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Sun Jan 12 2020 11:12:02

Business Buyer Baffled by eBay and PayPal Sales Tax Reporting

By: Reader

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Dear Ina,
I don't sell on eBay. I am strictly a buyer, using only PayPal. I purchase many, many things on eBay.

eBay does not have an option to download purchase history, so I must rely on the PayPal Reports for the information. 

When I downloaded my 2019 PayPal Transactions to determine how much I owed for Minnesota Use Tax, I was shocked to see how the taxes I paid on eBay purchases are being reported. This is going to take forever to get straightened out. Very frustrating! 

Up until November 2, 2019, PayPal had a separate row for sales tax paid on all eBay purchases. Just the tax amount on one row, with the description of "Sales Tax (1)" or "Tax collected by partner". It did not even associate the tax with the purchased product it applied to. The row below, I found out, is the purchase price and item description for which that tax applied to. 

After November 2, 2019, PayPal's reporting now just shows one total amount, which includes item price, shipping, discounts, and sales tax charged, all combined into one amount. 

So now I have to go to each item in my eBay Purchase History and manually enter the tax and shipping I paid for purchases I made after 11/2/19 on the spreadsheet. I need to categorize all of my business expenses. It is even worse to match things up when there was a combined order. Very time consuming.

While I was doing that, I added a formula to calculate what the tax rate was that I was charged on my purchases. Where I live the tax rate should be 7.375%. What I was actually charged is close, but every tax charge is at a different rate. I know that is not PayPal's problem, but eBay should fix that. eBay should also make a download option available for Purchase History!

I would like to know why PayPal is combining all of the charges (price of item, discount, shipping and sales tax paid) into one total amount! They must have the separate amounts somewhere since they need to report/pay taxes, right?
Thank you,
Sandy

Comments (25) | Leave Comment | Permalink
Readers Comments

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: Marie

Sun Jan 12 13:31:22 2020

Sandy

You will be very happy to know it is just a misunderstanding.  You are fine.  Ebay has been collecting sales tax from you for the entire year of 2019.  So you do not owe your state any Use Tax.  

Ebay has collected it and remitted it to your state.  You don't need to do this anymore for your Ebay sales.

Now as an explanation of the DETAILED transaction  reports you see on PP.  There is a column in which shows the Sales Tax collected on your payment processed by PP.  Then there is a separate column that shows it being removed from PP and transferred to Ebay for further processing directly to your state.  So there is an in and out for the amount.  

As to the amount of sales tax you are being charged as a buyer.  Make sure you have your full nine digit tax code in your ship to address.  This enables the computer program to charge a more accurate sales tax amount for your location.  

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: CanBrit

Sun Jan 12 13:41:49 2020

@Marie

The OP stated they are not a seller but strictly a buyer.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: Marie

Sun Jan 12 13:45:52 2020

@can

Yes I know.  Which is also why I stated that for all their purchases on Ebay, they would not owe any Use Tax to their state because Ebay has been collecting sales tax on their state for all of 2019.

I should have however added that I don't know if the detailed reports are different for those with just a buying PP account.  That would have been important for me to say.  But I think the detailed reports are the same for all, however since I don't have a separate buying account only with PP, I can't say for sure.

Sorry if I was unclear in what I wrote.  

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: purpleiris This user has validated their user name.

Sun Jan 12 15:49:33 2020

Just to let you know, PayPal reports what eBay sends to them. So, it is eBay that is combining the totals, not PayPal.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: Marie

Sun Jan 12 15:52:31 2020

Ebay creates an invoice in which buyers pay from.  On that invoice, if tax is due, it is on the invoice in which the buyer pays from.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: Moonwishes This user has validated their user name.
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Mon Jan 13 00:17:21 2020

As both a buyer for my store and a seller as well, I do not understand why people are depending on eBay, PP, Amazon, etc. to have reports showing all of this. Why aren't you showing this in your own accounting for each purchase made? Don't you track you own income and expenses for your entire business in one place? I have been hearing people moaning about how the venues are showing taxes, fees, etc. every year for years now and with the sales tax it has gotten even worse. The Feds, states and local taxing authorities don't care what the venues are showing, they want to see your figures for the year for what you are buying or selling.

We are only 13 days now into a new month in a new year. I would urge all of you to backtrack to the beginning of the year, Jan 1. and start recording all income and expenses, fees, taxes, business miles, etc. so that next year you don't have to become frantic because the venues aren't reporting things in a manner that is convenient and easy for you to understand.

We are very fortunate in this day and age to have software that helps in the process to track your financial information. Use it.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: lostliz This user has validated their user name.

Mon Jan 13 00:32:35 2020

I, too, was flummoxed by PayPal's treatment of taxes and fees when I prepared my sales data for the last quarter of 2019.  I am a very, very small seller.  Previously, I would pull PayPal fee out from the PayPal activity report fee column.  This quarter the PayPal fee column includes both my PayPal fee and the tax collected and submitted by the marketplace.  I had to go into the record to separate the two.  I feel that a fee that I am responsible for (PayPal processing fee) and one that the marketplace is responsible for (tax) are two very separate fees and should not be combined.  Also, it seems that PayPal is charging the seller, and not the marketplace, with the cost of processing of the tax that the marketplace is obligated to submit.  Why?

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: dsimporting This user has validated their user name.

Mon Jan 13 00:44:07 2020

(1) use tax is voluntary in most states (2) eBay is collecting sales tax from all sellers, Thus I don't see the buyers issue? (3) if buyer is reselling .they simple file an exemption certificate from Minnesota to eBay. Thus no tax is collected and no use tax is required since it will be collected when resold by this buyer.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: Gemz This user has validated their user name.

Mon Jan 13 01:01:07 2020

How about this.... Ebay is charging tax on items purchased from out of the country! We paid taxes on purchases from Russia! THERE IS NO TAX IN RUSSIA TO THE USA! And yet they found a way to charge us anyway! There are still plenty of states that have no tax liability and yet Ebay is still charging tax and pocketing it. There is no "low" deep enough for them to stoop to!

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: Marie

Mon Jan 13 01:54:39 2020

@lostliz

"I, too, was flummoxed by PayPal's treatment of taxes and fees when I prepared my sales data for the last quarter of 2019.  I am a very, very small seller.  Previously, I would pull PayPal fee out from the PayPal activity report fee column.  This quarter the PayPal fee column includes both my PayPal fee and the tax collected and submitted by the marketplace."

That is ONLY on the summary page.  If you click into the transaction you see the different amounts.  If you run the transaction reports you will also see the detailed information.

While I agree the summary page should show the two different things in separate columns [sales tax & PP fees], it is just the summary page.  You can easily get the info elsewhere.

PPs fees have always been predicated on the amount of money received.  They pay no attention as to what the money is for.  So yes you are correct, sellers are paying the PP processing fees on sales tax.

@GEMZ

Sales tax / use tax has NEVER been driven by where the product come from.  Never!  

When you shop at your local store and some of the items you are purchasing come from China or Canada, do you still pay sales tax on those purchases.  Yes, of course you do.  Even though the products came from outside the country.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: Utopia Computers This user has validated their user name.

Mon Jan 13 03:32:56 2020

My thought on this whole eBay collecting and remitting the Sales Tax is that eBay should be paying the processing fee on the amount of tax collected by eBay not the seller.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: Chicago48 This user has validated their user name.

Mon Jan 13 06:25:15 2020

As a seller, I like what AMZ does.  It shows you immediately what your fees will be on a sold item.  When it sells, it breaks down line by line how your total proceeds were calculated.  Nothing like that with EB, but it does happen with Paypal.
I don't understand how two associated sites can be so different when it comes to reporting.
The OP may have to start making a spreadsheet and entering his totals at time of checkout where it shows what the taxes and s/h are.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: cvsharkey This user has validated their user name.

Mon Jan 13 07:27:47 2020

The transparency of marketplaces collecting sales taxes and allowing the seller to have documentation on what has been collected for which state and proof that those funds have been paid to those states is very frustrating.  It lends to any of about 40 states to audit sales you've made to that state--and in response, you have nothing to provide as proof the taxes were collected or paid. Usually, these audits may be years away from the specific year they audit. This complicates a business's ability to provide this information and put an unfair burden on the seller.

We WANT to have proof of #1 What was collected, for which state and #2 a statement that this amount for each state was PAID.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: purpleiris This user has validated their user name.

Mon Jan 13 10:43:09 2020

Ditto to what Moon said.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: toolguy

Mon Jan 13 11:30:51 2020

The best tax numbers come out of thin air. . . .ROTFLMAO

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: Utopia Computers This user has validated their user name.

Mon Jan 13 18:36:23 2020

@GEMZ
We just made a purchase on 1/13/20 from a seller registered in China and the estimate delivery date is 2/5 - 3/18 so the item must be shipping from China. We were also charged sales tax. Why would eBay charge sales tax on items shipping from China not items manufactured in China and sold by a US seller as implied by Marie?  

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: Marie

Mon Jan 13 19:44:35 2020

@Utopia Computers

Because the origin of the product has NEVER played any part in determining if Sales tax / Use tax is due.

When you shop at your local store and some of the items you are purchasing come from China or Canada, do you still pay sales tax on those purchases.  Yes, of course you do.  Even though the products came from outside the country.

Use tax is a sales tax on purchases made outside one's state of residence for taxable items that will be used, stored or consumed in one's state of residence and on which no tax was collected in the state of purchase.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: Utopia Computers This user has validated their user name.

Tue Jan 14 04:05:18 2020

@Marie
You seem to be missing the point. I agree that if you purchase product from a local store, you pay sales tax regardless of where the product is manufactured. That is because a LOCAL store is selling (providing) the product. What we are talking about is product being sold by a foreign seller that has NO presence in the US. We purchase products from some sellers in the US where there is no tax collected so why on a seller based and shipping from China? BTW, just confirmed the product is shipping from China via tracking number.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

by: FeelingFroggy This user has validated their user name.

Tue Jan 14 06:52:05 2020

We just purchased a computer from a manufacturer in China. Cost of 600.00 and change. We were charged 36.00 for sales tax. This is the fourth computer we have bought from China in six years. All four of them were charged sales tax.

Perminate Link for Business Buyer Baffled by eBay and PayPal Sales Ta   Business Buyer Baffled by eBay and PayPal Sales Ta

This user has validated their user name. by: RKTOYS

Tue Jan 14 08:45:39 2020

I hate to say it but sellers need to keep their own records and not depend on these H1B-stuffed marketplaces.  The first thing I did after setting up my various accounts was program a database to track it all.  Non-programmers can use Excel to the same effect.

Second, the reason why Dunning Kruger is so prevalent is because of what bunglers so-called "professionals" are.  I don't have to know anything to know more than most "experts" and that goes double for the software arena.

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