Is Ebay going to Pull Sales Taxes on Everyone's Sales?

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Hi Jim, This is so sad. I have my taxes done every year and never have enough deductions, even with health costs to itemize. I am also one who when I do sell almost always sell at a loss or just break even especially since the market for some collectibles fell. I do not have a business and fall way below the amounts needed to be a business. I was looking at selling some coins again to better streamline my collection, but I wonder just how these auctions would go. I have already seen some poor sellers hit with negative feedback just for the tax.

 

Sales are sourced and subject to the rules of tax of the State where the goods are delivered. The rules of tax of the State from where the sale originated makes no difference.

I agree the Wayfair Decision has made a mess. Although I have many; one of the major issues I have is with the threshold itself. Most States appear to be adopting the North Dakota Threshold of 200 transaction or $100,000.00. So upon who does the burden of establishing whether a seller has met or exceeded this threshold. A State or the seller? Once someone conducts any sale/business within a State what burdens from that point forward can a State place upon you for the purpose of determining if or when your business conducted within that State meets or exceeds their threshold. Could a single contact subject you to a State's burden of periodic reporting, audit, etc.?

 

Here's the whole enchilada on ebay's new tax grabbing program!

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eBay sales tax collection
Based on applicable tax laws, eBay will calculate, collect, and remit
sales tax on behalf of sellers for items shipped to customers in the
following states:

Prior to the effective date, you should continue to collect and remit
tax in these states if required. Additional states will be added to
this list at a later date.

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. The
collection process will apply to all sales, whether the seller is
located in or outside of the United States.

When a buyer purchases an item on eBay, and the ship to address is
one of the above states, eBay will calculate and add the applicable
sales tax at checkout. The buyer will pay both the cost of the item
along with the sales tax. eBay will collect and remit the tax.

Sellers are not able to opt out of selling items into the states
listed above or opt out of eBay automatically collecting sales tax.

State
Effective Date
Additional Information

Minnesota
January 1, 2019
Small business exemption - Minnesota has enacted a small business
exemption for out of state unregistered sellers whose taxable retail
sales into Minnesota are less than $10,000 in the previous 12-month
period. These sellers are not subject to the Minnesota marketplace tax
laws, and eBay will not be collecting sales tax on these transactions.


Washington
January 1, 2019

Iowa
February 1, 2019


Connecticut
April 1, 2019


District of Columbia
May 1, 201


Nebraska
May 1, 2019


New Jersey
May 1, 2019


Idaho
June 1, 2019


New York
June 1, 2019


Alabama
July 1, 2019


Arkansas
July 1, 2019


Indiana
July 1, 2019
Please contact the Department of Revenue


Kentucky
July 1, 2019
Kentucky - opens in new window or tab


New Mexico
July 1, 2019
Please contact the Taxation and Revenue Department


Oklahoma
July 1, 2019


Pennsylvania
July 1, 2019


Rhode Island
July 1, 2019
Please contact the Division of Taxation -


South Dakota
July 1, 2019
South Dakota - opens in new window or tab


Virginia
July 1, 2019


West Virginia
July 1, 2019


Wyoming
July 1, 2019
Wyoming - opens in new window or tab


Vermont
July 1, 2019
Vermont - opens in new window or tab


California
October 1, 2019
Please contact the Department of Tax and Fee Administration


North Dakota
October 1, 2019
Please contact the Office of State Tax Commissioner -


South Carolina
October 1, 2019
South Carolina - opens in new window or tab


Texas
October 1, 2019
Please contact the Texas Comptroller of Public Accounts -


Utah
October 1, 2019
Please contact the State Tax Commission -

 

You are not alone on this site. Many ruin their eyes looking for a "Swan" to get out of such difficulties, but most get chicken feathers, or they buy things of value, they do not really understand. There are a few 6 or 7 figure people ( if you can believe it) on the forum, but very few. Coins are for enjoyment and challenge, not for long term financial success ( for most) Jim

 

THE SHORT ANSWER:

The Seller's state is irrelevant as long as it is located within the USA. It is the end user's (the buyer's) state where the goods are delivered which determines the requirement that sales tax be collected (or not collected in the case of NH and the other 4 states which don't charge sales tax).

It was ALWAYS required of Buyers to remit "Sales & Use Tax" to their home state if eBay or Amazon or Wayfair or ANY Online Seller did not collect Sales Tax for their state. The problem was that NOBODY was doing it because quite frankly, the 300 million consumers in the USA were not about to start doing their own accounting for every online or catalog purchase.

THE LONG ANSWER:

Before the Wayfair case if someone sold goods regularly on eBay, they were required according to the laws of their own state to register their business with the Sales Tax Authority of their own State and collect and remit Sales Tax on each purchase that was shipped inside their own state. So if a Seller residing in New York sold $____* of goods a year on eBay, New York State required them to collect Sales Tax ONLY on those Sales that were shipped to a New York location. BUT they had to REPORT ALL SALES to New York State, even those that were not New York State taxable. (* Each state had a minimum. If a Seller's gross receipts for the year was like a garage sale where a person sold $300 or less per year of goods, no state in their right mind would come after them. Where it got murky was at what point does it become Reportable within each state regardless of if it was Taxable or not.)

All that was the law before the Wayfair decision. Each state had its own minimum of how much gross income an eBay seller made per year before requiring the seller to register and REPORT to the state (regardless of how much was actually state taxable).

My understanding is that the Wayfair case ruling maintains that the state in which the goods or services reaches the end user (it's called "Sales & USE Tax") is the state to which Sales Tax should be paid based upon the rate of that state where the goods are delivered.

So if a Seller in New York sells and ships goods to a buyer in New Jersey, the state of New Jersey should get paid Sales Tax based on the New Jersey Sales Tax Rate since that is where the goods were delivered.

Since this Wayfair ruling, what eBay is doing now is covering it's butt since it fears the States where goods are shipped to will come after eBay for all that Sales Tax due to that state for sales which eBay facilitates since eBay is a bigger and easier target than going after thousands of individual Sellers.

In the example above, the New York based eBay seller who is shipping goods to New Jersey in reality should collect and remit those taxes to New Jersey, but they are a small seller and so eBay is taking care of that FOR them. That same seller was already registered in its home state of New York and always collected sales tax on sales shipped to a location within New York. So eBay is not going to take care of collecting New York State sales tax on sales for them because they themselves have been doing it as they were always required to do it.

There are 5 states, including New Hampshire, that do not charge Sales Tax on general goods and services.

It was ALWAYS required of Buyers to remit "Sales & Use Tax" to their home state if eBay or Amazon or Wayfair or ANY Online Seller did not collect Sales Tax for their state. The problem was that NOBODY was doing it because quite frankly, the 300 million consumers in the USA were not about to start doing their own accounting for every online or catalog purchase.

Due to the proliferation of online purchases, states like South Dakota (among 44 others which used to rely on Sales Tax Revenues) were feeling the pinch in terms of the loss of Sales Tax Revenue because they had no way to audit and retroactively charge the millions of individual buyers within their state on every person's online purchases. That's how the South Dakota V Wayfair case came to the Supreme Court. South Dakota wanted to put the burden onto Wayfair to collect the Sales Tax due to it based upon the goods that Wayfair was delivering to customers within South Dakota. But Wayfair claimed that since it did not have a "Nexus" (an office, warehouse or other physical presence) in South Dakota, that it should not be liable for collecting and remitting Sales Tax to South Dakota. Wayfair claimed this based upon the previous Supreme Court decision which was Quill V North Dakota where the SC said that Quill (the company) did not have to be burdened with collecting and remitting sales tax to North Dakota because it did not have a "Nexus" (an office, warehouse or other physical presence) in North Dakota.

 

You know ny is

 

You do not need to "have a business". Technically, if you decide to do a Garage Sale and buy lots of disposable supplies such as plastic tarps to lay down on the ground on which to place the goods you are selling, disposable bins to store the goods you are selling, signs to advertise your sale, advertising fees for a local newspaper, paper fliers to hand out on the street, paying someone help with carrying heavy items, etc, and ALL your expenses come out to be $600, but you only make $589 from the Garage Sale because it rained all weekend and very few people showed up, then you can list both your Income AND Expenses on an IRS Schedule C and declare a loss for the year of $11. If you do this regularly, say every year, you cannot declare a loss more than once every 3 years. But there is no minimum $ amount on an IRS Schedule C which would prevent you from using it if you in fact have losses on your sales after all expenses and if you have the receipts and paperwork to back it all up.

The IRS rule is that you cannot declare a loss on your Schedule C income more than once every 3 years. So I wouldn't recommend declaring a loss more than once every 3 years. But there is no reason you can't declare your loss once every 3 years if you in fact have the paperwork to back it up. eBay fees, Paypal fees, Shipping fees are all paperwork that you can keep in your computer or print out for your records. If you have the receipts from your packaging costs and most importantly your purchases of the items which you are selling, there is no reason to NOT declare that loss once every 3 years. Again, there is no "Minimum $ Amount" which determines if you have a business or not. If you declare a loss EVERY year, THEN the IRS says that you have a hobby and not a business. So go by the IRS rules and don't declare the income OR the losses for those other 2 years in-between.

If you pay someone to do your tax return, hand them a nice little list with the expense TYPE and the TOTAL for that expense. And give him/her only one Total Amount for Income (Sales). For Example:

Total Income: $785
Purchases (Goods): $395
Shipping Charges: $181
Ebay & Paypal Fees: $162
Packaging Costs: $58

If you do that and tell your tax preparer that you sold stuff on eBay and these are your legit numbers, there is no reason your tax preparer should NOT file the IRS Schedule C for you as long as you are not declaring a loss more than once every 3 years.

Don't fear the IRS if you have the paperwork to back up your claims. Take the deductions that are coming to you that you are allowed to take.

 

In your example NY gets 0% of Sales Tax on that transaction because the goods are leaving their state. But the Seller, if they are filing their own Sales Tax Returns, is required to Report to New York that they made a Sale for that that $ amount which was Non-Taxable in New York State. Since NY is the seller's home state they will probably be audited to make sure that the seller is telling the truth in reporting all their sales.

BUT New York will get paid INCOME TAXES on that money because the Seller is based in New York State he/she will have to pay New York State Income Taxes - whether as an incorporated business or as an independent contractor, or other type of business entity. So New York will get their "fair share" of taxes (or too much taxes as the highest if not one of the top 3 most taxed states in the union).

SCOTUS made a BIG MESS with this ruling, that's for sure. And as you said, eBay is doing the most strategic thing it can which serves their own purposes best.

But I don't think the end result will be Zero Internet Sales Tax. The 45 States that charge sales tax would not allow it - they would lose too much revenue - and they have the voting power to overrule Zero Internet Sales Tax.

I believe the end result will be a set percentage rate for all internet, phone, and catalog sales that are shipped to outside the state of the Seller. That's not simple, to be sure, but it is the simplest we can hope for in our messy, greedy and politically corrupt world. And in all honesty, it's a lot simpler than what it is now, which is massive chaos which will overly burden and even bankrupt small sellers around the country who are audited and can't afford the burden of immense record keeping, tax collecting, tax reporting, and the litigation fees it will take to fight this currently chaotic wild west non-system. And I fear that Congress will not get involved in creating legislation to fix this for at least 10-15 years while this all plays out and the little guys lose, as always.

 

Ohio just changed their tax law and now Ohio taxes Bullion sales:

https://coinweek.com/bullion-report...-kills-sales-tax-exemption-for-bullion-coins/

 

The sale is sourced to the State where the goods are delivered. Florida gets 6% sales tax and New York gets nothing. But when a seller in Florida sells into NY - that sale is sourced to NY. NY gets 4% sales tax and Florida gets nothing.

 

Just to clarify, although the New York STATE sales tax rate is 4%, every COUNTY in New York State also charges sales tax (at a percentage rate determined by that County) which is then ADDED TO the New York State 4%.

For Example: If a County's Sales Tax Rate is 4.5%, this is added to the New York State Sales Tax Rate of 4%, making 8.5% the Total Sales Tax to be charged on a sale of goods delivered to a location within that NY County.

 

Including City, County and States - there are over 10,000 different sales tax jurisdiction within the United States.

 

Dear Good Cents,

Thank you SO MUCH for the wonderful advice! I really appreciate it much more than you will ever know. I keep all receipts from purchases and sales and actually have all of my ebay sales itemized as well as their fees in a file.



I am almost 60 now, so I collected many different types of collectibles in the 70's, 80's and 90's. That is why I sell every now and then. Ebay started in 1995. Prior to Ebay, there was a strong market for just about any type of collectible since most people were limited to just their local area. Sales were very strong, half of the fun of collecting was in the "hunt", (my father used to bring bags and bags of wheat pennies for us to hunt through) and there were many more flea markets, antique shops, and shops in my area that sold coins, stamps and baseball cards. Coin and stamp shows locally were just about weekly. I hate to say this, but since Ebay opened the market globally, I have seen many collectible type items literally hit rock bottom. Additionally, the younger generation didn't seem to have the same interest in collectibles. I am thinking of selling a lot of my Civil War Tokens since the schools in Ohio are no longer even teaching anything about the Civil War. They start the history lessons after the Civil War. They also no longer teach cursive writing, so anything with cursive writing on it would not be desirable since they would not be able to read it. Even though my tokens are not that expensive, at least some people still know about the Civil War and may find them interesting. Isn't that sad?



Anyhow, regarding this taxing issue, Wayfair needed to be hit for tax money, my opinion. When people buy furniture, it is usually in the $1000's of dollars. Why wouldn't they ship for free?! A good bed alone can cost $3000-$10,000.



When Ebay started in 1995, I actually did sell some of my items at fair market value since there was still the frenzy out there for the "hunt" for your missing pieces to complete your collection. Now at almost 15 years after Ebay started, many items, coins included that were thought to be rare, turned out to be not so rare when all of the sudden the global market started finding many more examples. I suppose that is why they tell you to buy what you like and not for profit.



Since the tax issue was not addressed early enough, that is probably why many of the larger corporations started selling on Ebay. Now you can get your socks and vitamins there if you choose.



There is a huge difference of Wayfair making millions and billions of dollars and operating as the huge corporation and people like me that sell used items for maybe $2000 that I paid $2500-$3000 many years ago. Then I have to additionally figure in all of the fees. I hope that they get this mess all sorted out, but until then I will be taking your advice. It looks like we will have to go the nickel dime route. Thank you again!!! Madeline

 

As comic relief, I found this page very entertaining , Jim

https://en.wikipedia.org/wiki/Unusual_eBay_listings

 

I am rather new to this forum, and it looks like I may have hit the submit button incorrectly. I am so sorry to mess up your site. I also previously saw a post that someone sent me a link to an article:
Gold & Precious Metals News: Ohio Budget Kills Sales-Tax Exemption for Bullion, Coins

I was able to click on the link and want to thank the person who posted this. I must have checked the Ohio Tax site previous to this decision being made thinking that bullion was tax free. I am still not seeing totally how gold and silver are being considered a consumable item that needs to be taxed. I am also not understanding how some states can be totally tax free while other states have tax rates that are extremely high. Additionally, used items do have value, but those used items probably already had tax paid on them. Isn't that double taxation?

 

What I find sadly entertaining in all of this is the lack of recognition that your buyer already owed the tax and has since taxes were first collected.

If you buy a widget from out of state you are supposed to file a use tax return and remit the amount of tax you would have paid.

The states are correct that this is a major loss of revenue due to tax evasion.

The implementation of the Wayfair decision could have been better handled (although that would require a level of coordination that the several states have not shown) but the basics of it are simply transferring the responsibility to remit the tax to the seller, in line with a brick and mortar store.

The other thing I find, um, humorous - in a sad sort of way - is that everybody wants the services... You want the state police to help you when your car breaks down on the highway. You want the state police and the local cops to get those drunks off the road. You want the fire department to show up when your shed is on fire, Cheryl.

But nobody wants to pay for these services...

There's only a couple ways to raise money

• Voluntary contributions
• Taxes

Taxes can be on businesses - up to a point where your jurisdiction becomes uncompetitive

Taxes can be on individuals - up to a point where people move away

Taxes can be on things - real property, assets like stocks, etc. - but again only up to a point where people move.

NY and Florida is an instructive case.

Used to be people of a certain level of wealth would split their time between the two based on the weather.

Snowbirds became Florida residents for the lower taxes.

NY started to crack down on people who lived in Florida only four months by asking for copies of airplane tickets and counting days.

People starting spending a little more time in Florida.

Florida put an intangibles tax on investment assets.

People decided it wasn't such a bad deal to be a NY resident. The taxes on the bond interest was lower than the tax on the entire portfolio.