eBay sellers are uncertain whether eBay will report their 2020 sales accurately when they file 1099K forms with the IRS in January, some indicated on a recent thread on the eBay discussion boards.
The question arose because many states now require eBay to collect sales tax from buyers under Marketplace Facilitator laws - and now that eBay processes payments on behalf of sellers ("managed payments"), it's required to file a 1099K with the IRS for sellers who meet the reporting threshold.
"I was able to find a Help Page on this (link here
). To quote from it:
"Starting in 2019, any sales tax collected by eBay on sales made by you in the various marketplace states will not be on your Form 1099-K. This is because eBay automatically collects and remits such sales tax directly to the state (i.e. the sales tax for these states isn't paid to you).""
The Help page from which he quotes links to this page
, where it references the Marketplace Facilitator laws that require eBay to collect and remit taxes and states:
"Once eBay starts to collect tax in the above states, no action is required on your part, and there will be no charges or fees for eBay automatically calculating, collecting and remitting sales tax."
However, eBay has since made a major change that appears to make that statement out-of-date. Previously for orders eBay processed through Managed Payments, it charged a Final Value commission fee (FVF) on the sale (not including sales tax) plus a payment-processing fee on the total amount (including sales tax).
But this year, eBay now DOES charge sellers a fee on the total amount of an order including sales tax.
While companies charge fees to process payments on the total amount of a transaction including sales tax, it's unheard of to charge commission fees on sales tax, and it's unclear how state lawmakers would feel about eBay doing so.
A seller in the discussion thread said this year's change to eBay's fee structure makes the moderator's answer incorrect:
"Since MP (Managed Payments) brings the amount for sales tax into our MP accounts to begin with (nothing to do with the 1099k, but eBay also at that time, when the money is in our account, charges us a FVF on it) and then MP removes it and remits it to eBay for processing to the appropriate states.
"Because it comes into the MP accounts, it HAS TO BE ACCOUNTED FOR. As you can see from the excerpt from the IRS requirements for this form, there is no deductions from the Gross Receipts. It is suppose to be the GROSS amount of money coming into the account without deductions for anything. Excluding transfers of money into the account to cover some expense or negative balance."
At a minimum, eBay needs to change its Help page where it states, "there will be no charges or fees for eBay automatically calculating, collecting and remitting sales tax."
eBay also needs to clarify if it will include sales tax on sellers' Form 1099K when it submits them to the IRS in 3 months - and as the seller above stated, provide information to sellers so they can reconcile their books.