eBay Sales Tax Update

This week eBay updated the list of states for which it will be required to collect sales tax. We highlighted the newest editions in red in the list below.

More states are likely going to be added this year as more legislatures are passing laws to enforce sales tax collection from remote sellers and marketplaces.

  • Minnesota – effective January 1, 2019 (However, Minnesota has enacted a small business exemption for out of state unregistered sellers whose taxable retail sales into Minnesota are less than $10,000 in the previous 12-month period. These sellers are not subject to the Minnesota marketplace tax laws, and eBay will not be collecting sales tax on these transactions.)
  • Washington – effective January 1, 2019
  • Iowa – effective February 1, 2019
  • Connecticut – effective April 1, 2019
  • District of Columbia – effective May 1, 2019
  • New Jersey – effective May 1, 2019
  • Nebraska – effective May 1, 2019
  • Idaho – effective June 1, 2019
  • New York – effective June 1, 2019
  • Alabama – effective July 1, 2019
  • Arkansas – effective July 1, 2019
  • Indiana – effective July 1, 2019
  • Kentucky – effective July 1, 2019
  • New Mexico – effective July 1, 2019
  • Oklahoma – effective July 1, 2019
  • Pennsylvania – effective July 1, 2019
  • Rhode Island – effective July 1, 2019
  • South Dakota – effective July 1, 2019
  • Virginia – effective July 1, 2019
  • West Virginia – effective July 1, 2019
  • Wyoming – effective July 1, 2019
  • Vermont – effective July 1, 2019
  • California – effective October 1, 2019
  • North Dakota – effective October 1, 2019
  • South Carolina – effective October 1, 2019
  • Texas – effective October 1, 2019
  • Utah – effective October 1, 2019

Marketplace Facilitator Laws

The passing of new Marketplace Facilitator laws make it a requirement for eBay to collect sales tax to shipments going to these states.

There is nothing a seller needs to do to comply. However, if a recipient is tax exempt, eBay has instructions for how buyers must register with eBay to to prove their tax-exempt status.

READ MORE: The Fuzzy Math by States in Sales Tax Case South Dakota v. Wayfair

What do you think about states going after small business sales for sales tax on marketplaces like eBay? 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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  1. Great. So now we’re going to be nickeled and dimed to death on flipping sales tax! Our homes were recently reevaluated as well-thousands that have had their home owner taxes triple. This is going to cripple people who can barely afford to pay the “new” shipping rates Ebay posted not long ago. Can guarantee that I won’t be shopping online where I have to not only pay crazy shipping fees but now I’ll also be sales taxed to death. Who’s pocketing that money?

    1. Many states have long required buyers to pay “Use Tax” on out-of-state and online purchases, but there has never been a good way to enforce that. Wayfair v. South Dakota cleared the way for states to require marketplaces to collect & remit sales tax on behalf of their sellers, and that’s what we’re seeing happen now as states update their own laws to cover this change.

  2. same here this will curtail my on line buying, on top of that had planed to start selling on e bay later this year , now will be on hold or not at all once I get more info on this not needed taxation

    1. So you’re going to shop local? Your local merchants will appreciate that … and you’ll still be paying sales tax!

      1. At least with my local merchants, I won’t have to pay state sales tax on food & clothing … which ebay charged me for when buying some clothes there yesterday!

        1. This seems to be a thorny issue I have seen others mention too. I am not a tax expert and I don’t know if some marketplace facilitator laws may exclude some of the exempt categories. Often, the marketplace may only need to collect the state sales tax, not a local county or city portion. In any case, if eBay collects the tax, they will remit it. It would be serious criminal fraud if they collect a tax and don’t remit it. Many states have methods to recoup the sales tax if a consumer paid a tax they shouldn’t have to. This is based on the assumption the retailer charged a tax in good faith and remitted it. However, I am sure the process is a pain and not many consumers would do that unless it is a significant amount. Again, that is also assuming the exempted category applies to a marketplace.


  3. I just wish all the states would get together and charge like 5 or 6 % on all the sales and it would be collected automatically so that th ebusiness owners are not spending the time and money to collect it for the states .
    The states should pay 100% for the money that it is costing the businesses to comply to collecting sales tax in each state

  4. This is another thing that is going to push the mass adoption of crypto currencies. People are sick and tired of a payment system that allows big brother to reach into their back pocket and take money without their consent. You can sugar coat it, change the name to something innocent and righteous, but it is still THEFT and a direct violation of the commerce clause. The states and politicians keep looking for new ways to “interpret” (read: violate) it, but it is still an enumerated power of the constitution.
    As of now, eBay can dip into my PayPal account and withdraw funds in a separate transaction without my consent. With a payment system such as Bitcoin, this would not happen. The selling platform could charge the seller an up front fee (which may or may not vary depending on the type of item being sold), but from there on out, the transaction would be solely between the seller and buyer. It would be very much like a classified ad on Craigslist, etc. There would be none of this reaching behind your back and pulling more money out of your pocket because all crypto payments are explicitly controlled by the buyer.

  5. According to Avalara (one of Ebay’s suggested tax collection partners) pretty much every state on their list has a threshold(s) which triggers the need for sales tax collection. For the most part – the triggers are $100,000 worth of sales in a particular state or 200 transactions in a particular state. I’m sure there are some Ebay sellers out there doing that much business, but there are thousands of businesses not hitting those thresholds. So, how does that work? Has anyone looked into this aspect of Ebay’s sales tax collection system? Here’s the web address of the Avalara calculator and thresholds. https://www.avalara.com/us/en/learn/nexus/find_your_nexus.html

    1. The thresholds you reference apply to individual remote sellers. The reason eBay and other marketplaces have to collect sales tax in the states mentioned in the article is that they have marketplace facilitator laws. That means the marketplace, in this case eBay, has to deal with the sales tax collection, reporting, and remittance, regardless of the seller’s size. Marketplace facilitator sales tax laws are different from the economic nexus remote seller sales tax laws. You can more about that in our sales tax guide.


  6. So this seems like double taxation on the consumer. Most of these good are USED therefore sales tax WAS already paid on the item the first time it was purchased.

    1. New vs used has never been the real distinction if sales tas is to be collected, even before the internet. Used car dealers collect sales tax, when you buy refurbished electronics and other refurbished items you pay sales tax, thrift stores charge sales tax… It’s just most people never looked at this way when they bought items online that are used. It’s tangible vs intangible goods that usually determines in most states if sales tax has to be collected, not if the item is new or used. These new marketplace sales tax facilitator laws just make it mandatory that marketplaces such as eBay now have to collect the same tax that really had to be collected or reported as a “use tax” all along…


  7. My bank account was debited for tax not reflected on the eBay sellers invoice. I don’t have a problem paying sales tax but transactions must be transparent. To continue purchasing in eBay, I will need to figure in the 6.25 percent Texas sales tax and add that to the total before deciding whether to buy? If a transaction has shipping charges I assume those are taxable as well? Total purchase price is how I decide if an item fits my budget. Having eBay take the money from my bank account without notifying me or the seller is a bad business decision in eBay’s part. They are going to lose business for handling other people’s money this way.

    1. I agree! This needs to be 100% transparent to the transaction, and should be part of the “SORT BY PRICE, INCLUDING SHIPPING **AND TAXES**”

  8. I have just had a round with eBay regarding why they are figuring in sales tax, ( S.C.), on the shipping charge and in addition why the math shows they are charging 2% more that what S.C. charges me at the local stores. eBay would not help me and sent me to the S.C. department of revenue for answers. Taxes on shipping……………… something is wrong with this picture. At least eBay and any other similar selling system should be able to explain the whats, wheres and hows of their taxing procedure. A side note is that eBay restricts sellers from posting the tax on the listing, per their tax Q.A. section.
    Thanks Kate good points.

  9. As we slowly evolve into socialism here in the usa in 2020, this is only the beginning of huge tax increases that loom in the very near future….FEEL THE BERN?!!!!

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