eBay now adds out-of-state sales tax

[The Real MC]

Just bought an item on eBay, they are now collecting out-of-state sales tax if you reside in certain states.

 

I am saving $$$ to move out of NY and until that happens I won't be making purchases on eBay. Glad I made the bulk of my acquisitions before this happened.

[RedKey]

Reverb too.

 

[AnotherScott]

Glad I made the bulk of my acquisitions before this happened.

One always thinks one has already made the bulk of his acquisitions. ;-)

 

BTW, Musiciansfriend, Sweetwater, and Samedaymusic too. They're all reacting to the same laws. I think you'll have to move to a state with no sales tax!

 

[Synthoid]

I've said it before but charging sales tax on used items is double dipping. The tax was paid up front with the original purchase.

 

And yeah, I've heard the reasons they give to justify it but it still sucks, especially for folks on limited incomes when they buy a used car.

 

 

[ElmerJFudd]

Glad I made the bulk of my acquisitions before this happened.

One always thinks one has already made the bulk of his acquisitions. ;-)

 

BTW, Musiciansfriend, Sweetwater, and Samedaymusic too. They're all reacting to the same laws. I think you'll have to move to a state with no sales tax!

 

Alaska.

Delaware.

Montana.

New Hampshire.

Oregon.

 

All lovely and scenic to visit. Not all packed with gigs.

[Tom Williams]

Also Amazon and B&H....

 

Sometimes the rules are clear -- "If you have a warehouse in our state, you're an in-state business." In other cases there are reciprocal agreements between states to charge sales tax.

 

It's mainly due to the fact that we customers of Amazon et al have been able to have our cake and eat it too -- making routine purchases online that used to be done by driving to the local mall. For states that get significant revenue from sales tax, it's been pretty rough. So, to maintain their income stream, those states either had to increase taxes on something else -- income, real property, death, whatever -- or just redefine "in-state" purchases.

[MoodyBluesKeys]

There was a US Supreme Court decision during 2018 which decided that online vendors MUST pay sales tax, meaning that they have to collect it. The claimed reason was to bring it in line with brick-and-mortar stores.

Each state that collects sales tax has a somewhat different approach. From what I've seen (here in NC), vendors that don't sell more than a certain number of dollars of product are not being forced to collect sales tax, but above that threshold, the vendor WILL be liable to the different state to pay the sales tax (regardless of whether or not they collect it). Mechanisms are being setup by the governments of the different states to track this boondoggle. Previous to this court decision, out of state sales tax could only be demanded if there was a "presence" in that state (such as a physical store, or even a shipping point); the effect of the court ruling is that a "presence" is legally considered even if there is no physical presence at all in the state, they deem it a virtual presence because it was placed on the web.

 

Some of the larger vendors aren't yet collecting it obviously (I suspect that they increased pricing enough to pay it, and are paying it - to avoid customers adverse reaction. In the "old" system, NC had a law that required you to pay what they called a "use" tax for anything that you purchased out of state, whether you ordered it by mail, picked it up on a trip, or whatever. The states had the problem that a majority of people didn't bother to track such things, and did not pay the "use" tax.

 

As time progresses (there was a period of time granted for implementation, don't remember exactly how long), merchants will get new accounting system software and almost universally collect it. I just hope it remains at only the state level, can't imagine how someone like Sweetwater, EBay, or Amazon would deal with the hundreds of thousands of individual city, county, parish, etc. added taxes (where I live, there is state and county tax, some towns also have their own).

 

 

[The Real MC]

Glad I made the bulk of my acquisitions before this happened.

One always thinks one has already made the bulk of his acquisitions. ;-)

 

"No more gear"... yeah famous last words, right?

 

BTW, Musiciansfriend, Sweetwater, and Samedaymusic too. They're all reacting to the same laws.

 

Also the component suppliers like Mouser. Digikey, et al.

 

I think you'll have to move to a state with no sales tax!

 

Alaska.

Delaware.

Montana.

New Hampshire.

Oregon.

 

All lovely and scenic to visit. Not all packed with gigs.

 

That's the escape plan... retirement is at least ten years away, by then my gigging days will be over, I will be moving to a state with favorable economic conditions, and a scenic view would be nice while working in the studio.

 

[Delaware Dave]

I think you'll have to move to a state with no sales tax!

Living in the great state of Delaware there is no sales tax. $0.99 means $0.99, not a $1.06 w/ tax. I will be more than happy to broker your purchases so that they are tax free. All I request is a measly 10% brokerage fee.

 

[The Real MC]

So, to maintain their income stream, those states either had to increase taxes on something else -- income, real property, death, whatever -- or just redefine "in-state" purchases.

 

The problem is that many states refuse to acknowledge that they spend too much, and citizens are fleeing high taxes for more friendly states. I'm going to stop there to avoid crossing into political discussion.

 

There was a US Supreme Court decision during 2018 which decided that online vendors MUST pay sales tax, meaning that they have to collect it. The claimed reason was to bring it in line with brick-and-mortar stores.

 

Therein lies my beef: while Amazon, Mouser, and others are vendors: are eBay, Reverb, and other AUCTION SITES defined as "vendors"? I think not, because auction sites have no distribution contract like Amazon and others, and they do not stock a quantity of goods available for sale to the general public.

 

In the "old" system, NC had a law that required you to pay what they called a "use" tax for anything that you purchased out of state, whether you ordered it by mail, picked it up on a trip, or whatever. The states had the problem that a majority of people didn't bother to track such things, and did not pay the "use" tax.

 

NY had that too. The problem was they demanded you pay taxes on goods you purchased while traveling out-of-state and physically carry into your residence. You ALREADY paid sales tax at the point of purchase and NY wants you to pay another tax if you "use" it in your NY residence, which is a DOUBLE TAX.

 

[Jim Alfredson]

Sweetwater has been doing it for awhile. But I agree that sites like eBay and Reverb are auction sites, not vendors, so it seems like that should not count.

[OB Dave]

I'm an eBay seller and I've seen no changes on my end. If they're collecting sales tax, I'm not seeing it, and that's probably a good thing. They must be filing the returns with the various state agencies. Wouldn't be worth it for me to start filing with the BoE of every state I ship to - I'd probably just shut down the store. Keeping track of California is work enough as it is.

[AnotherScott]

Sweetwater has been doing it for awhile. But I agree that sites like eBay and Reverb are auction sites, not vendors, so it seems like that should not count.

Reverb doesn't appear to charge tax for a sale into NY (unless the actual vendor is in NY). I'm surprised about eBay too.

[Chromedoggy]

I have an ebay store. I just checked a few hundred transactions. None of my shipments had tax added on other than those shipped in my home state.

As a seller you can set up tax in each state. Each state that has instituted mandatory collection has a minimum threshold, which is typically a combination of dollars and number of transactions at which an online retailer must collect and submit sales tax.

The good and the bad, I don't meet any of the minimums yet, but hopefully some day.

As far as selling used goods, the double tax issue does suck. This is typically a big issue in the used car business.

[Jazzmammal]

I'm an eBay seller and I've seen no changes on my end. If they're collecting sales tax, I'm not seeing it, and that's probably a good thing. They must be filing the returns with the various state agencies. Wouldn't be worth it for me to start filing with the BoE of every state I ship to - I'd probably just shut down the store. Keeping track of California is work enough as it is.

 

This is one of the biggest arguments against this but I don't know how the new law addresses it. Obviously if a small vendor like you has to suddenly be able to handle sales taxes to how ever many states is impossible and millions of small online businesses will just quit. Maybe that only applies to direct sales to customers but using a third party like Ebay lets them handle it. That sucks in it's own way because of the fees.

 

I'm a tax pro doing mostly tax resolution work nationwide. I've done returns for pretty much every state and they all have a Use Tax section including California and they've had it for years. Our tax system works using the honor code. Sounds old fashioned I know but we're all supposed to report everything truthfully including the Use Tax. CA has a default you can use based on income and it's not much. If someone has an AGI of 50K it's only like $50-60 or so so nobody has to keep track of online purchases, they can use the default. The problem is nobody does, they all check the box, No Use Tax which can be a lie in many cases and it's not feasible for state auditors to come after people for such a small amount. Everybody knows this and keeps on lying about it. Therefore, this is what we get. We can debate endlessly about the fairness of this tax or that tax but the bottom line is taxes are what allows our civilization to even exist. People tend to forget the disclaimer next to the signature line on a tax return. "I declare under penalty of perjury that this tax return is true and correct" or similar. That includes everything on the return like state Use Taxes.

 

Governments agencies at all levels need money to operate and of course we can all have great fun pointing out stupid stuff, wasteful spending and all that rot. This is not the forum for that, I'm simply pointing out in a representative republic such as ours we elect people to handle stuff like this and we all as citizens agree to follow the laws they pass. The Supreme Court has spoken so that's the way it is, including purchases of used stuff.

 

Bob

 

[RABid]

The only time that I have seen it is when the buyer and seller are in the same state.

[Chromedoggy]

Avalara has an app that integrates with most selling platforms. The user determines which states to charge tax. Alavara charges the correct percentages on each purchase and creates the necessary filing documents. The app is typically free at most volume levels.

An online operator could theoretically collect taxes in every state, it would then be up to them to actually submit payment to those states. I foresee this as being a big problem in the future. It seems highly unlikely every state would be able to audit every small online retailer.

[nursers]

Ebay has jumped the shark big time for me, particularly as a seller. I sold a laptop for parts, clearly stating it didn't work etc. Someone bought it, then posted negative feedback that sat on my record. That'd be semi-ok if I could in return post negative feedback, but unless something has changed in the last year, a seller CANNOT post negative feedback about a buyer. Have avoided selling stuff on there since.

[Docbop]

There was a talk about this at the last NAMM and it's coming everywhere the new government rulings are not only making them collect taxes they also redefined what constitutes a business residing within a state. They say that someone who is one of those small like a Amazon Marketplace vendors has to collect taxes because they use Amazon to sell and Amazon has a presence just about everywhere so the small vendor is now considered to be everywhere. This is even worse for small businesses that sell on the internet because they have to keep up with the tax rates in all fifty states. collect the taxes and get it to the state and keep records for the feds. There is subscription software to do this but it is way too expensive for a small business, so little businesses on the internet will die and leave just the big dogs, not good. So sales tax free internet is going the way of the dodo bird.

 

 

Also many states like where I'm at in California they are going after music stores that offer lessons and collect the money for the lessons. By new changes in the law a guitar teacher is now considered an employee of the store and that means benefits, taxes deductions, and etc have to be given to the teachers. Again for smaller store this will be cost prohibitive, but there is a way around it. If the store changes to renting the lessons rooms to the teacher then the teacher is not an employee. So music stores for teacher will have to be like beauty salons and similar businesses that rent the space out.

 

Government is doing all it can to kill off the small businesses so only the big chains survive.

[harmonizer]

I have felt it was a huge sham that sales via the Internet did not require the seller to collect sales tax, while sales via brick and mortar did require the store to collect it. The reason that brick and mortar stores have been required to do so is that people realize that if the store does not collect it, people are not going to self-report it. This problem has existed for decades.

 

(Outside of Keyboard Corner, not here) One can debate whether the state they live in spends money wisely, and whether the state they live in collects money fairly from the proper sources (income tax? sales tax? real estate tax? use tax? etc) - but that is not a topic for here.

 

But if I have to pay sales tax on a used keyboard I buy when I walk into a Sam Ash store, why should I also not have to pay sales tax if I buy a used keyboard over the Internet?

 

(please note I am not saying that it is good or bad for a state to have a Sales Tax law - I am just saying it should apply the same to purchases made in a physical store, and purchases made over the Internet). .

[ElmerJFudd]

It seems like when the internet was wide open and wild, government wasn't keeping up with tech and perhaps purposefully so in order to give people a reason to consider trying the new online marketplace. Now that internet sales are on par, and surely will surpass brick and mortar shopping at some point - state revenue must be dipping. Hence the need, or rush to catch up with internet sales tax.

[Synthoid]

state revenue must be dipping. Hence the need, or rush to catch up with internet sales tax.

 

I'll give them that. Sales tax on new items only.

 

 

 

[The Real MC]

I have felt it was a huge sham that sales via the Internet did not require the seller to collect sales tax, while sales via brick and mortar did require the store to collect it. The reason that brick and mortar stores have been required to do so is that people realize that if the store does not collect it, people are not going to self-report it. This problem has existed for decades.

 

(Outside of Keyboard Corner, not here) One can debate whether the state they live in spends money wisely, and whether the state they live in collects money fairly from the proper sources (income tax? sales tax? real estate tax? use tax? etc) - but that is not a topic for here.

 

But if I have to pay sales tax on a used keyboard I buy when I walk into a Sam Ash store, why should I also not have to pay sales tax if I buy a used keyboard over the Internet?

 

(please note I am not saying that it is good or bad for a state to have a Sales Tax law - I am just saying it should apply the same to purchases made in a physical store, and purchases made over the Internet). .

 

I have a different opinion but I can't elaborate without wandering into a political minefield. Suffice to say, it is a free country and I can choose to live where fiscal responsibility is more mature.

[OrpheusNY]

state revenue must be dipping. Hence the need, or rush to catch up with internet sales tax.

 

I'll give them that. Sales tax on new items only.

 

 

The thing is, when taxes are levied on a transaction its not the item itself thats being taxed, its the transaction. And exempting used items would exempt huge swaths of the retail economy, and create a giant loophole for tax evaders.

 

 

 

[OB Dave]

Which is why it's called a use tax.

[J. Dan]

This reminds me of the bar owners who get upset when ASCAP or BMI finally catches up with them and makes them start paying fees. Technically, you were supposed to be paying the sales tax to your state all along, but of course nobody ever did it, which is why the sellers are starting to collect it.

[Synthoid]

Which is why it's called a use tax.

 

I'm feeling used just thinking about it.

 

 

[J. Dan]

Don't feel bad. We get taxed more than just twice on every dollar - that's just the beginning! Your employer gets taxed on what they pay you (if you're a self employed musician, you pay that), then you pay federal, state, and in some cases (like me) local income tax. Buy a car, pay sales tax, then (in my state) pay personal property tax every year, not to mention license and insurance. When you buy gas, all kinds of tax on that. Die and pass it on to your kids, estate tax.

 

The thing that really bothers me even more than personal property tax (cars and boats in MO) is just property tax in general....the fact that you can pay off your house, but if you don't pay tax in it every year, they can take it from you, that means you never really actually own it. You're just renting.

[Synthoid]

When you buy gas, all kinds of tax on that.

 

Yeah, really high here in Pennsylvania.

 

 

 

[J. Dan]

We're actually in pretty good shape here in MO as far as gas prices. I've done some business with refineries and a lot of people don't realize that a lot of the cost goes int having to do different blends for different states a different times of the year. Every time they have to stop one blend and switch to another and have storage for it costs money especially in downtime not to mention the various additives. Even if we all were to stick to the most strict emissions standards, if we could all agree on the same blend it would be cheaper, except for the seasons. Unfortunately California doesn't have the same seasons as North Dakota, for example. It burns different due to air density which changes with temperature and elevation.

 

Just thought some of you might find that interesting. Return to your regularly scheduled discussion.