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PayPal charging sales tax on ebay sales?

WhatYourWatchSay
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I sold two watches on ebay and PP just took my buyer for over $25 CAD in sales tax.

I'm located in Ontario, Canada and the buyer is in America.

When did this absurdity start?

I'm already paying taxes on my sales up here and now my buyers have to pay US based sales tax?
Edited:
 
STANDY
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EBay international sites now takes/ collects the 10% GST in Australia for goods under $1000 dollars as of July.
Heaps of bigger online sites in the US do this also. ( smaller sites don’t )

Tax man has caught up to a lot of online sites 😉
 
Evitzee
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South Dakota vs Wayfair, Inc, US Supreme Court decision in June 2018 upheld this tax grab by the states. The system is in transition.
 
MikeMan2727
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Yes, I just experienced this first-hand the other day.

They want to collect taxes from US sales, fine.

I also don't understand the idea of collecting state sales tax for items coming from abroad. The explanation I read is that "it has to do with the state the item is being shipped to."

I don't see myself buying many more high value items on ebay since taxes will kill any good deals I can find. Couple that with possible import charges, which are completely separate, and the buyer ends up being taxed twice.

It's too bad for ebay - I feel like the number of deals done outside of ebay or directly through PP will increase substantially over time.
 
gatorcpa
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MikeMan2727 MikeMan2727
I also don't understand the idea of collecting state sales tax for items coming from abroad. The explanation I read is that "it has to do with the state the item is being shipped to."
That is 100% correct. Almost all states with sales tax also have use tax. Use tax is a tax on goods coming into the state which are not subject to sales tax from the seller. Generally, that would include sales coming in from another state or outside the US.

Think of use tax as your state’s equivalent to customs charges.

Hope this helps,
gatorcpa
 
WhatYourWatchSay
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Evitzee Evitzee
South Dakota vs Wayfair, Inc, US Supreme Court decision in June 2018 upheld this tax grab by the states. The system is in transition.

I had heard about that but incorrectly assumed it would only effect American based sellers.

Archer Archer
Thread with more outrage here from a while back...https://omegaforums.net/threads/what-is-going-on-with-ebay.101686/

I should have done a search before starting a new thread. I could have joined the bitching over there.

MikeMan2727 MikeMan2727
I don't see myself buying many more high value items on ebay since taxes will kill any good deals I can find. Couple that with possible import charges, which are completely separate, and the buyer ends up being taxed twice.It's too bad for ebay - I feel like the number of deals done outside of ebay or directly through PP will increase substantially over time.

My buyer was none too pleased about this. He believed I would be paying the tax as the seller. He honoured the deal but was not happy about it. I still don't understand if PayPal will be collecting tax on every transaction or if this will only be happening through ebay.

gatorcpa gatorcpa
That is 100% correct. Almost all states with sales tax also have use tax. Use tax is a tax on goods coming into the state which are not subject to sales tax from the seller. Generally, that would include sales coming in from another state or outside the US. Think of use tax as your state’s equivalent to customs charges. Hope this helps, gatorcpa

Thanks for this explanation gatorcpa. It helps, but doesn't end the pain!
Edited:
 
gatorcpa
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WhatYourWatchSay WhatYourWatchSay
He believed I would be paying the tax as the seller.
That would never be the case, even if this is a sale within the same state.

As a seller, if this transaction is taxable in your state, it is your responsibility to collect the tax from the buyer and pay it to the state. If the sale is not taxable (i.e., the buyer is in another state), then the payment of tax is always the buyer's responsibility. The eBay User Agreement makes this clear, but it would serve you well to add it to your description in the listing.

The only thing that has changed is that as a result of the Wayfair case, eBay and PayPal have now made agreements with some jurisdictions to collect use tax from buyers in situations where the seller does not have the obligation to collect.

I think states have done a very poor job in explaining the differences between sales and use taxes to their citizens. Most people are of the belief that purchases made from out-of-state are not taxable, and this is simply not true in most places.
gatorcpa
 
wsfarrell
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MikeMan2727 MikeMan2727
It's too bad for ebay - I feel like the number of deals done outside of ebay or directly through PP will increase substantially over time.
100% true. eBay will increasingly become a search-only site where people look for out-of-state items and then contact the seller directly, saying (in effect) "I can save tax and you can save eBay fees if you sell to me directly."
 
gatorcpa
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IMO, this has been happening for a while. My purchases for my collection have almost exclusively come from eBay. However, I have almost no additions this year. There really hasn't been a whole lot of good stuff to purchase or bid on, and what few good items do show up are heavily contested.

I think eBay would rather become a retail site (similar to Amazon) rather than an auction site, at least with respect to most collectible items. Fixed price and fixed fee. I can't imagine settling disputes over taxes and fees is a profit generator for them.

Basically, they want us all to go away. At least, that's what I'm seeing.
gatorcpa
 
WhatYourWatchSay
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I don't think any collectors miss the old ebay how it was back in 1999 where you took a risk with every purchase and hoped the seller would be honest and not cheat you. But what it's become today isn't great either.
 
140dave
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I will say it has one positive aspect. IF you are audited by the IRS they will look at your PayPal account and go after both income and back sales taxes “owed” for items you have sold. Yes, I have personal experience and the checks to the IRS to prove it. This will actually help (a seller) in this instance.
 
Bill Sohne
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Hi

I think its Ebay doing the collecting not PayPal ......

Good Hunting
bill
WhatYourWatchSay WhatYourWatchSay
I had heard about that but incorrectly assumed it would only effect American based sellers.



I should have done a search before starting a new thread. I could have joined the bitching over there.



My buyer was none too pleased about this. He believed I would be paying the tax as the seller. He honoured the deal but was not happy about it. I still don't understand if PayPal will be collecting tax on every transaction or if this will only be happening through ebay.



Thanks for this explanation gatorcpa. It helps, but doesn't end the pain!
 
gatorcpa
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140dave 140dave
IF you are audited by the IRS they will look at your PayPal account and go after both income and back sales taxes “owed” for items you have sold.
The IRS does not audit for sales or use tax. Those taxes are administered by your state of residence.

But the idea is correct. That is how the states audit for sales taxes.
gatorcpa
 
140dave
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gatorcpa gatorcpa
The IRS does not audit for sales or use tax. Those taxes are administered by your state of residence.

But the idea is correct. That is how the states audit for sales taxes.
gatorcpa

But the IRS does charge you income tax for the income received on the sales via eBay/PayPal (The tax was the state portion of the audit, you are correct, I was brief in my statement)
 
gatorcpa
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In a federal income tax examination, if there is an adjustment, the IRS will report that adjustment to your home state for income tax purposes only. Most states give you a set amount of time to amend those returns based on the results of the federal exam without penalty.

I have never heard of a state opening up a sales/use tax audit based on the results of a federal income tax exam.

Now if you have a business and aren't filing sales/use tax forms...😲
gatorcpa
 
watch3s
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ebay collects taxes now, i found that out the hard way when i purchased a watch around august
 
Walrus
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We can take comfort in the fact the states aren’t doing anything good with the taxes at least
 
bgrisso
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yes I bought two watches from south america recently and Ebay was very happy to collect my sales tax up front. I assume this is my California use tax 🙄 😡
 
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