Question: How do eBay apply tax on buyers?

[Kalmer]

Not sure is it the right place to ask, but it has bothered me for a while.
It seems that eBay is applying sale tax on buyer end pretty randomly. I live in NYC, and when I buy from sellers in CA, I noticed that even for exactly same seller, similar price items, some items will apply a tax automatically on check out, while for others there’s no tax at all (One can check this out buy clicking ‘buy it now’ and directing to the checkout summary page).
I called eBay and the customer service person said that Supreme Court passed some new law and that eBay has been collecting sale tax on the buyer end for buyers in NY since June this year, so technically as long as you’re located in NY, you should pay tax on each transaction.

Now I’m totally confused, do anybody know what exactly is going on here? Thanks.

 

[TheOldFashioned]

Not sure is it the right place to ask, but it has bothered me for a while.
It seems that eBay is applying sale tax on buyer end pretty randomly. I live in NYC, and when I buy from sellers in CA, I noticed that even for exactly same seller, similar price items, some items will apply a tax automatically on check out, while for others there’s no tax at all (One can check this out buy clicking ‘buy it now’ and directing to the checkout summary page).
I called eBay and the customer service person said that Supreme Court passed some new law and that eBay has been collecting sale tax on the buyer end for buyers in NY since June this year, so technically as long as you’re located in NY, you should pay tax on each transaction.

Now I’m totally confused, do anybody know what exactly is going on here? Thanks.

Here is a explanation regarding sales tax from eBay's help page.

My state just started collecting sales tax effective July 1. Unaware of this new law, I ordered something on June 29 and wasn't charged tax. Ordered something else a couple days later and was charged. I noticed this immediately only to learn of the new policy. Since that time I have always been charged sales tax on every order that I have placed, whether it was auction, buy it now, best offer, etc.

 

[Kalmer]

Here is a explanation regarding sales tax from eBay's help page.

My state just started collecting sales tax effective July 1. Unaware of this new law, I ordered something on June 29 and wasn't charged tax. Ordered something else a couple days later and was charged. I noticed this immediately only to learn of the new policy. Since that time I have always been charged sales tax on every order that I have placed, whether it was auction, buy it now, best offer, etc.

It they charge tax consistently it will make sense to me.
The thing is even today, when I tried checking out, most items still don’t apply any tax, while others do. And it seems to have nothing to do with item condition (new/used), price, or if it’s business/private seller.


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[AbbaDatDeHat]

Here is a explanation regarding sales tax from eBay's help page.

My state just started collecting sales tax effective July 1. Unaware of this new law, I ordered something on June 29 and wasn't charged tax. Ordered something else a couple days later and was charged. I noticed this immediately only to learn of the new policy. Since that time I have always been charged sales tax on every order that I have placed, whether it was auction, buy it now, best offer, etc.

I’ve bought a few things lately from several different US states and all had sales tax.
Total p**s off!!
I just wonder who gets to keep the skim??
And who has to pay who what, besides me to the seller.
Total BS!!
I’d like to throw some tea in the bay!!
B

 

[seres]

It gets even more confusing… I live in a NO SALES TAX state. The nearest town has a sales tax, but I reside OUTSIDE of the town limits. So legally, I should pay NO SALES TAX.

If I specify shipping by UPS, FedEx, etc to my residence, I pay NO SALES TAX, but I pay much more for this shipping service… much more than the sales tax.

If I specify shipping by USPS, the cheapest alternative, I MUST PAY the sales tax. Why? Because the US Post Office is located within the town limits (and the town has a sales tax). I can not get home delivery from the USPS. This confusion only applies to Amazon, but I fear it’s coming to all vendors soon.

It's more economical to use the USPS, pay the sales tax, and save 10x the tax on the shipping costs.

The gates have been opened, and the states and towns will reap tremendous income. I wonder if my property taxes will start to go down????

 

[Kalmer]

It gets even more confusing… I live in a NO SALES TAX state. The nearest town has a sales tax, but I reside OUTSIDE of the town limits. So legally, I should pay NO SALES TAX.

If I specify shipping by UPS, FedEx, etc to my residence, I pay NO SALES TAX, but I pay much more for this shipping service… much more than the sales tax.

If I specify shipping by USPS, the cheapest alternative, I MUST PAY the sales tax. Why? Because the US Post Office is located within the town limits (and the town has a sales tax). I can not get home delivery from the USPS. This confusion only applies to Amazon, but I fear it’s coming to all vendors soon.

It's more economical to use the USPS, pay the sales tax, and save 10x the tax on the shipping costs.

The gates have been opened, and the states and towns will reap tremendous income. I wonder if my property taxes will start to go down????

Well, that’s an insane story! But at least we can figure out and understand the rules behind that clearly, although it’s some absurd rules.
Meanwhile in my case, I cannot see any clear logic or rules at all. Items in same category with same price from same seller, how can some come with tax while others don’t! And the seller isn’t aware of that at all either.


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[HPA Rep]

It is a very complicated system and, in the case of Ebay, they have inaccuracies in how the sales tax is being applied. If you would normally pay a sales tax, then you should be charged. But as Seres pointed out, there are very specific applications that the current system does not provide solutions for. Ebay is charging the sales tax separately from your payment on the goods, so you should see two charges and not one for the total due, which makes it even more complicated to me.

Ebay is basing their tax collection on your locale and the item category, but not the actual item, which is how the law requires it to be applied. I live in New Jersey and we pay no sales tax on clothing (neighboring PA and DE also have no tax on clothing), so I should not be paying any on clothing bought on Ebay or anywhere else. If I purchase a piece of clothing listed in an Ebay clothing section, then I am likely to correctly not be charged a sales tax, but if I buy an item of clothing listed in, say, collectibles, Ebay will apply sales tax, which is because they are taking the easy way out and not putting the volume of time in they should to base tax collection as my state would, which is by specific item type.

Under NJ tax law, clothing is clothing, and it does not matter if the item is a rare German tunic from WWII or an LL Bean shirt bought new - NJ residents should not be paying sales tax. I have spoken with my state's tax collectors and Ebay on the matter and the state is very disturbed by this, while Ebay claims they appreciate my input and that they will work on a solution [one day]. I am about to mail to my state tax collector all the Ebay receipts on purchases from which I paid tax I should not have and they indicated a refund will be processed [surely not very speedily]. But I am now having to pay tax on items that in the past would not have been the case: helmets, medals, insignia - any item that is not clothing.

The good news is that HPA sales will never be impacted and our customers will never have to pay sales tax because we are outside the scope of the law's specifics and we are based in a state with no sales tax on clothing.

There will very likely be numerous federal challenges to this law in the not-so-distant future because it is, in many cases (New Jersey is one), not being applied per the precise terms as stated in the law.

I'd need to see specific examples to offer a better analysis as related to the OP.

 

[jpk_NJ]

Exactly what HPA states. As a fellow Jersey Boy, I’ve gone through the same inaccurate / illegal tax hassle with EBay a few times this year. I’m actually avoiding eBay purchases until they correct their tax collection program.

 

[belfastboy]

Well, that’s an insane story! But at least we can figure out and understand the rules behind that clearly, although it’s some absurd rules.
Meanwhile in my case, I cannot see any clear logic or rules at all. Items in same category with same price from same seller, how can some come with tax while others don’t! And the seller isn’t aware of that at all either.


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I have all my Ebay purchases shipped to WA state and everyone has had the state sales tax applied.

 

[Guppy]

It looks like ebay now apply sales tax to everything. Even used goods.