eBay and PayPal Make Changes on How Sales Tax Will be Managed for Sellers

eBay Sales Tax Update
eBay

11 new states have adopted Internet Sales Tax policies as of October 1, bringing the total to 34 states that now require the collection of sales tax.

As the impact of this tax law becomes more apparent, PayPal and eBay are making changes that will make Internet Sales Tax collection less complex for buyers and sellers.

Starting in November 2019, the way taxable transactions are processed and how taxes are collected for remittance will change, as follows:

In states where eBay is required to collect Internet Sales Tax from buyers, order totals sent for processing will reflect the gross order amount inclusive of tax.

Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.

A record of the sales tax portion of the order will be available on the Seller Hub Order details page and through the Download order report.

Sellers will not have to take any actions for these changes. eBay also reminds sellers that buyers will be responsible for all taxes due.

eBay sellers can learn more about Internet Sales Tax in the eBay Seller Center.

Also, sellers who have questions about how Internet Sales Tax may affect them should contact their tax advisor, or eBay’s partners Avalara and TaxJar.

Sellers who use eBay Managed Payments are not impacted by this change.

What do you think about how eBay and PayPal plan to manage sales tax moving forward?

Please use the comments section below or head over to our Facebook Group for Small Business Sellers and interact with other small business owners.

Follow us on FacebookTwitter, and LinkedIn to stay up to date with relevant news and business insights for your online business.

14 COMMENTS

  1. Since the gross order total is what will be processed into our accounts, does that mean that the ebay fvf fee will be based on the gross amount? (Meaning…are they charging the fee based on the Gross amount? Ditto for Paypal? ) Also, how will ebay be classifying the charge when they take it out? Won’t it appear that the Sales Tax is coming from the seller, rather than the buyer? Does this mean ebay is going into our Pay Pal accounts and creating a debit every time we make a sale?

  2. eBay consistently overcharges me on sales taxes as a buyer (I often use eBay to source items for resale). Can someone please ask eBay about this & where I get that money back–or better yet, how I use my valid reseller’s permit to NOT pay that tax in the 1st place)?

  3. wtf? i have to pay taxes for used phones? im out of ebay. spent hundreds of thousands of dollars over the years on their platform, now my money will go somewhere else.

  4. I have been buying off e bay for long while, using Paypal as means to paid for what I purchased, however now it seems that what I buy paying with paypal is taxed by ebay and ebay adds their tax amount not with purchase but their own charge that went into my paypal acct. I thought these were fraud charges, even my cardholder said it was fraud number used to collect this charge. Reported it to fruad, then got ahold of paypal and they told me it was ebay going back and collecting sales tax on what I had brought on e bay but paid through my paypal account. I don’t understand how they can now do this without contacting buyer that they are going to do this?

  5. One of the problems I see is that Paypal will now make more money at the seller’s expense. When a seller receives a payment from a buyer Paypal now adds the tax to the sale amount as one transaction. This means the seller is now charged an extra few cents in Paypal fees due to the transaction price being higher even though the buyer is the one paying the tax.

    • But that is true for all credit card or electronically processed transactions at any store, physical or online. Unless you only use cash at a local store to pay for goods, that store (small or large) is paying for collecting sales tax when they make a sale. Whatever bank, card issuer, or digital payment processor is involved will get their cut on the sales tax cost on that transaction.

      Richard

  6. So, they say ‘Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.’ Does that mean it will be on our monthly invoice, or deducted from Paypal? Or something else? When will it be settled? This is very unclear language.

  7. I’m selling on eBay but I’m not based in the US. I was about to prepare a package and saw this tax charge. Now, PayPal is charging me a fee on that tax. Why is that?. My fees are already high – 5.4% + $0.30.

  8. The buyers state generates a sales, tax which EBAY collects and to remit back to the state. Why does the tax have to be added to a seller’s Paypal account? Sellers do not generate this tax yet sellers are being forced to pay Paypal fees. Get a dollar added to your Paypal account, pull the dollar back out to the state and sellers are left with a 3 cent fee.

    • Unfortunately, while new to the online seller community that never had to deal with sales tax, that is exactly what happens when using a credit card in a store. The business pays for the fee on sales tax when a consumer purchases goods with a credit card or other digital payment.

      Richard

  9. Richard, I understand what you are saying, but I think it should be handled differently so that the sellers don’t have to pay a Pay Pal fee on sales tax that the seller is never involved with. When a brink and mortar store sells something and there is sales tax added, the entire amount is charged to the buyer’s credit card and remitted to the store. The store collects the entire amount, including sales tax and then, in turn, remits it to the state. So, the store gets the sales tax in and the store passes it on. With ebay, when sales tax is added, it’s only a matter of how the programers wrote the program….the amount doesn’t need to be remitted to the seller’s Pay Pal account and then simultaneously taken from the seller’s account and passed onto the state. The amount can be added to the buyer’s invoice, taken from the same funding source as the payment for the item and held in an ebay tax account for remittance to the state. There is no reason for the seller to ever be involved and no reason for the “in and out” to go through the seller’s Pay Pal account. Let the sales tax run through some kind of ebay transition account and leave the seller out of it. Of course, if they did it that way, Pay Pal would want to charge ebay for handling the money on their behalf and ebay would just raise their fees to cover the charge that Pay Pal would charge ebay for holding the money in an ebay account before ebay remits it to the state. I guess there’s no winning….one way or the other, the seller is stuck with paying a 2.9% fee on the 6% or 7% or whatever $ the state charges. It’s a catch 22. Still, it doesn’t seem fair. I’m not Macy’s after all, just a collector who sells extras here and there.

  10. I used to love eBay being member for a long time and making a lot of purchases during more than 14 years…After eBay implemented the sale tax I’m very disappointed and I will really try to understand why we the buyers supposed to pay sell taxes for items listed “used” and “not working “ conditions?!?!…this is ridiculous and I can say is considered stealing from our pockets because everyone knows all that items which were new back in time taxes were collected somehow…why I suppose to pay taxes for a used iPhone since taxes was collected for sure for this item?…this was just an example…there are millions similar items sold every day which the government illegally collect taxes…where I supposed to address for this issue since I called eBay customer service and they don’t care about (suggested me to get in touch with my state attorney and find out what’s going on)…please, any answers will be greatly appreciated and I hope people will do something to stop this robbery…Shame on you , EBay who allowed this to happen.

    • Sales tax on used items is not new, just new to eBay because states have passed new laws that force eBay to collect those taxes. Offline, you generally pay sales tax on used cars, used phones, used clothes, anything sold in a retail store, new or used. It is simply a case of “tangible goods”, not the condition. Most states have a “use tax” which is the responsibility of the buyer to submit the sales tax. Technically speaking, if you purchase an item at a flea market, at a yard sale, or from another state, you were supposed to report this to the state and pay the appropriate tax. Of course, virtually no one did this which is the reason the states pushed for marketplaces and many online sellers to now collect sales tax for them.

      eBay, (Etsy, Amazon, Bonanza, and other marketplaces like that) are simply caught in the middle. After the Wayfair ruling by the US Supreme court, it opened up the floodgates for states to pass new laws. Now even purchasing items on a marketplace like eBay from a seller that is located outside the US will require eBay to collect sales tax. The US is not unique in this, actually, the US was unique in avoiding to collect many of the sales tax for so long as we do not have a federal sales tax like so many other countries.

      Unfortunately, Congress has the power to fix this problem, but that would likely mean some sort of centralized sales tax scheme. They have for 50 years failed to do anything about it and left it up to the US Supreme Court to defacto “regulate” the collection of sales tax. However, on the last go-around, the Supreme court basically said it’s not their problem and it is not unconstitutional and it really Congress’ problem to solve, if they choose to do so. That’s why eBay’s answer to contact your congressperson is really the right answer.

      I hope this clarifies this a bit. There is a bit more to it, but I hope you see why this is happening and eBay is not happy about it either as it has impacted their sales, but their hands are tied until there is congressional action.

      Richard

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.