eBay has begun to collect sales tax from buyers located in certain states, including Washington, thanks to Marketplace Facilitator laws, and eBay included news relating to that development in its Early Seller Update last week.
eBay announced it would begin adding information about the sales tax it collects from buyers on the Orders Report. It did not say if it would include data retroactive to January when it first began collecting sales tax from buyers.
eBay also acknowledged a major shortcoming in its collection system – it currently does not exempt buyers who have exemption certificates, a significant problem we had reported on February 12. (eBay did not respond to our February 6th inquiry about this and other sales-tax issues.)
It’s possible this deficiency could be negatively impacting sales. For example, acquisition librarians at colleges and universities looking for hard-to-find books may choose to shop elsewhere once they learn eBay has no way to honor their tax-exempt status.
When we asked Washington’s Department of Revenue last month about reports of problems with eBay’s sales-tax practices, a spokesperson told us that it would not comment specifically on eBay’s practices. Its website continues to advise shoppers to contact the seller if they have problems, even though in eBay’s case, that doesn’t apply – shoppers should contact the marketplace facilitator. That verbiage could lead to buyers blaming sellers instead of marketplaces for any mistakes or problems in the way eBay collects state sales tax.
In last week’s Seller Update, eBay stated, “At this time, we do not have the capability to accept exemption certificates from buyers who may be exempt from state sales tax. We’re looking into adding this functionality. In the meantime, buyers should be able to get a credit or refund of the sales tax paid to eBay directly from marketplace responsibility states. The refund process differs for each state and buyers should contact their tax advisors or the tax agency in their state for further details.”
eBay also revealed it is partnering with Vertex “to ensure our tax calculator accurately reflects state and local tax law, and regularly update our tax calculations.”
You can find eBay’s announcement and FAQs about sales tax on the Early eBay Seller Update landing page.
TAXES : While this entire event is UNCONSTITUTIONAL and ILLEGAL,
I say “Let the venues and shopping cart hosts distribute the tax. Leave Us Out of it.”
Bothering small businesses about collecting the ILLEGAL out of state tax should not be an option.
Dear The End:
I think you raise a lot of GOOD points about the power of state governments to tax the citizens of other STATES, and how the Supreme Court has interpreted the powers of the so-called “dormant commerce clause.” Would you care to expand on the unconstitutionality and illegality you describe in your INITIAL POST? Looking forward to more EXCELLENT legal ANALYSIS.
Very best regards,
Thanksbutnothanks
I can confirm that shopping venues that do not accept valid resale exemption certificates will lose business. Etsy started doing this last year and I have boycotted them ever since. I’ll start to do the same on eBay. I live in PA, and unless PA changes the rules for getting sales tax back – which is an onerous, time-consuming process – it is not feasible to seek or expect any sales tax help from PA.
Even if I were to file an appeal, part of the documentation required to get a refund for sales tax paid if the reason is “purchased for resale”, is proof that you sold the item and collected sales tax.
Um – most of my sales are not to other PA residents, so I would never be able to provide that AND that requirement is contrary to how it works when you normally present a resale certificate to a vendor: i.e. you never pay the tax in the first place.
Until the whole sales tax mess is worked out, the states will not realize its full potential, because what they are gaining in sales tax from out-of-state sellers will be partially offset by loss of income taxes paid by sellers who see their revenue decrease. Even though I’m a small seller, I do report my income from online sales to both the state and feds.
I have always collected and remitted sales tax for sales to other PA residents, which I realize many small sellers don’t, but they are breaking the law. I’m an accountant by day-job and have always handled sales and use tax at the companies I’ve worked for, so I don’t find dealing with it as daunting as many would.
Big online selling venues who choose to be Marketplace Facilitators (which means they act as a middle man by having the payments made to them instead of directly to the seller) need to work out a system for accepting resale exemption certificates ASAP, and the states need to amend any of their own laws that throw up legal roadblocks to the selling venues doing this.
Hello Thanksbutnothanks,
Please review Article 1, Section 9, paragraph 5 of the United States Constitution:
“No Tax or Duty shall be laid on Articles exported from any State.”
It is self explanatory.
https://www.archives.gov/founding-docs/constitution-transcript
Thank you.