eBay Canada posted a notice to sellers informing them that sales to the US may be taxed to comply with marketplace facilitator laws enacted in select US states.
The buyers would pay the tax and eBay will handle the reporting and remittance of the sales tax to the states.
Sellers in Canada do not have to change their listings, but may need to expect to get questions about this from US buyers.
This is the first time that a global marketplace such as eBay has publically informed sellers their sales may be subject to US sales tax.
“In June 2018, a US Supreme Court decision removed the requirement for retailers to have a physical presence in a state in order for that state to impose sales tax on these retailers.”
“Some states have extended the tax collection obligation to marketplaces. This means that regardless of where you’re physically located, if you sell to buyers in certain US states, those states will require the collection of applicable taxes on your transactions.”
“As a seller, you will not need to take any action. eBay will calculate this new sales tax, charge buyers, and remit sales tax for orders shipped to customers in the following states…”
eBay Canada Statement
The notice further adds the effective dates for states with marketplace facilitator laws for which eBay will collect sales tax.
- Washington—Starting January 1, 2019
- Minnesota—Starting January 1, 2019
- Iowa—Starting February 1, 2019
- Connecticut—Starting April 1, 2019
- New Jersey—Starting May 1, 2019
- Alabama—Starting July 1, 2019
- Pennsylvania—Starting July 1, 2019
- Oklahoma—Starting July 1, 2019
We have not found similar notices on other international eBay marketplace sites or on other marketplaces such as Etsy and Amazon.
There has been some question if state-enacted marketplace facilitator laws apply to international sales.
International trade is the domain of the federal government. It would seem that if an item is shipped from outside the US, the transaction falls under the jurisdiction of the federal government.
Also, the Supreme Court decision in South Dakota v. Wayfair that opened up this sales tax mess in the US dealt with interstate commerce and what burden the requirement of the collection of sales tax has on businesses.
How this ruling applies to international trade appears puzzling.
We are trying to get opinion and clarification on this issue. But it looks like US buyers in states with marketplace facilitator laws could face paying sales tax on items purchased from outside the US.
What do you think about eBay Canada notifying sellers it will collect sales tax on orders to select states? Please use the comments section below or head over to our Facebook Group for Small Business Sellers and interact with other small business owners.
Update 2/12 from author: To clarify this post because it was brought up in a comment on our Facebook discussion page. According to a Canadian member in the group, Etsy is collecting sales tax on his sales to US states with marketplace facilitator laws. In this article I question the jurisdiction of US states to impose taxes on goods that are sold by and shipped from sellers located outside the US. I am not saying eBay is doing something that other marketplace may be doing now or in the future as well. But to the best of my knowledge, eBay is the first one to address this situation to its non-US sellers, or at least to sellers located in Canada.
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