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

[ricarmic]

Yep I believe the no refunding fees only applies to .COM accounts (so far).

Unfortunately I have had a fair bit of refunding experience as of late and in all cases I've gotten everything back. (I was worried because I was a .COM PAYPALer before there was a .CA PAYPAL and I never know how us grandfathered folks show up for stuff like this).

[hlmacdon]

Canadian user agreement has not been updated...yet. I would expect them to try the same thing here since they are just copying Stripe's strategy and pointing at them. Birds of a feather raise margins together.  

The more important bit here is how things get broken out on reporting. Ideally the sales tax is deducted from the gross amounts and the sales tax amount is removed as a line item before it hits any of our reporting. We don't collect or have anything to do with the tax in this case so it shouldn't hit any of financial reporting other than the increased fee amounts but who knows how poorly thought out this change is. It could be extremely messy.

[lotzofuniquegoodies]

Very messy if there happened to be refund involved.

-Lotz

[historysci]

I just had to add sales tax to a customer on the invoice going to OH (I am in Canada). Two weeks ago I had to do no such thing.

So I sent the invoice as is to combine shipping. The sales tax calculated before and after setting the correct shipping cost remains the same, so it is taxing phantom shipping charges I am not asking for. In this case the portion of sales tax is 8% on $24 (for 3 items going at same cost) rather than 8% on $8. There was no way to fix this

This is a bug I suspect, but how to report it? In the meantime, all invoices wiht multiple items to the US will be incorrect, overcharging customers.

Moreover, the invoice shows the cost of 3 items as $30, shipping as $8, and total as $42.32, with no other line item. $30+$8 does not equal $42.32. So the invoice is wrong. Looks like another mess eBay created to frustrate sellers and buyers!

[lotzofuniquegoodies]

tyler@ebay 

@historysci 

[femmefan1946]

Well, you could tyler@ebay 

But basically, the US internet taxes have nothing to do with us.

They are calculated by eBay based on their knowledge of the various and sundry state tax rules.

You are not collecting the taxes.

You are not remitting the taxes.

You cannot make any changes to the taxes.

Your only concern should be that Paypal is charging you on the basis of the customer's payment, which passes through your account.

So the error is costing you $1.28 (overcharge on tax) x.037( percentage paid to PP on international sale) = 4.43cents.

Unless you have hundreds of high value sales to Ohio it's probably best to ignore it.

Your time (if you lived in BC) is worth 23c a minute at minimum wage.

[femmefan1946]

Are you doing all your maths in US dollars or in Cdn dollars?

If some of the numbers are in one currency and some in the other don't forget foreign exchange.

[lotzofuniquegoodies]

@femmefan1946 

I believe for @historysci  it's a matter of how it should be documented for customs. It's not really explained in any of the eBay announcement notes. With shipments to Australia from Canada it's relatively easy to show on customs documentation that taxes have already been collected. With shipments to the USA it's not so easy. Another thing that comes into play is any shipping can be taxable with certain but not all states. For a standard customs invoice using a courier you show the extended value per item, the state taxes paid and shipping along with standard HS codes and countries of origin.  With Canadapost and eBay in the mix not so cut and dry. Any packing slip would show the same amounts. Or that they could have been previously paid. It needs to be all properly documented.

-Lotz

[historysci]

No it is not worth my time for this shipment, but if I sell an item in the $100s or $1000+ it will matter, but then bogus charges on shipping matter less. For smaller value items the shipping cost matters much more. in this case the shipping cost for one item is about the same price as the item, so for many items this is adding a charge of 8% on the total

All numbers are in CAD. All I see is the invoice and what is sent to buyer. The tax calculation is wrong as it stays calculated as the total of individual shipping charges before I calculate actual shipping charge and send the invoice.

[femmefan1946]

But again.

Not our problem.

We don't work out the tax, eBay does.

We don't have to know the tax rates, eBay does.

And American residents have a duty-free allowance of $800 (~$1000Cdn) and in any case it is the responsibility of the buyer to pay applicable duty, which is usually handled by the shipper (USPS/UPS/FexEx).

Not our problem.

Include the customer's invoice/packing slip that shows what she paid.

[recped]

---

@lotzofuniquegoodies wrote:

@femmefan1946 

I believe for @historysci  it's a matter of how it should be documented for customs. It's not really explained in any of the eBay announcement notes. With shipments to Australia from Canada it's relatively easy to show on customs documentation that taxes have already been collected. With shipments to the USA it's not so easy. Another thing that comes into play is any shipping can be taxable with certain but not all states. For a standard customs invoice using a courier you show the extended value per item, the state taxes paid and shipping along with standard HS codes and countries of origin.  With Canadapost and eBay in the mix not so cut and dry. Any packing slip would show the same amounts. Or that they could have been previously paid. It needs to be all properly documented.

-Lotz

---

You don't need to show sales taxes on the customs forms for US shipments because eBay is collecting STATE taxes not a federal tax such as we have in Canada and Australia.

US Customs do not care about State sales tax, they can't collect it.

[historysci]

It is our problem (and another waste of time). All of a sudden a buyer in the US has to pay 8% tax on items+shipping and there is NOTHING on the invoice to indicate this - I sent a note to the buyer in effect saying, this costs you $4 more as eBay has just started to add sales tax in the US. The  shipping for tax is calculated as the sum of all the individual shipping costs for items in the order, and not the actual shipping cost. It is quite obviously wrong (I am not even thinking about who pays what, etc.). On top of that the invoice does not show any taxes. They have not paid, so I have not experiecned what will happen after that:

- buyer orders 3 items for $10 + $8 shipping

- total shows up on the form to invoice with tax calculated as 8% of $52 ($30+$24 shipping) = $4.32

- I set shipping cost to $8 for all items, ie total is now $38, and the tax stays at $4.32

- I had no option but to send that to buyer.

- Invoice to buyer shows: items $30, shipping $8, total $42.32 with no other line item. If I received this I would throw it back at the seller and ask why they (actually eBay) can't add, and why am I not paying $38 as is what is expected from the listing, why am I being charged an extra $4.32, etc. etc.....

[recped]

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@historysci wrote:

It is our problem (and another waste of time). All of a sudden a buyer in the US has to pay 8% tax on items+shipping and there is NOTHING on the invoice to indicate this - I sent a note to the buyer in effect saying, this costs you $4 more as eBay has just started to add sales tax in the US. The  shipping for tax is calculated as the sum of all the individual shipping costs for items in the order, and not the actual shipping cost. It is quite obviously wrong (I am not even thinking about who pays what, etc.). On top of that the invoice does not show any taxes. They have not paid, so I have not experiecned what will happen after that:

- buyer orders 3 items for $10 + $8 shipping

- total shows up on the form to invoice with tax calculated as 8% of $52 ($30+$24 shipping) = $4.32

- I set shipping cost to $8 for all items, ie total is now $38, and the tax stays at $4.32

- I had no option but to send that to buyer.

- Invoice to buyer shows: items $30, shipping $8, total $42.32 with no other line item. If I received this I would throw it back at the seller and ask why they (actually eBay) can't add, and why am I not paying $38 as is what is expected from the listing, why am I being charged an extra $4.32, etc. etc.....

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eBay will adjust the tax after you send the invoice and it will be shown to the buyer before they pay.

[tyler@ebay]

Thanks for the tags @femmefan1946 & @lotzofuniquegoodies.

Hi @historysci - for US states where we are required to collect sales tax we override anything that you input in that sales tax field and replace it with the appropriate tax amount when the buyer views/goes to checkout.

The reason you see this previewed on the invoice and not on your completed Order Details is because you haven't collected the sales tax, we did. It's an attempt to not muddy the waters as much as they already are (state sales tax and marketplace facilitator laws being what they are).

There are changes coming  next month to the way tax is collected and remitted,  but in the mean time I can assure you the buyer was charged the appropriate tax based on their stated shipping address at checkout, and the amount they paid displays properly for them in their Order Details screen. Thanks!

[historysci]

Hi Tyler,

Thanks for the clarification.

Please note that what I saw I had to invoice to the buyer as tax (which I did not expect to begin with) was not correct: The tax was on the total for the order with individual shipping costs for each one, before I invoiced with combined shipping. After changing the shipping the tax remained the same according to the invoice.

Also the invoice that was sent to the buyer showed a total higher than items+shipping but no line item to indicate tax is added. I was paid simply the item+shipping cost so no problem for me there.

[reallynicestamps]

Ummm-- if you are not registered to collect and remit a tax, don't.

You can change the shipping (or reduce your selling cost to allow for the shipping error) but keep your hands off the tax.

The revenuers get tetchy about changes made by those who are not remitting taxes.

[reallynicestamps]

this costs you $4 more as eBay has just started to add sales tax in the US.

EBay and Amazon and PoshMark and Target and WalMart and LLBean....

This is a Supreme Court descision and a law.

The venues have to deal with it.

Every single one of them.
I just noticed a post on Quora about state sales taxes and Amazon.

Individual sellers don't have anything to do with this.

As far as telling the buyer about it, don't poke a sleeping bear.

Either he knows about it and is writing furious letters to his state representatives or he doesn't and remains blissfully ignorant.

All you are doing is making him mad at your (possibly) and eBay (probably).

Schtum.

[tyler@ebay]

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@historysci wrote:

Hi Tyler,

Thanks for the clarification.

Please note that what I saw I had to invoice to the buyer as tax (which I did not expect to begin with) was not correct: The tax was on the total for the order with individual shipping costs for each one, before I invoiced with combined shipping. After changing the shipping the tax remained the same according to the invoice.

Also the invoice that was sent to the buyer showed a total higher than items+shipping but no line item to indicate tax is added. I was paid simply the item+shipping cost so no problem for me there.

---

Hi @historysci - sorry to be dense, but I don't think I'm understanding what you're describing. 

When sending a buyer an invoice, the field for 'tax' will be shown as there are still US states that do not require eBay to oversee collection, leaving it to individual sellers to manage if necessary. If your buyer's location is within a Marketplace Facilitator state, the percentage amount you input into that section of the invoice is cosmetic only - meaning the buyer will not be charged what you enter there. Instead they are charged tax in accordance with their state's tax rate. This rate is assessed at checkout after the buyer confirms their shipping address.

If you are able to get screenshots of what you're describing that may better help me understand what you've encountered!

[historysci]

Hi Tyler,

As the order has been paid and shipped I can't go back and create an invoice. When I did I noticed the invoice will always add tax on the sum of the individual shipping charges for all item as in the listings. Changing that to the actual shipping cost does not change it. And the invoice goes out as: items $30, shipping $8, total $42.32, nothing to indicate tax is added. Tax is 8%, so should be total of $41.04.

- buyer orders 3 items at $10 with shipping in listing $8

- when I go to invoice is shows the total items as $30, shipping as $24, total as $52 and 8% tax $4.32

- I set the shipping cost for the order to $8, the 8% tax stays the same, total $42.32

So if the buyer is getting billed $4.32 they are being overcharged for taxes.

The invoice email that went to buyer shows the items $30, shipping $8, total $42.32 with no line item or indication why the total is not $38.

The order details info I see on eBay.ca does only show $30 item + $8 shipping as expected.

[tyler@ebay]

Thanks for this clarification @historysci!

I can confirm the buyer was charged the appropriate tax amount upon completing checkout. 

At this point in time, the invoice screen is really for you to provide your buyer a discount on shipping costs. Most of the other reasons it was originally created are made obsolete by the shopping cart and electronic checkout. 

Sorry that this was such a stressful transaction! I'll make sure your feedback is shared with the right folks. Hopefully we can see some changes to make it clearer when working with buyers from Marketplace Facilitator states. Thanks!