Sellers face unique challenges around sales-tax obligations when selling on eBay, and the new Good Til Cancelled (GTC) mandate could add to their difficulties, even as states get more aggressive about forcing online sellers to collect, report, and remit sales tax for purchases made to their residents.
A reader who sells on eBay explained his less than ideal experience trying to comply with state laws after moving from one state, Illinois, to another - Georgia.
"I just moved to outside of Atlanta, GA from Chicago area and made sure to delete collecting sales tax from Illinois (IL) and adding Georgia (GA). I sold an item over the weekend to a customer in IL, and he was charged sales tax by me even though I had changed my settings."
When he contacted eBay customer support, the company representative told him eBay would not collect taxes correctly until his listings renewed. "eBay will continue to collect sales tax for me in IL and not in GA until the listing gets cycled through and relisted in my GTC listings," the seller told us.
"So now my customers in IL will get cheated, and I will need to refund taxes that weren't supposed to get collected, and my GA sales will not get sales tax charged, and I will need to pay for that too."
The problem becomes greater as eBay rolls out the GTC mandate this week making all listings Good Til Cancelled except for auction format listings. Any time a seller moves from one state to another, they'll have to factor in the possible sales-tax implications of their GTC listings until they renew - which could take up to 30 days.
"I checked my settings under site preferences and sales tax table again," the seller said, "and at the bottom it says, "These changes will apply to your new, relisted and revised listings only." This is a big problem and they say there is nothing they can do!!"
eBay has also been sloppy
about state sales tax in other ways. It admitted
it does not yet have the ability to honor certificates from tax-exempt shoppers, for example, and sellers have reported eBay has incorrectly collected sales tax for items that are tax exempt
Will state departments of revenue enforcers look with understanding on sellers who struggle to comply despite the challenges they face from marketplace shortcomings? Sellers such as the one cited above are taking no chances, meaning they'll take a financial hit.