Readers are asking us questions about eBay's new practice of collecting state sales tax for Washington and Minnesota (it began collecting Iowa state sales tax this month), as required by Marketplace Facilitator Laws. eBay has not yet replied to our inquiry sent last week.
Many sellers who buy inventory for resale have obtained resale certificates that allow them to make tax-exempt purchases, but sellers in Washington State say eBay is charging them sales tax on their purchases regardless. On Thursday, a reader said, "Bad enough that I am being charged WA sales tax on items bought for resale, but also being charged 10% when the actual rate for my location is 8.6%."
We're still hearing reports that users are having problems with the way eBay is collecting Washington State sales tax
, so we sent an inquiry to its Department of Revenue (DOR) today. We asked if there were problems on eBay's end and what buyers could do in those cases.
A spokesperson for Washington's DOR responded with the following (see update below):
"We can't by law talk about specific businesses and if or how much they collect. We also can't speak about a business' practices. At this time, purchasers should contact the seller about any incorrect sales tax collection. If there is no resolution, the purchaser can apply to the Department of Revenue for a refund."
That advice could make things worse, since *sellers* aren't the ones collecting Washington's sales tax and are in no position to do anything about it. One seller has already said he's had several angry customers from Washington contact him complaining they were overcharged.
On the DOR website, it advises consumers who believe they have paid sales tax in error to "first seek a refund directly from the seller" because the seller has records to verify that sales tax was paid, etc., and says it "may" grant refunds of sales tax directly to consumers in certain cases.
We hope the state will update its website to reflect its new requirements around marketplaces!
Even if eBay is collecting state sales tax for Washington, Minnesota, and Iowa 100% correctly under the new Marketplace Facilitator laws, eBay sellers are spending a lot of time worrying about the ramifications of the new practice. Just read this thread
on the eBay boards, "What we Need as Members to Enhance the Sales Tax Collection process by eBay."
The original poster said they'd appreciate a report that shows by state what taxes were collected on sellers' behalf. Another poster shared a tip, saying sellers could use eBay File Exchange to download sales reports, saying File Exchange could be difficult to use for uploading listings, but was easy for downloading reports (good to know!) - see post #74.
An eBay moderator came in to the thread and answered questions. In post #92 on page 5 he addressed some questions and concluded with the following:
"In closing, most sellers do not generally need to figure out the tax rules that apply for states where eBay is collecting and remitting sales tax - eBay is taking over this process for the seller and while a seller should still address buyer concerns by directing them to eBay resources, additional questions can be handled by eBay Customer Service or by the buyer contacting the state tax authority. Some sellers may need to look further into these regulations, particularly for states where the seller has revenue from sources outside of eBay. A local tax authority is the best resource for additional questions."
And in post #94, he wrote that reports for sellers were "definitely something on our radar. I am not able to provide a timeframe, but reporting tools are a top priority for us to provide for our sellers."
Up next: Connecticut, New Jersey, Alabama, Oklahoma, and Pennsylvania.
Update 2/12/19: The spokesperson for the Washington Department of Revenue provided us with additional information in response to our followup:
"Since the facilitator is the agent for the seller, we mean that they should contact the marketplace facilitator. We will be taking a look at our website to see if and what needs to be updated.
"Another point to note: The issue of items being purchased for resale is a different issue. We have a deduction from sales tax that businesses take on their combined excise tax return called tax paid at source. Our answer was directed at consumers, not businesses."
Also: EcommerceBytes think it's worth noting that the Marketplace Facilitator laws were supposed to take the burden off of small businesses and individuals selling on online marketplaces.
Constructive comments about what challenges you're facing and what the states and marketplaces could do to alleviate them are welcome. Don't assume non-sellers understand how difficult and anxiety-inducing this can be.
Update 2/12/19: Here's a post on the eBay boards from a seller today who says eBay is charging Washington buyers sales tax for certain coin and bullion purchases that are EXEMPT from sales tax.