6 common eBay sales tax questions
With over $82 billion in gross merchandise volume and 162 million active buyers in 2015 alone, eBay is a powerful selling platform and one of the world’s largest online marketplaces. Whether selling a few personal items or launching an online business, sellers appreciate eBay’s simplified listing process, finance protection tools, and access to a large customer base.
While eBay makes selling your goods easy, many sellers have questions regarding their responsibilities when it comes to collecting and remitting sales tax:
1. I’m just using eBay to sell a few personal items. Do I need to collect sales tax?
If you’ve decided to use eBay to get rid of your old camping equipment, chances are you do not have to collect sales tax. These types of one-off sales are known as "occasional, casual, or isolated sales," and are often exempt from sales tax, as they are neither routine nor continuous.
Occasional sales are often limited by the number of transactions and or the profit amount earned within a certain time period. For example, a person can sell one or two taxable items tax-free during a 12-month time period in California and Texas. Massachusetts, on the other hand, does not impose a limit on the number of tax-free casual sales allowed in a calendar year. As the rules regarding occasional sales vary by state, it’s important to research sales tax exemptions in each state in which you have sales tax nexus.
2. Does eBay track from whom I should be collecting sales?
eBay does not track from whom you should be collecting sales tax. As the seller, you are responsible for collecting sales tax on all non-exempt items from customers in each state in which your business operates and or maintains nexus.
As an online seller, it’s sometimes difficult to determine in which states you maintain nexus. Although the determination of nexus varies from state to state, an ecommerce business usually has nexus if it operates a physical office or warehouse, maintains sales representatives, or markets its products in a given state.
3. How do I collect sales tax?
In order to collect sales tax, you must first register and apply for a sales tax permit (also referred to as a seller’s permit or a sales tax certificate of authority) within each state that you maintain nexus. Once you’ve received the permit, you are then legally permitted to collect sales tax through eBay on behalf of the state.
4. Does eBay calculate how much sales tax is owed?
eBay is not responsible for the calculation of sales tax owed to a state. It is your responsibility to understand how much sales tax is owed, including both state and local taxes. Refer to each state’s treasury department to determine the correct and most up-to-date sales tax rate. While eBay does offer the option to set up tax tables to help sellers manage sales tax rates for the states in which they maintain nexus, at this time, eBay only offers one flat sales tax rate for each state, regardless of local sales tax variations.
5. When do I remit collected sales tax to the proper state(s)?
As a seller on eBay, you are fully responsible for collecting and remitting sales tax owed to each state in which you have nexus. Although the rules differ by state, most state treasury departments typically require businesses to remit taxes on a monthly or quarterly basis. Not remitting sales tax on time or in accordance with each individual state’s rules may result in fines. Automating this process can make it much easier.
6. I want to purchase goods from a vendor to sell on my eBay store. Do I need to pay sales tax?
Generally, resale items -- or items purchased from a vendor to be resold to an end-user -- are not subject to sales tax, as it is assumed that the end-user will pay the sales tax on these items. However, in order to purchase these goods tax-free, you are typically required to hold a reseller license or permit.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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