Caveat Emptor - New Laws Regarding Taxes Collected on eBay

[pjmuck]

I recently won an auction for a used Martin guitar on ebay advertised with free shipping. To my shock, I was hit with a hefty tax fee.

Effective January 1st, 2020, ebay and PayPal will now be collecting taxes on all internet sales and auctions regardless of whether the item is new or used, and regardless of whether the seller is a business or individual. (I'm not sure how Reverb is handling this new law yet). You will taxed in accordance with your state's tax rate and ebay collects the fee. This is a major SUCK, since the whole incentive of shopping online for something to begin with is to get the best price. You can read up on it more here. So keep in mind for future potential auctions and goods you plan on purchasing that even if the item states "free shipping" calculate the amount of tax you will be required to pay at checkout for your state's tax rate.

https://pages.ebay.com/seller-center/se ... n.html#ist

https://www.ebay.com/help/buying/paying ... intent=tax

[bobjones2260]

I just sold a keyboard on Reverb

This is what the Seller in CA paid
Order Total
Subtotal $300.00
Shipping $90.00
Sales Tax (CA) $23.93
Total $413.93USD

This is what I received
Total Sales: $413.93USD
Total Processing Fees: -$11.43USD
Total Selling Fees: -$13.65USD
Total Sales Tax Remitted: -$23.93USD

So you can see the buyer pays the tax and it is remitted on my behalf.

[AzWhoFan]

Every Reverb listing has a state from which they collect tax.
Sweetwater started collecting tax on sales in Arizona in October.
While this may be good for funding state/county budgets, it certainly sucks for us consumers who have been used to avoiding paying tax for so many years.

[Jeroen]

What kind of tax is this? Is this a USA thing, or is this eBay coming up with new ways to make money?

Here in Europe we just have VAT (21% on consumer goods (not including food, that has a far lower percentage) in most countries), and it is only paid over items bought in stores or from professional (re)sellers. We don't pay taxes on items bought from private sellers, so this seems strange to me.

[tim]

Yeah, it's a strange artifact of our federal system.

Sales taxes are set by the state--there's no federal sales tax. But states don't have the authority under the Constitution to levy taxes on out-of-state sales.

This gives an unfortunate advantage to online sellers over local shops, because local sales are subject to sales tax, but sales from an online retailer generally are not (unless the seller operates a place of business within the state or the item happens to ship from within the state).

So in that sense, I'm okay with states going after the big sellers to take away any advantage they have over the local shops. But it is definitely a bummer for buyers accustomed to avoiding sales tax, and for private sellers on eBay who already lose so much to fees.

[donahue]

I agree that it will hurt online sales and definitely discourage buyers but on the flip side anything that can help the local market come back is a good thing imo.

I miss "hey man can I come over and check out that bass or piece of gear?" a lot.

[pjmuck]

I itemize my tax returns every year. In previous tax years, you, as a taxpayer, were responsible for claiming online sales purchases out of state, and the IRS would calculate taxes owed via a deduction from your return, which I was perfectly fine with. As long as your purchases didn't exceed $600, it was a wash, so it was one of the numbers I played around with in determining how many write offs I wanted to claim as it would affect my return. Can't do that anymore. Likewise, less and less establishments I'm hired to play at are paying cash anymore. They all want to cut 1 check for the total amount of the band, and unless you have a band DBA/band checking account someone in the band has to take the check in their name, distribute payments accordingly to band members, and then figure out come tax time how the bulk check affected their taxes and calculate what the band owes them back in taxes. It's a pain in the ass.

Sucks being a musician today. And it's not like venues are paying more in conjunction with inflation either. I made more playing music in the 80's.

[superheavydeathmetal]

Holy crap. Even Google now charges tax on MP3s. HA! A whole 8 cents.