eBay Sales Tax Update

eBay is advising international sellers that sales to states in the US that have marketplace facilitator sales tax laws will have the tax added to them. The company is also clarifying how this will appear in the Seller Hub to avoid confusion for sellers.

In a note to UK sellers, eBay UK said:

“As of 1 October, there will be some new Internet Sales Tax changes in the United States that could impact your cross border trade business. From the beginning of October, 34 states will now require the collection of Internet 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 for you.”

eBay is simplifying the terminology for international sellers by calling the tax an “Internet Sales Tax,” which technically is not true.

The company is also not explaining to international sellers that the tax amount could be different from state to state, or even between different cities or communities (taxing jurisdictions) within the same state.

This could lead to confusion for international sellers if different US buyers question the sales tax (as many still do) on the same item, but going to different locations.

The sales tax is in addition to any import taxes that may be due at the time of delivery and some states may require buyers to pay sales tax on the shipping costs as well.

eBay further said to UK 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 our Download order report.

Please note the applicable tax will continue to be paid by the buyer and you do not need to take any action.”

The bottom line for US buyers is that after the Supreme Court decision that allows states to seek additional avenues to collect sales tax, purchasing from overseas on eBay became more expensive for buyers.

International sellers on eBay will not have to do anything to comply with the sales tax regulations in the US as eBay will do all the work.

But sellers should be aware of this situation as they may receive questions from US buyers on this issue and how it will be reported in Seller Hub to avoid confusion on gross sales reports.

While the quotes are from the eBay UK team, the sales tax collection requirement applies to all eBay sellers, regardless of their location.

What do you think about this mess with US sales tax?

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

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

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