts in sales tax (Avalara, TaxJar, etc) are having a bit of trouble keeping up.  

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: val2525 This user has validated their user name.

Sat Jan 5 12:40:16 2019

If you want a federal sales tax law, you need to write, email, fax or call (or all) your two senators AND your representative.  You can fax them for free here:

https://faxzero.com/fax_senate.php
https://faxzero.com
/fax_congress.php

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: Marie

Sat Jan 5 13:48:56 2019

This isn't Ebay's fault, it is the various states implementing these tax laws.  Ebay is just trying to do their part to abide by them.

In the case of determining what a seller's sales are in any given state, Ebay is at a disadvantage to do that.  I mean do you want to have to report to Ebay your sales from other venues in these states that have thresholds?  I sure don't.

We would also need a way to adjust gross sales that Ebay knows about for cancellations, refunds, discounts, etc.  So that the gross sales gets appropriately reduced.

I for one do not want Ebay being responsible for determining what my sales are for any given state and I sure don't want to have to report to them my sales from other sources so they can do this.

I can see where this could fall under an undue burden.  I can also see how this can be extremely easy to make mistakes and over pay or under pay taxes.  What a mess!

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: Lightning

Sat Jan 5 14:15:05 2019

The simplest thing would be to have a Federal Internet Sales tax of 5%.  All entities, individual or marketplace, whichever or both if applicable, open electronic accounts that receive the sales tax in real time, as each transaction takes place.  It all goes to the Treasury.  Then it is disbursed to the states proportionately based on population or electoral votes, since that system was made to level the population playing field.  Nobody does anything except tie into the system once.

There's very little e-commerce tax going to states now.  They should all be thrilled with their share of the 5% pool without having to do anything.

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: iheartjacksparrow

Sat Jan 5 18:46:39 2019

@val 2525 - I hadn't heard about eBay collecting tax in California. I got the notice because I live and sell in California.

California's sales tax return is a nightmare to complete, and gets worse every year. When I telephoned for help this year, the guy I was talking to didn't seem clear on what certain portions of the form were asking for. If states want tax from small sellers, the least they could do would be to make their forms so the average person can figure them out.  

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: Rexford

Sat Jan 5 21:00:06 2019

It's the mess that we all predicted it to be on previous threads.  What a damn mess.  Each state will not only have different laws but different "monkey wrenches"

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: phantom This user has validated their user name.

Mon Jan 7 00:56:59 2019

Collecting sales tax for sellers is another money making scheme for ebay for some states allow a discount credit o 2-3 percent of funds collected. eBay has been behind the sales tax scheme the entire time.

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: cfrphoto

Mon Jan 7 01:19:58 2019

As a seller with sales tax numbers for in-state sales in several states, eBay entering the fray complicates the issue beyond reason. Whether correct or not, I would consider sales taxed through eBay as wholesale transactions that do not contribute to the sale counts or thresholds set by various states for Internet sales. Someday, states may treat sales through third parties as retail, but until they do, declaring the sales as wholesale is the only way to avoid paying the sales tax twice if a tax return for sales outside of eBay is required.

Meanwhile, it may be necessary to advise customers in the affected states to search mirror sites like HipStamp, Delcampe or Bonanza that support eBay sync at least until they catch up with eBay on tax collection. Another point of contention will be the 200-transaction limit. It is not clear if eBay will count each sold item as a transaction or each order shipped and not returned. I am not sure if the eBay database is structured properly to correctly count transactions, based on business rules defining how sales can be combined into orders. Some uncertainty extends to PayPal which allows buyers to pay individually for sales in a combined order while eBay apparently no longer allows individual sales to be removed from combined orders. Confusion reigns!

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: toolguy

Mon Jan 7 01:31:56 2019

I bet eBay payments collects all sales taxes for sellers in every state.

No burden to sellers

eBay will profit off the money until remitted to each state.

Another windfall for eBay just like shipping is.

eBay makes money on every aspect of a sale. . .

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

by: Chicago48 This user has validated their user name.

Mon Jan 7 05:50:59 2019

It's my understanding that in order to collect & pay taxes in a state, you need a special tax license which costs money.  I know here in Illinois when I applied for a tax license some years ago, it was $5 or $10.  It simply gave me a vendor's license to show to vendors that I was a legitimate business that could buy goods and I had to report / pay taxes on sales.  Governments are so complicated, I betcha each state will require that the seller fill out that form.

Perminate Link for eBay Sellers Deal with Sales Tax Monkey Wrench   eBay Sellers Deal with Sales Tax Monkey Wrench

This user has validated their user name. by: Rexford

Mon Jan 7 06:14:30 2019

"Meanwhile, why are sellers upset about eBay collecting taxes?  It's being collected from the buyer so the seller isn't paying anything."

Agree 100% Val2525.  This is one of the best things that eBay has done for sellers.

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