OT eBay tax scam?

[ctownboy]

Hello,

I don't know if this has been talked about or not and sorry if it has but I have a question.

I sell some things on eBay, nothing major and usually for not big dollars. Most of the time I weigh things properly and the buyers pay actual shipping price (as I state in my listings). A couple of weeks ago, however, a person bought soemthing from me and we discovered they lived about five minutes from my home and they didn't want to pay for shipping if they didn't have to. So, we decided to have the buyer pay for the purchase with Paypal and then when it was over, I would refund the postage if we met in person for the delivery.

The delivery happened with no problems and when I went to refund the postage, I saw that eBay had charged sales tax on the postage. My questions are these; should eBay ACTUALLY be doing this? If so, do the states get that sales tax charged on the postage or does eBay siphon it off and add that to their profits?

David

[jfkheat]

In some states it is legal to charge tax on shipping.

[buymycards]

There have several threads about this. I posted this in one of the other threads.

I live in Wisconsin and delivery charges and shipping charges are subject to sales tax.

5) Delivery Charges
When a retailer sells taxable products or services which are subject to tax and the retailer charges the
purchaser for the delivery, the retailer's total charge, including the delivery charge, is taxable. It is
immaterial whether delivery is made by the seller's vehicle, a common or contract carrier, or the United
States Postal Service.
The correct state tax computation to be shown on an invoice when the retailer charges the purchaser for
delivery of the product is shown in the following example:
Merchandise $ 100.00
Delivery Charge 10.00
Subtotal $ 110.00
Tax ($110 x 5%) 5.50
Total $ 115.50

The reason for this is because of people trying to scam the system. You used to see it on eBay quite often. If a seller was selling a $20 card, they listed it for $1 plus $19 shipping to avoid paying eBay and PayPal fees, so eBay and PayPal adjusted their fee structure and started charging fees on shipping. The same thing happens with other businesses. A company sells and delivers a $500 item. They bill $1 for the item and $499 for shipping/delivery to avoid paying sales tax. The states figured it out and started charging sales tax on delivery charges.

[ctownboy]

Thanks for the info in the posts and the private message about this.

David

[Case12]

This helps my understanding of why some purchases don't match my state tax. I did not know shipping could be taxed (and it seems this is different for different sellers?)