ebay & sales tax 0

[diva_tsarina]

I just noticed that for the last couple of items I sold on ebay the customers were charged sales tax that was included in my paypal payment (first one was on 11/23/19). I knew ebay started charging sales tax a while ago (I am in NJ) but I thought they handled it, does this mean that sellers now have to deal with keeping track of and reporting this when they file their taxes? 

[cstojano]

If this becomes the seller's responsibility to report then short this stock asap.

It is a confusing mess: https://www.ebay.com/help/buying/paying-items/paying-tax-ebay-purchases?id=4771

For my state it seems most mom and pop sellers are exempt, yet the tax is collected from me anyway. 

In short, it could depend entirely on your state and the specific tax laws there. Are you sure you are receiving the tax in your paypal account and it is not just showing as part of the customer invoice?

Edited December 27, 2019 by cstojano

[diva_tsarina]

25 minutes ago, cstojano said:

Are you sure you are receiving the tax in your paypal account and it is not just showing as part of the customer invoice?

you're right, I went back and double checked the emails I received from paypal vs logging into my paypal account and checking the transaction summaries there. On the email summary it just notes the credits (i.e. bid value, added postage and added tax but does not note the debits, i.e paypal fee and ebay handled tax). When you log in to your account the full transaction summary shows the tax fee as a deduction handled by ebay. But I don't recall seeing this until very recently, they may have tweaked how they present the info.  so nothing to see here... 

[vodou]

31 minutes ago, diva_tsarina said:

they may have tweaked how they present the info.  so nothing to see here...

This done so you are assessed PayPal fees on the gross amount inclusive of the taxpayer's responsibility. I haven't checked yet but likely eBay fees are being assessed the same way (against buyer's gross not your net), making the playing field truly level for all businesses -online and off, as standard physical retailers that take electronic payments have been paying fees on the taxes collected for decades.

It would be improper of me to go further re: the legality of slave laws (being an uncompensated state employee by calculating, collecting, remitting taxes on behalf of the state without applying for or agreeing to the terms of a state business license...) I do not want another political anything to ensue So I will not go further.

[cstojano]

1 hour ago, vodou said:

This done so you are assessed PayPal fees on the gross amount inclusive of the taxpayer's responsibility. I haven't checked yet but likely eBay fees are being assessed the same way (against buyer's gross not your net), making the playing field truly level for all businesses -online and off, as standard physical retailers that take electronic payments have been paying fees on the taxes collected for decades.

It would be improper of me to go further re: the legality of slave laws (being an uncompensated state employee by calculating, collecting, remitting taxes on behalf of the state without applying for or agreeing to the terms of a state business license...) I do not want another political anything to ensue So I will not go further.

I briefly looked into the supreme court case that started this mess (or resolved the great ongoing injustice, depending in your point of view) and the 5-4 split was not what I was expecting.

[aokartman]

1 hour ago, vodou said:

This done so you are assessed PayPal fees on the gross amount inclusive of the taxpayer's responsibility. I haven't checked yet but likely eBay fees are being assessed the same way (against buyer's gross not your net), making the playing field truly level for all businesses -online and off, as standard physical retailers that take electronic payments have been paying fees on the taxes collected for decades.

It would be improper of me to go further re: the legality of slave laws (being an uncompensated state employee by calculating, collecting, remitting taxes on behalf of the state without applying for or agreeing to the terms of a state business license...) I do not want another political anything to ensue So I will not go further.

That may be coming, but I do not see any additional fee collection on sales tax as a seller on either EBAY or PAYPAL accounts right now. 

They do collect final value fee on shipping.  But, that is sometimes offset by shipping discounts to sellers.

Sellers do get an end of year IRS statement now, depending on your state.

David

[vodou]

2 hours ago, aokartman said:

That may be coming, but I do not see any additional fee collection on sales tax as a seller on either EBAY or PAYPAL accounts right now. 

They do collect final value fee on shipping.  But, that is sometimes offset by shipping discounts to sellers.

Sellers do get an end of year IRS statement now, depending on your state.

David

I've verified: as recent as yesterday eBay is not charging final value (or any other) fees, at least in my account, inclusive of sales tax gross.

It would not surprise me if that changes, but also if not.

David, what YE IRS statement do you mean? 1099-K from PayPal/similar processors or something different and/or from eBay?

[aokartman]

1 hour ago, vodou said:

I've verified: as recent as yesterday eBay is not charging final value (or any other) fees, at least in my account, inclusive of sales tax gross.

It would not surprise me if that changes, but also if not.

David, what YE IRS statement do you mean? 1099-K from PayPal/similar processors or something different and/or from eBay?

Vermont has a very low $600 annual threshold for EBAY/PAYPAL sellers.  IIRC, it comes from Paypal as a 1099.

My sales exceed that, but not dramatically.

I just give it to our tax person since the IRS gets a copy.

I don't have a business tax number, so I'm sure I'm getting screwed a little bit.

Just doing my part.

The trade-off is the neatness of the various entities and experts helping me take care of which forms to submit.

Other states have a higher threshold, if any.

Hope this helps, 

David

[John E.]

Ok, so my eBay selling has really slowed to a crawl in the last six months so I haven’t seen any changes since this new tax law. But now 💩 just got real. 
 

So I made a sale of exactly $25, free shipping. The seller is in sales tax state (MN) and got charged $2.22 in taxes. Well that tax money goes to my PayPay so $27.22 lands in my account. My itemized invoice shows that eBay subtracted the $2.22 for taxes; however, my PP fee is now $1.09 rather than $1.03. Not that I’m crying over $.06, but this clearly shows that PP is filching money from me due to this new tax law. 
 

So for every $1k I sell on eBay, I have to pony up an additional $2.73? Again, sounds like I’m a cheapskate, but it’s the principle. Also, just because it’s in their T&C it doesn’t make it legal. Besides the principle I’m also looking at the aggregate here. 

[vodou]

56 minutes ago, Jay Olie Espy said:

clearly shows that PP is filching money

Not really; the same thing happens everywhere all the time, the merchant fee (or transaction fee in PayPal parlance) is applied to the gross transaction amount.

Example: This happens to the restaurant when you use a credit card to pay the bill, including even meal tax. Whatever number hits the card, they pay a merchant fee on.

Oh yeah, and when you put the server's tip on there too...restaurant makes him/her/it whole at cashout end of shift, with actual cash, but they (restaurant) pay merchant fee on that too.

And people wonder why things keep going up; it's called transaction friction. Don't like it? Do your part and use cash. You won't change the world but you'll be -marginally- starving the middlemen.

[John E.]

5 minutes ago, vodou said:

Not really; the same thing happens everywhere all the time, the merchant fee (or transaction fee in PayPal parlance) is applied to the gross transaction amount.

Example: This happens to the restaurant when you use a credit card to pay the bill, including even meal tax. Whatever number hits the card, they pay a merchant fee on.

Oh yeah, and when you put the server's tip on there too...restaurant makes him/her/it whole at cashout end of shift, with actual cash, but they (restaurant) pay merchant fee on that too.

And people wonder why things keep going up; it's called transaction friction. Don't like it? Do your part and use cash. You won't change the world but you'll be -marginally- starving the middlemen.

Yeah you make a good point. I do tip my servers in cash for that reason.  I guess it’s ok until it happens to me 😡

I see your point about using cash but it’s nearly impossible to do so on eBay. The system is set up to “penalize” cash buyers because it doesn’t favor PayPal, does it? 
 

[vodou]

4 minutes ago, Jay Olie Espy said:

I see your point about using cash but it’s nearly impossible to do so on eBay. The system is set up to “penalize” cash buyers because it doesn’t favor PayPal, does it? 

It's really not about PayPal.

It's about the convenience (and protection) of doing mail order/online buying without the inconvenience (to both the buyer and the seller) of check/mo/cash through the mail.

There is a price to be paid for the service the middleman provides here, a real solid service imo. Traditional mail order vendors that wanted to accept credit cards, thus opening their business up to a much wider pool of skeptical/paranoid/impulse buyers would need to find a bank willing to take them on as a merchant account. PayPal just opened the thing up to very small and even first time "sellers" that would never get approved for a true merchant account when selling their occasional garage sale trinkets (think eBay circa 1997 here) on eBay. PayPal charges a little more than a merchant account, but the little guy gets access to that same much larger pool of buyers -leveling the playing field among sellers, in a sense that's almost priceless...unless we all want to go back to the days of selling only to dealers (at 25% of "book" as Overstreet used to warn in their front matter every year) or having to become one ourselves!

[vodou]

@Jay Olie Espy your anger here shouldn't be directed toward PayPal (or any payment processor for that matter) it should be directed toward sales tax legislation. That's what changed and the residents of every state/tax jurisdiction where it's being applied are the ones to take up that cause, being out of state, you're working for them (the tax jurisdiction, as a collector and remitter, same as eBay and PayPal here) without compensation or representation (the right to vote in the jurisdictions applying the tax) except when it happens to be the same as your own. And unless you happen to have a business license in your state, and all those other states too, with those terms written in and your agreement was made by applying and being approved for that license (all of them, all taxing jurisdictions), you're not only doing all this collecting/remitting without compensation, you're doing so involuntarily. It does sort of boggle the mind, doesn't it?