US Internet Sales Tax

[lotzofuniquegoodies]

"Starting in November 2019, the way taxable transactions to US buyers are processed and how taxes are collected for remittance will change, as follows:

• In states where eBay is required to collect Internet Sales Tax from buyers, order totals sent for processing will reflect the gross order amount inclusive of tax.
• Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.
• A record of sales tax portion of the order will be available on the Seller Hub Order details page and through our Download order report."

Regarding this recent announcement and the Internet Sales Tax.

It should NOT be inclusive. It should appear as a separate line item with the state noted and the percentage for clarity.

-Lotz

[tyler@ebay]

Hi @lotzofuniquegoodies - the specific state and amount the buyer paid in tax is broken down in the report available through Seller Hub. 

As to how PayPal will show and demonstrate that payment I don't know - that's a better question for them. I'd imagine that the amount that's sent would show up as a sub-line on the transaction, but that's just me guessing. 

If you do end up contacting them let us know what you find out!

[lotzofuniquegoodies]

Hello tyler@ebay 

As a seller shipping internationally we need these values for customs. Separating it makes it easier.  That way the customer knows what they are being charged and why and that it is not a seller trying to overcharge them. I use shippo for creating labels. We shall see how it shows....Eventually. Should we really have to jump around between screens to create a shipping label?

-Lotz

PS. In checking the announcement on dot com it's explained as "Grosse amount". Also of major note there are a large number of buyers and sellers that are completely unaware of why they are being charged this tax. Even between states.

[ypdc_dennis]

Gross amount would be the total amount that the BUYER is charged.

I don't see anything there that says taxes will not have a separate subtotal (just like shipping).

[lotzofuniquegoodies]

Inclusive in the announcements makes it sound like combined. Not separate lines. 

State with no taxes - Actual amount

State with taxes - Combined amount - No additional line

-Lotz

PS. There are reports starting 3 months ago and new ones since on dot com of sellers seeing no shipping included on the packing slip. Fun fact. If you happen to be shipping by courier the actual shipping is required on the customs documentation.

https://community.ebay.com/t5/Shipping-Returns/Packing-Slip-now-no-longer-shows-price-paid-and-shipp...

[mrdutch1001]

In an email just received from PayPal:

"In 2018, PayPal and eBay worked together to implement a solution to comply with laws that require eBay to collect and remit tax on applicable transactions. Those transactions that require eBay to collect tax are currently divided into two separate charges - one for the item purchased and another for the associated tax.

Effective November 2019, PayPal and eBay will change the way these transactions are processed and how taxes are collected and remitted.
 
For transactions that require eBay to collect tax from buyers, the tax amount will be included in the gross purchase amount to be processed. Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.
 
You do not need to take any action. "
 
Learn more about Internet Tax at eBay Seller Center

[pjcdn2005]

tyler@ebay 

Sorry, I'm a bit confused....will the tax will continue to shown as a separate line on the ebay buyers invoice?

[lotzofuniquegoodies]

More specifics/concerns attached.

https://www.ecommercebytes.com/C/blog/blog.pl?/pl/2019/10/1570028413.html

-Lotz

[tyler@ebay]

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@pjcdn2005 wrote:

tyler@ebay 

Sorry, I'm a bit confused....will the tax will continue to shown as a separate line on the ebay buyers invoice?

---

Hi @pjcdn2005 - the buyer's experience does not change. When they check out they will continue to see separate line items for item price, shipping (if charged) and any applicable taxes. 

Once they pay, the gross amount will be sent to you, and when that amount settles their tax will be remitted to the proper US State tax authority. Thanks!

[femmefan1946]

Once they pay, the gross amount will be sent to you, and when that amount settles their tax will be remitted to the proper US State tax authority.

We we get paid every penny the buyer pays, then the tax is taken from the money we receive? 

And how does that affect our gross income-- which in turn has an effect on our Canadian income tax?

This is a pass through payment.

Between the buyer, eBay and the (foreign) government.

There is no reason for it to ever appear on our accounts.

[cumos55]

When an invoice is forwarded to a US buyer that lives in a state that collects taxes,  the state tax amount will be present on the invoice...

The sales record for an item that has been mailed does not show the tax paid by the buyer.

It appears that eBay collected the tax, as indicated on the sales record for an item.  A Canadian seller does not  have anything to do with charging the tax or remitting the tax to the correct state.

The sales record  for Canadian sellers only contains the price of an item and postage.  If a tax is charged  it is eBay's responsibility  and does not appear as a part of a sales record for each sale to a US buyer.....

[hlmacdon]

Fee for the sales tax payment processing shifts to the seller and we get the fun of doing accounting legwork. Paypal better not butcher this. When a change this major is made I'd hope we'd see a far more competent announcement that covers all of the implications. Paypal is a payment processing partner, this should be documented.

[pjcdn2005]

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tyler@ebay wrote:

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@pjcdn2005 wrote:

tyler@ebay 

Sorry, I'm a bit confused....will the tax will continue to shown as a separate line on the ebay buyers invoice?

---

Hi @pjcdn2005 - the buyer's experience does not change. When they check out they will continue to see separate line items for item price, shipping (if charged) and any applicable taxes. 

Once they pay, the gross amount will be sent to you, and when that amount settles their tax will be remitted to the proper US State tax authority. Thanks!

---

tyler@ebay 

You’re saying that the total including tax will go into my PP account and I will pay 3.7% to PayPal on the sales tax?  And then eBay or PP submit  the tax? 

[ricarmic]

Arrghhh, I fell prey to the "nothing for you to do" comment. Now I'm confused about how this is actually going to work. I need visuals.

Today: (these all hypothetical numbers for ease of calculating)

Buyer buys $100 item with $5 shipping and $10 taxes

Buyer pays $115.

I guess the $10 taxes go to ebay somewhere, I don't see it anywhere on my stuff.

I get a Paypal payment transaction showing:

$100  item

$    5   shipping

====

$105. To my PAYPAL account

With the change:

Buyer pays $115

I get a PAYPAL payment transaction showing:

$100 item

$    5 shipping

$  10 taxes

====

$115. To my PAYPAL account

Then by some means of magic there will be a deduction from my PAYPAL account of $10 to remove the taxes?

I'm assuming there will be a PAYPAL transaction of some sort to show the $10 deduction from my PAYPAL account.

As PJC says, we're going to be paying the PAYPAL fees on the taxes now as it moves through our account?

Assuming I have things correctly, "nothing for us to do" is totally inaccurate, because the funds actually arrive in my account, there is now a perhaps significant amount of accounting for me to do. Somehow I have to figure out at each month end, how much tax was collected and remitted through my account. Accounting wise, I guess conceptually it is the same as HST I'll have to show the input amount into my account and outgoing amount from the account.

tyler@ebay  looks like you're going to be popular for a while trying to help us understand what this will really mean to us!

[cumos55]

When an eBay  invoice was sent to a US buyer,  the Internet Tax was on the invoice.  This was noted before an invoice was sent to a US buyer.

Once the buyer paid the sales record on eBay did not show the internet tax for a US state. 

The Paypal record for a sale to a US Buyer does not show the internet tax paid by a US buyer.

[ypdc_dennis]

---

@ricarmic wrote:

... With the change:

Buyer pays $115

I get a PAYPAL payment transaction showing:

$100 item

$    5 shipping

$  10 taxes

====

$115. To my PAYPAL account

Then by some means of magic there will be a deduction from my PAYPAL account of $10 to remove the taxes?

...we're going to be paying the PAYPAL fees on the taxes now as it moves through our account?

Assuming I have things correctly, ... there is now ... accounting for me to do.  ... I'll have to show the input amount into my account and outgoing amount from the account.

---

That's how I read the change as well.

Shifting one of the costs of managing the USA sales tax from eBay to Sellers.

With all the States hopping on the bandwagon that processing cost could be over $50 million next year, so no real surprise.

But, from a Seller's viewpoint the timing could have been a lot better, with January 1 being a better accounting changeover point.

The Canadian question: for GST/HST required registration -- does the new gross amount (with USA tax) count towards the $30000 in 12 month limit?

-..-

[ricarmic]

I for 100% certain feel pain on behalf of the poor technical support/coding staff that have to implement this stuff. It also explains some of the reason why "improvements" aren't getting done more/quickly, effort and $$$ are being diverted to this "required" stuff, which I do not think is an easy thing for them to implement system wide....

Whilst the title of this thread is US taxes, based on the wording in PAYPAL, it looks to me like this is the case as well for Australia, the same current process happens for them, my assumption is that it will look the same for Australian buyers too?

[lotzofuniquegoodies]

@ricarmic 

That is the interpretation that sellers are making on the US side in viewing the several discussions and the comments in the ecommerce page. (Upset/majorly peeved comments added frequently to ecommerce). Nothing is really clarified in the recent announcement. Nowhere does it actually state "separate". Paypal Fees would come from the total total. FVF opinions varied.  And as soon as the new payment system takes effect they were confident this would definitely be the case. Gross translates as combined. Combined makes it a "hidden" tax with new seller fees!!! 

-Lotz

[ypdc_dennis]

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@lotzofuniquegoodies wrote:

.. Paypal Fees would come from the total total. FVF opinions varied.  And as soon as the new payment system takes effect they were confident this would definitely be the case. Gross translates as combined.

---

The usual doom and gloom idiot crowd.

FVF is currently not accessed on "gross amount".

There is a separate FVF on sale value.

There is a separate FVF on shipping.

There is no FVF on sales tax.

Any change to have FVF be accessed on the combined total amount would have to be announced.

-..-

[tyler@ebay]

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@pjcdn2005 wrote:

---

tyler@ebay wrote:

---

@pjcdn2005 wrote:

tyler@ebay 

Sorry, I'm a bit confused....will the tax will continue to shown as a separate line on the ebay buyers invoice?

---

Hi @pjcdn2005 - the buyer's experience does not change. When they check out they will continue to see separate line items for item price, shipping (if charged) and any applicable taxes. 

Once they pay, the gross amount will be sent to you, and when that amount settles their tax will be remitted to the proper US State tax authority. Thanks!

---

tyler@ebay 

You’re saying that the total including tax will go into my PP account and I will pay 3.7% to PayPal on the sales tax?  And then eBay or PP submit  the tax? 

---

Hi @pjcdn2005 - that's correct - you would receive the gross amount (item price, shipping, sales tax), and once that amount settles the sales tax will be automatically deducted and sent to the proper taxing authority. As to the application of fees, that's something you'd want to verify with PayPal, but my understanding is that their fees are on the gross amount processed/received.