eBay Sales Tax Update

eBay has expanded the list of states for which it will collect sales tax with the latest additions being South Dakota and South Carolina.

This means there are now four more states for which eBay will collect sales tax on July 1. These states enacted marketplace facilitator laws that require eBay to collect the sales tax on all shipments destined to buyers in those states.

eBay will calculate and add the applicable sales tax at the checkout and sellers will not have to deal with reporting and collecting the required sales tax.

  • 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
  • New Jersey – effective May 1, 2019
  • Nebraska – effective May 1, 2019
  • Alabama – effective July 1, 2019
  • Oklahoma – effective July 1, 2019
  • Pennsylvania – effective July 1, 2019
  • South Dakota – effective July 1, 2019
  • South Carolina – effective October 1, 2019

Marketplace Facilitator Laws

Marketplace facilitator sales tax laws are now the latest weapon by states to collect more sales tax revenue from remote sellers on major marketplaces like eBay, Etsy, Amazon and others.

Since last year’s US Supreme Court’s decision in South Dakota v. Wayfair allowed states to become more aggressive in collecting sales tax from non-resident entities, many states have enacted sales tax laws they believe will hold up to future scrutiny by the high court.

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

Until a new case makes its way to the high court that may change the legal landscape, eBay and other marketplaces will have no choice but to follow these new regulations.

The good news for sellers on the marketplaces is that most will not have to deal with the complexity of reporting and remitting sales tax on their sales on the marketplace.

However, adding four more states on July 1 will certainly generate more questions from buyers to sellers who suddenly will notice sales tax being added to their orders.

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.
And don’t forget to follow us on FacebookTwitter, and LinkedIn to stay up to date with important news and business insights for your online retail business.

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