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Mon Feb 17 2020 15:52:58

Is eBay Ignoring Michigan Sales Tax Exemptions?

By: Reader

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Dear Ina,
I saw your ecommerce articles and thought you might be interested in this:

In January, eBay started to tax ancient coin and bullion buyers in Michigan*, even though the state of Michigan does not charge tax for such sales online nor in brick and mortar stores. 

When brought to the attention of eBay, the company refunds the tax, but they do not change the policy. 

It begs many questions: 

- How many people are losing money without realizing they are being illegally taxed;

- What is eBay doing with the funds that the state does not take from them; and 

- What other products and states might also have this situation?

Thanks,
Kim

*And, I assume, other states with similar tax laws.

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Readers Comments

Perminate Link for Is eBay Ignoring Michigan Sales Tax Exemptions?   Is eBay Ignoring Michigan Sales Tax Exemptions?

by: Geetar This user has validated their user name.

Mon Feb 17 17:00:54 2020

I am sure there are tons of problems with ebay, and sales tax. I am sure what ever department at ebay that handles the sales tax is most likely very over burdened at his time.
What was it tax jar said "there are over 20,000 jurisdictions in the us for sales tax" I am sure sooner or later they will catch up. But call them every time you run into this problem. it wouldnt hurt to remind them.

Perminate Link for Is eBay Ignoring Michigan Sales Tax Exemptions?   Is eBay Ignoring Michigan Sales Tax Exemptions?

by: angryllama This user has validated their user name.

Tue Feb 18 06:05:09 2020

Part ONE of TWO ... Your example of sales tax on an item that EBAY is collecting Michigan state sales tax on wherre the STATE has already EXEMPTED purchase of ancient coins and precious metal bullion is not IDENTICAL to same TEXAS state sales tax exemptions, but like the IMPROVED comment on how History does not really REPEAT itself, but it RHYMES.
There is likely a laundry list of MORE items that TEXAS does NOT tax, but of interest to me is the exemption for all DRUG items.
Ebay sensibly does NOT allow listing or sale of Prescription ONLY drug items, but it DOES NOT FORBID listing / selling OTC (Over The Counter) drugs even if YEARS AGO that same drug was ONLY available by prescription.  
Does eBay COLLECT TEXAS state sales tax on such DRUG sales by a TEXAS seller to ANY TEXAS eBay Buyer?  Right this minute I have NO CERTAINTY, but likely the answer is YES, they do.
Why would they do that?  Ebay has spent YEARS trying to HAMMER and BANG as many square pegs into ROUND holes as they possibly could.
In a business sense, it even seems appropriate for eBay err on the side of Charging Tax and letting STATE of TEXAS figure it out.
Would that be a "TOTALLY RIGHT" choice?  No, but it would seem to be the SIMPLE WAY OUT.
By the way, TEXAS exemption for DRUGS goes all the way DOWN to Aspirin, Tylenol, and UP to $3,000 per month PRESCRIPTION Cancer drugs, too. (Imagine being beset with cancer, $3k per month drug, and then TEXAS tax of 8 percent on TOP of that $3k.)

Perminate Link for Is eBay Ignoring Michigan Sales Tax Exemptions?   Is eBay Ignoring Michigan Sales Tax Exemptions?

by: angryllama This user has validated their user name.

Tue Feb 18 06:16:05 2020

Part TWO of TWO.   Especially regarding EBAY paying Taxes TO MICHIGAN in your example of EXEMPT items.

Of course, eBay PAYS it to MICHIGAN and their payment to the state would NOT include data as to WHO paid eBay, WHERE exactly the item shipped to-or-from, and NOTHING would be divulged as to WHAT the product WAS.
Presuming those stipulations... NO, the state of MICHIGAN (nor any state) would ever REFUND such $-overpayment to any aggrieved buyer/seller.
It is akin to the BIZARRE event once a year when THREE different companies where my wife's AUNT (a financial planner) thought it Smart and Prudent to GIVE .... ONE share of 3 different companies to ALL of her nieces and nephews to encourage them to INVEST in stock.
HA !     Why do I laugh?   Because NOW those self-same three companies have to MAIL a DIVIDEND check to all of those nieces and nephews every year where the POSTAGE, envelope, and such associated COSTS the corporations around $0.53 and the CHECK enclosed ranges from $0.41 to a MAX of $1.07

Perminate Link for Is eBay Ignoring Michigan Sales Tax Exemptions?   Is eBay Ignoring Michigan Sales Tax Exemptions?

by: careerseller This user has validated their user name.

Thu Feb 20 10:14:48 2020

 Ebay is incorrectly collecting sales tax on items that are tax exempted in states that have enacted marketplace sales tax laws.
 For example tires for farm equipment and tractors used in agricultural production are tax exempted in Iowa and certain other states yet ebay collects it anyway if the state has passed a marketplace sales tax law. Exempted items were a problem foreseen by sellers and brought up each time the legislators tried passing these internet sales tax laws. Each jurisdiction has different rates, different exemptions, etc. Who knows what should and should not be taxed in each jurisdiction?  
  Now the legislators have succeeded in getting these laws through and have money coming in they don't care if exempted items are being incorrectly taxed, just send  us the check!  
  If a marketplace fails to collect sales tax on an item that should be taxed the burden falls back on them pay the sales tax due with interest and penalties if audited and caught. Because of that and the fact they have no means of knowing the specific exemptions for each jurisdiction you are going to see tax collected on items that should be exempted so the marketplace doesn't get hung and fined if audited.  If they collect it on everything they can't get hung. No state will penalize you for OVER collecting for them.
  The marketplaces are going to be extremely cautious as to exemptions for fear it may leave them stuck with the tax burden.
  The whole reason these internet tax laws targeted the marketplaces in the first place was because that's the biggest and easiest place for the states to collect. States have no means of tracking sales of small out of state sellers. They can't chase after every 25 cents of sales tax some little guy selling something out of their garage failed to report and pay them.
States tried relying on use taxes where the buyer was supposed to report the online purchases they made and pay the use tax in. No one reported purchases and paid use tax because the states had no virtually no means of enforcement. They didn't know what, when, and how much you were purchasing and having shipped to you from an out of state seller. The laws they passed targeted the big guys that can't run and hide.    

Perminate Link for Is eBay Ignoring Michigan Sales Tax Exemptions?   Is eBay Ignoring Michigan Sales Tax Exemptions?

This user has validated their user name. by: Marie

Thu Feb 20 18:00:51 2020

If your seller is listing in the Collectible category, that would be why the coins are being taxed.  More education needs to be extended by Ebay for both buyer's and sellers on how categories play a part in how sales tax may be applied in certain states.  

When you are shopping, before you purchase, put it in your shopping cart and see if tax is going to be applied.  If it is and you feel it is a non taxable sale, take a closer look at the listing and see if it is in the wrong category.  You may need to communicate with your seller before purchasing so the listing can be corrected prior to purchase.



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