eBay to collect online sales tax in 3 US states

eBay has announced that it will be collecting the relevant sales tax owed by sellers in 3 US states when their products are bought by residents there. The new system will come into action next year and affects shoppers buying from the states of Washington, Pennsylvania and Oklahoma, according to an eBay.com announcement.

The ruling in South Dakota regarding the online sales tax was subsequently referred to the Federal Supreme Court who didn’t make a definitive ruling but argued that the matter was better decided by lawmakers not judges. So the situation is still subject to change.

eBay says that they will automatically calculate and collect the tax from sellers and then pass it onto the relevant state tax authority. Merchants themselves will have to take no action but, in the meantime, will need to administer their own tax affairs. eBay advises business sellers to seek out tax advice where necessary.

As you may know, the Supreme Court ruled in favor of South Dakota in June 2018, which removed the requirement that certain retailers have a physical presence in a state in order for that state to impose sales tax obligations on these retailers. Some states have extended the tax collection obligation to marketplaces. We believe this ruling is unfair to small businesses and will continue to call for greater simplicity. In the meantime, we’re working to find the best way to support our sellers.
– eBay

Governments around the world are studying the validity and possibility of a local online sales tax and in one case, eBay has already stepped in. eBay has taken this step in Australia where the new GST (Goods and Services Tax) implemented this year means that all imports to the country are now liable to pay tax. eBay administers the calculation and collection of tax where applicable there.

In the case of the United States, it’s possible there may be some relief to the online sales tax if a bill successfully passes through Congress. Called the Online Sales Simplicity and Small Business Relief Act, it would limit the liability of smaller online retailers. Specifically, they would only be liable if turning over $10 million and as a federal law it would overrule state laws and apply nationally.