It's been almost a year since the Supreme Court threw the ecommerce industry into chaos by overturning the physical nexus mandate that had limited states from requiring out-of-state retailers to collect sales tax on their behalf.
Since then, state Marketplace Facilitator laws have been growing ever more popular, requiring marketplaces to collect sales taxes rather than third-party sellers.
On Friday, Etsy updated sellers
with a list of states for which it collects sales tax and invited sellers to help advocate for a federal solution.
As of June 1st, Etsy is collecting for 3 additional states, and as of July 1, it will collect for an additional 8 states, bringing the total number of states for which it will collect to 21.
"We expect more states will attempt to pass similar laws or regulatory changes in the future," the marketplace noted in Friday's announcement.
Etsy said the laws create a patchwork of requirements - "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."
Etsy said its experience thusfar has shown how hard it is to properly classify the 50 million handmade, craft, and vintage goods available on its marketplace into taxable item categories.
eBay seems to be lagging Etsy's compliance timetable. Note that it's easier for Etsy to comply with Marketplace Facilitator laws than it is for eBay, since Etsy handles payment processing. eBay currently handles payments for 5% of total dollar sales that take place on its marketplace.
Though many sellers prefer to offload the collection and remittance of out-of-state sales tax collection, there have been numerous reports of problems resulting from implementation of these laws.
The latest report we received was from a reader who said that when a friend received a refund from PayPal for a return on eBay, he received the purchase price but not the New Jersey sales tax eBay had collected from him - and he is having trouble getting the sales tax refunded.
Let us know if these "patchwork" laws are making your lives easier, or if you're seeing wrinkles in how they're being implemented.