Buyer Wasn't Charged Sales Tax - Why Not?

[nostalgicaftertaste]

A buyer purchased an item yesterday, and although I have all my listings configured to charge sales tax, somehow they didn't pay what should have been a 13% tax rate for Ontario. Only the base price is what they paid for.

When I received the notification, I immediately thought that perhaps I made a mistake in the listing somehow, since it's an older one that was created prior to when I started collecting sales tax. However, I checked the back-end again and saw that the sales tax box is indeed checked off, and under Shipping & Payments, it does indicate that I collect sales tax depending on the province.

I further tested it out by adding another stock and attempting to check out in incognito mode as a guest, and sure enough, tax is displayed after entering my information.

I'm confused as to what possible explanation there could be for this discrepancy. The only thing I could think of is that perhaps the buyer has a tax exemption on their account, but to my knowledge that only applies to certain US accounts that are eligible for this status in some states.

Has anyone who charges tax ever had this happen before? Any idea what could have caused this? Thought I'd ask this helpful community before contacting the short-staffed Customer Service team. Thanks!

[brettjet38]

Where is your Buyer located? 

Canada?

US?

International?

What does the invoice you sent show?

[nostalgicaftertaste]

Thanks for your response.

As mentioned, the buyer is in Ontario so it should have been a 13% tax rate.

No invoice was sent since the item was purchased straight. My listings require immediate payment for purchase, and this wasn't a situation where an offer had been made.

[cumos55]

A Seller must set up a sales tax table on eBay  ...

Under .....Site Preferences > Payment from buyers > Use Sales Tax  Table

The tax is automatically added to an invoice when a buyer buys and pays immediately.

You must also specific your VAT Number  (Business Number) that is then placed at the bottom of each listing on eBay.

Also.... You must register with the Canada Revenue Agency to collect tax  if...

Sales plus postage is greater than $30,000 each year...  that is eBay sales plus sales at an off eBay sales location.....

This is the reality of GST/HST collection for businesses in Canada

[cumos55]

No invoice was sent.....  Does this mean that, you,  the seller must send the invoice?

If everything is set up .....  then a person buys... buyer receives an invoice from eBay , with all taxes indicated on the invoice ..... and buyer pays...

[richardcm]

How old is the buyers eBay id?

Is the buyers shipping address so old the the province is not today's standard abbreviation of ON? If it is Ont I believe the tax table lookup fails. There was no standardization of provinces and state abbreviations way back then for very old accounts. eBay never corrected the old addresses on file retroactively. I believe this was never fixed. A nice loophole. I found this out years ago.

[cumos55]

Is the postal code a better indicator of where the buyer lives?

[pjcdn2005]

As you said, your listings seem to be set up to collect tax and your listings that show on your sold page  yesterday all show that “tax will be collected....” 

I will page an eBay rep so that they can look at it during the work  week but could you please give the item number so he knows which listing to look at.

tyler@ebay 

[recped]

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@nostalgicaftertaste wrote:

A buyer purchased an item yesterday, and although I have all my listings configured to charge sales tax, somehow they didn't pay what should have been a 13% tax rate for Ontario. Only the base price is what they paid for.

When I received the notification, I immediately thought that perhaps I made a mistake in the listing somehow, since it's an older one that was created prior to when I started collecting sales tax. However, I checked the back-end again and saw that the sales tax box is indeed checked off, and under Shipping & Payments, it does indicate that I collect sales tax depending on the province.

I further tested it out by adding another stock and attempting to check out in incognito mode as a guest, and sure enough, tax is displayed after entering my information.

I'm confused as to what possible explanation there could be for this discrepancy. The only thing I could think of is that perhaps the buyer has a tax exemption on their account, but to my knowledge that only applies to certain US accounts that are eligible for this status in some states.

Has anyone who charges tax ever had this happen before? Any idea what could have caused this? Thought I'd ask this helpful community before contacting the short-staffed Customer Service team. Thanks!

---

It happened to me once many years ago, at that time I could never figure out the reason why. Later I came up with this possibility.

I notice you have free shipping on most of your listings plus you do not block buyers in countries you don't ship to. Because of this a buyer could change their primary ship to address to a location where taxes don't apply and then at checkout/PayPal change the address back to the Canadian one. The taxable or not decision is done by eBay based on the primary shipping address, once you get to PayPal you can use whatever address you like and the sales tax (or not) won't be adjusted.

In that old case I think what happened is that the (Canadian) buyer had a US address in eBay as their primary because they used a forwarder based in the US. On the rare occasion they bought from a Canadian seller they would change the shipping address once they got to PayPal but by that time the sales tax had been locked in.

[nostalgicaftertaste]

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@cumos55 wrote:

A Seller must set up a sales tax table on eBay  ...

Under .....Site Preferences > Payment from buyers > Use Sales Tax  Table

The tax is automatically added to an invoice when a buyer buys and pays immediately.

You must also specific your VAT Number  (Business Number) that is then placed at the bottom of each listing on eBay.

Also.... You must register with the Canada Revenue Agency to collect tax  if...

Sales plus postage is greater than $30,000 each year...  that is eBay sales plus sales at an off eBay sales location.....

This is the reality of GST/HST collection for businesses in Canada

---

I appreciate your response. However, none of this information is lost on me; all of what was stated is already applicable or in place. I am a registered business, my business number is displayed on my listings, and all my listings have the sales tax table applied. Thanks, though.

[nostalgicaftertaste]

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@richardcm wrote:

How old is the buyers eBay id?

Is the buyers shipping address so old the the province is not today's standard abbreviation of ON? If it is Ont I believe the tax table lookup fails. There was no standardization of provinces and state abbreviations way back then for very old accounts. eBay never corrected the old addresses on file retroactively. I believe this was never fixed. A nice loophole. I found this out years ago.

---

Good catch. Thank you for making me aware of this.

So the buyer's ID was created in 2017, originally a UK resident.

Upon further examination of their mailing address on file, it says "Toronto Canada" not "Toronto, ON" or "Toronto ONT", so this may relate to what you were referring to. That's probably the culprit.

Hmm... Not sure of the best approach in this scenario.

[nostalgicaftertaste]

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@pjcdn2005 wrote:

As you said, your listings seem to be set up to collect tax and your listings that show on your sold page  yesterday all show that “tax will be collected....” 

I will page an eBay rep so that they can look at it during the work  week but could you please give the item number so he knows which listing to look at.

tyler@ebay 

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Helpful as always, @pjcdn2005. Thank you for getting tyler@ebay involved.

The item ID of the listing in question is 173855380938.

See my above reply to another community member. I think the reason for the discrepancy is their mailing address shows "Toronto Canada" for some strange reason. :S

[nostalgicaftertaste]

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@recped wrote:

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It happened to me once many years ago, at that time I could never figure out the reason why. Later I came up with this possibility.

I notice you have free shipping on most of your listings plus you do not block buyers in countries you don't ship to. Because of this a buyer could change their primary ship to address to a location where taxes don't apply and then at checkout/PayPal change the address back to the Canadian one. The taxable or not decision is done by eBay based on the primary shipping address, once you get to PayPal you can use whatever address you like and the sales tax (or not) won't be adjusted.

In that old case I think what happened is that the (Canadian) buyer had a US address in eBay as their primary because they used a forwarder based in the US. On the rare occasion they bought from a Canadian seller they would change the shipping address once they got to PayPal but by that time the sales tax had been locked in.

---

It's only fairly recently that I removed some blocks/exclusions, actually. But that's interesting. Didn't even know something like that was possible. Yikes.

Yes, that feeds into what my suspicion was as well — that they originally had a US address but changed it.

See my above reply to another member, as I think I found what caused it: The buyer's mailing address appears as "Toronto, Canada" followed by their postal code. No province.

[cumos55]

For me it is.... Learn something new every day .....

and then ..  it becomes  a part of history... just in case it happens to me

[ypdc_dennis]

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@cumos55 wrote:

Is the postal code a better indicator of where the buyer lives?

---

In Canada the answer is a simple yes for the provinces, but not for the territories.

First letter of postal code breaks out as:

A = Newfoundland & Labrador 15% HST

B = Nova Scotia 15% HST

C = Prince Edward Island 15% HST

E = New Brunswick 15% HST

F, G, H = Quebec 5% GST + provincial

K, L, M, N, P = Ontario 13% HST

R = Manitoba 5% GST + provincial

S = Saskatchewan 5% GST + provincial

T = Alberta 5% GST

V = British Columbia 5% GST + provincial

X (minus X0A, X0B, X0C) = Northwest Territories 5% GST

X0A, X0B, X0C = Nunavut 5% GST

Y = Yukon 5% GST

-..-

[cumos55]

Nunavut was a part of the Northwest Territories when postal codes were first used....

This could be the reason why Nunavut and the Northwest Territories have a postal code that starts with "X"

[tyler@ebay]

Thanks for the tag @pjcdn2005, and for getting me an item number @nostalgicaftertaste. 🙂

In looking into this I think that you're correct, somehow the buyer got 'canada' in the province field which short circuited it. 

You could consider cancelling this transaction for 'issue with buyer's address' and advise that they need to check out with a proper province. 

I've also reported this internally to make sure that the right teams are aware so they can review and take action as appropriate. Thanks!

[recped]

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tyler@ebay wrote:

I've also reported this internally to make sure that the right teams are aware so they can review and take action as appropriate. Thanks!

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Just in case you are not aware, people have been asking for an improved address verification system since I arrived on eBay in 1999.

I'm not necessarily talking about actually confirming the official address as per USPS/Canada Post but rather only allowing the proper data in specified field (for example the Province field should only accept actual provinces rather than any garbage a user wants to put there).

This problem has existed on eBay AND PayPal and during the 23 years eBay owned PayPal and nothing was done on either side.

I'd love to get back all the time I have spent "fixing" buyer addresses, especially non-US/CA addresses which really get butchered by your deficient input screens that allow garbage to be included in addresses and/or critical info to be left out.

[ypdc_dennis]

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@recped wrote:

... I'm not necessarily talking about actually confirming the official address as per USPS/Canada Post but rather only allowing the proper data in specified field (for example the Province field should only accept actual provinces rather than any garbage a user wants to put there).

This problem has existed on eBay AND PayPal and during the 23 years eBay owned PayPal...

ebay owned paypal from 2002 to 2014 (13 years not 23)

I find the address problem has improved over the years (or maybe I've just gotten better at spotting and fixing issues).  But it is still a  problem, often with buyers who seem to think sharing their proper address when making a purchase is a bad thing.  And with "younger" buyers who have no idea how the mail system works, because they never used it when growing up.

....

And it's not a new problem:

Even as late as the 1970's (before postal codes took over)  the post office had to remind people to write the actual town name on mail instead of using "Town" or "City" or "Village"  or local slang/nicknames.

-..-

[nostalgicaftertaste]

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tyler@ebay wrote:

You could consider cancelling this transaction for 'issue with buyer's address' and advise that they need to check out with a proper province. 

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Thanks for the advice, Tyler.

I was under the impression that selecting anything other than "Buyer asked to cancel the order" for a cancellation makes me open to receive a defect. Correct me if I'm wrong.

I am going to ask the buyer to update their information and repurchase, but I fear pushback and possible repercussions. If I receive a negative, would this get wiped off my record?