Each e-commerce platform has its own rules and practices regarding sales tax collection and remittance. For example, on Shopify, sales tax is collected but not remitted. It is the responsibility of the seller to pay each jurisdiction the sales tax it owes. eBay’s sales tax rules are different.  

As of July 1, 2021, a total of 46 jurisdictions requires the collection of sales tax. In such cases, eBay collects and remits Internet Sales Tax on your behalf. This takes a huge burden off the seller, since they do not have to calculate individual tax rates in every state, city, township, or county in the U.S. Additionally, they do not have to determine what items are taxed in each of these locations. For instance, some municipalities do not have a tax on clothing while others do. Further, items such as scarves may be considered clothing in some places and accessories in another, meaning sometimes sales tax is paid and sometimes it is not. 

Additionally, there are aspects of sales and use tax services that eBay does not handle. For instance, eBay does not determine economic nexus. Economic nexus requires sellers to pay taxes under certain circumstances, such as how many sales they make in other jurisdictions and how much these sales are worth. Taxes must also be paid if your goods are stored in an eBay fulfillment center in another state or area. eBay does make it easier to make an economic nexus determination for storing goods by providing sellers with fulfillment reports, which inform sellers as to where their goods are being stored and shipped from. 

While there are many benefits to using the eBay platform, it is the sales tax services that eBay does not supply that sellers should be concerned about. For instance, before you can collect sales taxes in another jurisdiction, you need to obtain a business license there, which is a service eBay cannot help you with. Further, you do not need a sales tax registration if you do not meet the economic nexus threshold. eBay does not report when nexus is triggered by your sales. Our sales tax firm can keep an eye on this for you, and we can also offer e-commerce business registration assistance. 

Please keep in mind that these are only examples, and there may be other e-commerce sales tax compliance issues that sellers must address when working with eBay. 

For help with sales and use tax, compliance review services, e-commerce business registrations, sales tax filing, economic nexus determinations and much more, contact us. 

Based on applicable tax laws, eBay will calculate, collect, and remit sales tax on behalf of sellers for items shipped to customers in the following states and territories. 

Some online platforms used for selling products are considered Marketplace Facilitators. This means that the platform is responsible for collecting and remitting sales tax. This removes the responsibility to collect and remit sales tax as a seller on those platforms. eBay is considered a Marketplace Facilitator and therefore, they collect and remit sales taxes for all marketplace facilitator jurisdictions.  

eBay retailers are responsible to collect and remit sales tax on applicable orders for states that have not passed Marketplace Facilitator legislation. The platform does not handle the tax collection or the tax settings for sellers for these jurisdictions. Before enabling tax collection for your online store, it is important to evaluate where you have sales tax nexus and whether your products are taxable in those jurisdictions. 

What if I Sell on Another Platform? 

A seller may have no liability to collect and remit sales tax for most transactions on eBay because the platform is considered a marketplace facilitator. However, if that online retailer also sells on another platform that is not a marketplace facilitator, such as Shopify, then they are liable to collect and remit sales tax for those transactions.  

Seller Platforms that Are Not Marketplace Facilitators 

• BigCommerce 
• Shopify 
• WooCommerce 

Steps to Collecting Sales Tax on eBay 

1. Complete a thorough sales tax nexus review for both physical nexus and economic nexus. 
2. Register necessary sales tax account. 
3. Obtain sales tax certificates. 
4. Enable sales tax collection on all required platforms for the registered jurisdictions. 
5. File sales tax returns and maintain sales tax account. 

Many companies and groups qualify as exempt from sales tax and may make purchases on eBay without paying sales tax. For transactions like this it is important to collect the exemption certificate from the buyer in order to verify their exemption status. We recommend keeping exemption certificates on file for a minimum of 5 years from the transaction date. In the case of an audit, an auditor may ask for proof of exemptions when a sales tax-exempt transaction is in question. Without the exemption certificate the seller may be liable for the sales tax they did not collect. 

eBay provides an Orders Report that itemizes how much tax they collected and remitted for transactions in marketplace facilitator states. You can download orders in a CSV (comma-separated) file from the “Manage all orders” page in your Seller Hub. 

Sales Tax Report in Seller Hub 

1. Navigate to Orders tab. 
2. In the top-right corner, click on Download Report. 
3. Under the Listings and records drop-down, select the “Sold” report, then choose the “standard” file format (Excel file) and choose the date range. 

Sellers can periodically download the data and save it to a personal drive, in order to accumulate a full year’s worth of data. Currently, these reports can only contain a maximum of 90 days worth of data at a time. 

The buyer’s address information is used to determine sales by state and which taxes they collected and must remit.  

Sales Tax Report from PayPal 

You can also pull a transaction report from your PayPal account. 

For Business PayPal Accounts 

• After you login to your account, click on “Reports” in the top navigation. 
• Select “Tax documents” on left hand menu and tax year on the next page to generate a report.
   

For Non-Business PayPal Accounts 

• After you login to your account, click on “Activity” in the top navigation. 
• Click on “Statements”. 
• Select “Tax docs” and tax year on the next page to generate a report. 

The eBay Seller hub provides the ability to specify a sales tax rate for each US state in which you’re required to charge sales tax. You can also charge tax on shipping and handling, if it’s required by law. 

Buyers will then see your tax rates on the listing page. Once they confirm their shipping address at checkout, eBay automatically calculates the sales tax amount and adds it to their order total. 

Here’s how to set up your tax table: 

1. Go to the Sales Tax table page. 
2. Fill in the sales tax rate for any state where you want to charge sales tax. If you’re also required to tax shipping and handling in that state, select the Also charge sales tax on S&H check box. 
3. Select Save. 

Important things to keep in mind when setting up a tax table: 

• When you list your item, you need to indicate that you charge sales tax in the listing form and associate your tax table with the listing. 
• Changes that you make to your tax table won’t be reflected in your live listings. You will need to revise any current active listings in order for your tax table changes to apply to those listings. Listing created after you have saved your tax table changes will reflect your tax table updates. 

Once you’ve created your tax table, you need to specify in your listing that you are charging sales tax. Here’s how: 

1. On the listing form, check the box beside Charge sales tax according to the sales tax table. 
2. You can open and make changes to your tax table by selecting View sales tax table. 
3. Complete your listing and select Preview listing or Save and continue later.