US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

In eBay's October & November, 2019 announcement eBay.ca said:
"Please note the applicable tax will continue to be paid by the US buyer
and as a Canadian seller, you do not need to take any action."
 
If that is the case, why did a Japanese buyer have to pay a 10.25% state sales tax
on his purchase just because he was using a forwarding company in California?
He is NOT a US buyer, he is not a resident of California.  The purchase was not made
by the forwarding company in California and the parcel was not staying in California.
Shouldn’t there be an exception for this type of buyer?
This is like a penalty being imposed on a buyer in a foreign country and an abuse
of a foreign buyer’s rights. 
 
US buyers have to pay the sales tax by law.  Buyers in other countries
who use a US forwarding service are forced to pay the state sales tax too??
What a windfall for the American states!  Windfall for eBay too if they are given
a commission for collecting and remitting the state taxes.  Doesn't seem right.
 
So what is the solution for this unfair situation?
eBay should be able to make available to foreign buyers a way to have that tax cancelled before payment is made or else allow foreign buyers a way
to claim back or get a refund for the state tax that by law
they are not required to pay. 
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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

This is nothing to do with ebay, it is to do with how the State sees it. If it is based on the shipping address, it is the buyer's problem to do the work to recover the $$$ acquired by the state when it shouldn't have been.

For Canadian snowbird customers, if we're shipping to their Canadian address, they pay HST/GST, if they're in Florida or Arizona, they don't pay taxes because we are shipping to an out of country address, it doesn't matter what country they are a citizen of.

My point is the same thing applies to our Canadian taxes, which are address based. If someone is using a freight forwarder based in Canada, we have to charge them taxes because the shipping address is in Canada, again it doesn't matter where they actually live. So the Japan based person would have to pay the relevant Canadian taxes if their freight forwarder was based somewhere here in Canada because we are shipping to a Canadian address.

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

Buyer's choice to use a forwarder not eBay's.  Mail forwarders can lobby their State governments to allow exemptions for their clients.

 

The buyer can switch to a mail forwarder in a different state that doesn't charge the internet tax or to one where they can get a tax exemption.

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


@ricarmic wrote:

This is nothing to do with ebay, it is to do with how the State sees it. If it is based on the shipping address, it is the buyer's problem to do the work to recover the $$$ acquired by the state when it shouldn't have been.


What you are saying is all fine.
eBay’s announcement specifically said “the US buyer”.
eBay is ignoring the fact that foreign buyers are being forced to pay taxes to the USA.
Where is the Justice in this?
It may be the "buyer's problem" but can't eBay help out by making a "workaround" ?
It would be simple enough for eBay to make a simple method available on eBay whereby
buyers living in foreign countries can be exempted from the tax at the time of payment
or else have a way of getting a refund for the tax or of claiming the tax payment back
even if they are using a freight forwarding company.
 
By not doing this, eBay and the American States are taking advantage of foreign buyers.
 
 
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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


@ricarmic wrote:

  it is based on the shipping address,

For Canadian snowbird customers, if we're shipping to their Canadian address, they pay HST/GST, if they're in Florida or Arizona, they don't pay taxes because we are shipping to an out of country address, it doesn't matter what country they are a citizen of.



I don’t quite follow this.
 
I understand that if a Canadian is in Florida or Arizona they do not pay
the Canadian tax  because you are shipping out of the country.
 
However, by the same way foreigners are required to pay the state tax based
on where the shipping address is in a US state, the Canadians must have to pay
the Florida or Arizona state taxes since that is where their shipping address is.
 
Is that correct?  And if it isn’t, why would the Canadian be exempt and the Japanese isn’t? 
How would the Canadian get out of paying the Florida or Arizona state tax?
The Japanese is registered with eBay as a resident of Japan with a shipping address in  California and the Canadian is registered with eBay as a resident of Canada with a shipping address in Florida or Arizona. 
The Canadian buyer does not have to pay state taxes and yet the Japanese does?
 
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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

 
However, by the same way foreigners are required to pay the state tax based
on where the shipping address is in a US state, the Canadians must have to pay
the Florida or Arizona state taxes since that is where their shipping address is.....The Japanese is registered with eBay as a resident of Japan with a shipping address in  California....
 
You answered your own question.
Your Japanese customer has a US shipping address.
 
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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


@gwrocen wrote:

@ricarmic wrote:

  it is based on the shipping address,

For Canadian snowbird customers, if we're shipping to their Canadian address, they pay HST/GST, if they're in Florida or Arizona, they don't pay taxes because we are shipping to an out of country address, it doesn't matter what country they are a citizen of.



I don’t quite follow this.
 
I understand that if a Canadian is in Florida or Arizona they do not pay
the Canadian tax  because you are shipping out of the country.
 
However, by the same way foreigners are required to pay the state tax based
on where the shipping address is in a US state, the Canadians must have to pay
the Florida or Arizona state taxes since that is where their shipping address is.
 
Is that correct?  And if it isn’t, why would the Canadian be exempt and the Japanese isn’t? 
How would the Canadian get out of paying the Florida or Arizona state tax?
The Japanese is registered with eBay as a resident of Japan with a shipping address in  California and the Canadian is registered with eBay as a resident of Canada with a shipping address in Florida or Arizona. 
The Canadian buyer does not have to pay state taxes and yet the Japanese does?
 

Yes if the Canadian snowbird resides in California, then yes they would also be paying the Californian tax. I guess my example was confusing because I was only speaking to the Canadian tax perspective. Here it is again, hopefully more clear (Note that I've picked a state that charges tax, I don't think FL or AZ are yet).

 

A Canadian:

-In summer lives in Ontario and I ship to the ON address. Buyer pays 13% HST to Canadian governement via me.

In winter lives in California and I ship to the CA(lifornia) address. Buyer pays ?% taxes to CA governement via Ebay.

 

A Japanese buyer:

-uses a freight forwarding company in Ontario and I ship to the ON address. Buyer pays HST 13% taxes to Canadian government via me.

OR

-uses a freight forwarding company in California and I ship to the CA address. Buyer pays ?% taxes to state government.

 

My point was that the situation at hand already existed in our world regarding Canadian taxes, the US states are just the latest area to employ it....and neither of them have anything at all to do with eBay, eBay is stuck in this situation (which I bet has cost them millions in application development work to implement) and I bet they hate it as much if not more than us!

 

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

Hi,

Look you paypal fee and you will see paypal take % on taxe on each transaction .

Seller waste maney each time , it not just a problem for buyer !!!

Message 8 of 35
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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

Yes however this was always true when we sold something to Canada.

If I sell something to a Canadian, I'm paying the PAYPAL fee on the item, shipping and taxes, same as now is the case for many of the folks in the USA....

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

marnotom!
Community Member

If you're really concerned about "windfalls" to state treasuries. . . 

https://www.salestaxinstitute.com/sales_tax_faqs/foreign_visitor_sales_tax_refund

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

Yes,  that eBay sellers are paying  3.4% of US Internet Sales Taxes to Paypal  has been discussed here on the Canada Seller Board too.

We actually pay more in PP fees on the IST than American sellers, because PP charges higher fees on non-domestic payments.

 

It is my personal conspiracy theory, that eBay is using this as a stick to push sellers into using their Managed Payments system, which they intend to replace PP with in a year or so.

 

MP is more expensive that PP, because they charge the 30c non-refundable fee on every single transaction, not on every payment as PP does.

That is, if you buy 10 items at $10 each for a total of $100, PP would charge the seller 30c plus a (domestic) fee of 2.9%, totalling $2.90+.30= $3.10

Managed Payments would charge you 10x30c = $3.00 plus $2.90= $5.90.

 

It is of course equally likely that this was an unintended consequence that happens to benefit eBay, and which they have chosen to accept because, Hey! Free Money!

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


My point was that the situation at hand already existed in our world regarding Canadian taxes, the US states are just the latest area to employ it....and neither of them have anything at all to do with eBay, eBay is stuck in this situation (which I bet has cost them millions in application development work to implement) and I bet they hate it as much if not more than us!

 


I don't think eBay is hurting even if they spent "millions" to implement.  Smiley Happyrelieved

The USA meaning of one billion is a thousand million, or one followed by nine zeroes (1,000,000,000).

https://www.macrotrends.net/stocks/charts/EBAY/ebay/net-worth

How much a company is worth is typically represented by its market capitalization, or the current stock price multiplied by the number of shares outstanding. eBay net worth as of February 07, 2020 is $30.25B.

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

Unfortunately though what happens is the company sets aside so much $$ each year for "fixing" software applications and "development" of software applications. Generally because it affects the bottom line, this budget is not exceeded, although for the IST maybe it was, it would likely be noted on the financial statements if it was.

Fixing is the glitch stuff we see every day.

The development piece is the piece we hope implements changes that benefit us or the buyers, "new" things so to speak. It can also include "fixes" that take a lot of $$$ to implement and can be prioritized/deferred.

When some unavoidable ie prioritized large "problem" like implementing the IST comes in, it will pull $$$ away from the development side, so stuff they wanted to do gets diverted.

This diversion does indirectly affect us/buyers because other things that theoretically we would like to see won't happen till later now because the IST had to come first.

I doubt they're done with the systems impacts from it, I think it is a bigger problem for them than most situations because I think the states have a lot of different rules from each other, it is almost like up to 50 different "countries" implementing it....
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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


@ricarmic wrote:
Unfortunately though what happens is the company sets aside so much $$ each year for "fixing" software applications and "development" of software applications.
The development piece is the piece we hope implements changes that benefit us or the buyers.  It can also include "fixes" that take a lot of $$$ to implement and can be prioritized/deferred.
When some unavoidable ie prioritized large "problem" like implementing the IST comes in, it will pull $$$ away from the development side, so stuff they wanted to do gets diverted.
I think it is a bigger problem for them than most situations because I think the states have a lot of different rules from each other, it is almost like up to 50 different "countries" implementing it....
 
What you are saying may well have merit. 
 
If this were my business, I would be charging the expenses of the tax collection
against the income generated from the taxes collected. 
I would NOT be charging that expense against other revenue
that would "pull $$$ away from the development side"
I would not be charging those expenses against the fees collected from the sellers
or from their so called "development fund  budget". 
The income from fees collected from sellers or general revenue would not have to be touched to cover the cost for this tax collection part of their operation.
I am sure that eBay and the States should be able to handle the expenses of tax
collection out of the tax money income leaving everyone with a tidy profit.
 
MY net worth is not even a drop in the bucket of eBay’s net worth
or any American State’s net worth and yet eBay, with the collusion of PayPal
and the States, all of whom benefit, did not hesitate to download the expense
of PayPal fees for this tax collection onto the backs of all sellers. 
Even onto the backs of foreign buyers living in foreign countries who by law
are not required to pay tax to any US state especially since they are buying
from me, a Canadian.  I am actually surprised that you seem to be defending
eBay and the USA states.
As mentioned before, there should be a workaround for foreign buyers
to reclaim the tax money that has been unjustly collected from them
just because they happen to use a freight forwarder in the USA. 
Those buyers are being taken advantage of and I,  as a seller,
am the one who has to take any "flack' from them about those
tax charges that are not in my control. 
 
Sure,we are thankful that eBay has been available as a venue for us to use. 
We have always faithfully paid the required fees.  The income generated
each year from eBay fees is in the tens of billions.  (This information is readily
available on the internet).  eBay should be grateful that so many people
would be willing to use their platform for selling. 
Where would they be without these sellers and of course the buyers? 
 
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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


@gwrocen wrote:

The income generated each year from eBay fees is in the tens of billions.

No "s" required.

eBay revenue (from all sources not just seller fees):

2019 - 10.8 billion

2018 - 10.7 billion

2017 -  9.9 billion

2016 -  9.3 billion

before then PayPal was part of the equation.

 

Sale of StubHub by eBay will reduce revenue in 2020 by over 10%

 

Another interesting stat:

2019 sales to the USA by ebay sellers is down 6.3% with over half that drop blamed on the internet sales tax rollout reducing buying power.

 

Number of active eBay Buyers in 2019: 183 million (2018 there were 179 million)

 

-..-

 

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


@ypdc_dennis wrote:

 

No "s" required.

eBay revenue (from all sources not just seller fees):

2019 - 10.8 billion

2018 - 10.7 billion

2017 -  9.9 billion

2016 -  9.3 billion

before then PayPal was part of the equation.

Sale of StubHub by eBay will reduce revenue in 2020 by over 10%

Another interesting stat:

2019 sales to the USA by ebay sellers is down 6.3% with over half that drop blamed on the internet sales tax rollout reducing buying power.

Number of active eBay Buyers in 2019: 183 million (2018 there were 179 million)


Thanks for posting that interesting data. 

 

https://www.macrotrends.net/stocks/charts/EBAY/ebay/net-worth

But more interesting was that in 2015 eBay's net worth

was over $80billion (80,000,000,000) before eBay got rid of PayPal. 

Prior to that from early 2011 to 2014 eBay's net worth fluctuated

between $37B and $76B.

 

Even eBay makes mistakes when trying to buy into the tech-driven future.

In September 2005 they paid $2.6 billion for Skype, thinking perhaps

that telephony had something to do with online auctions.

Four years later, (2009) they sold Skype for $1.9 billion."

Must depend on who is in charge and how business savvy the CEO and CFO are. 

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!


@ricarmic wrote:
Unfortunately though what happens is the company sets aside so much $$ each year for "fixing" software applications and "development" of software applications. Generally because it affects the bottom line, this budget is not exceeded, although for the IST maybe it was, it would likely be noted on the financial statements if it was.
@gwrocen wrote:


Even eBay makes mistakes when trying to buy into the tech-driven future. In September 2005 they paid $2.6 billion for Skype, thinking perhaps that telephony had something to do with online auctions. Four years later, (2009) they sold Skype for $1.9 billion."Must depend on who is in charge and how business savvy the CEO and CFO are. 

I guess the point I was trying to make with the above was that it looks like eBay can afford to lose $700,000,000.00  (seven hundred million) because of poor business decisions but they cannot afford to shoulder the cost of collecting the state tax so they immediately download that expense of PayPal fees onto the backs of all sellers worldwide.

 

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

That's about the how of it all...

eBay doesn't like to sweat the small stuff, which is why eBay is in such a mess...eBay never deals with the small stuff...

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US State Tax Paid by Foreign Buyers is a “Windfall” for American States and eBay!

I think it is important to also look at this from a customers perspective.

Prior to this, the buyer saw two transactions, one for the item, one for the tax, maybe from two different folks (me and ebay? I'm not sure what they saw).

That would be very confusing to the buyer.

The change they made, made it now look like a normal transaction to the buyer with the item, shipping and tax all in one place. (which is exactly the same as what a Canadian buyer has always seen from our transactions to Canadian buyers).

Unfortunately yes, it means we get dinged for the PAYPAL fees on the tax (which is exactly the same as what happens when we collect Candadian taxes).

Do I like yet another, very small but still present, cost because of this? No.

However the $$$ cost of all the various states and countries implementing a wide variety of ways of dealing with online selling is costing me wayyyyyyy more in the time it is taking to accomodate all of them.... even the USA stuff is a pain from the accounting, and processing perspective as compared to the actual $$$ it costs me.

I've said this before, it is going to get worse before it gets better unfortunately.....
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