How eBay Handles Gross sales Tax on 1099Ks

Now that eBay is processing funds (quite than permitting consumers to pay sellers immediately), it’s required to file Kind 1099Okay to sellers and to tax authorities within the US.

A reader who’s now enrolled in this system reached out and requested how eBay was dealing with 1099Ks with regard to gross sales tax that it is required to gather and remit to states.

“I’ve contacted “Charles” on eBay’s Managed Funds group board and posted the query under however haven’t obtained a solution:

“”Is eBay reporting gross revenue together with the taxes that had been taken out to the IRS on our 1099’s?”

“My intestine feeling is that they should not as sellers by no means are in possession of this tax cash however nobody will reply my query. Does anybody have any data on this for eBay sellers?”

This assist web page that explains how eBay handles 1099Ks consists of the next data:

Easy methods to use a Kind 1099-Okay

Kind 1099-Okay consists of the gross quantity of funds made to you inside a calendar yr, so refunds, transport prices, gross sales tax, and so on. aren’t subtracted from the whole quantity. Which means that the quantity reported in your Kind 1099-Okay might not be absolutely reportable in your tax return. It’s best to seek the advice of along with your tax advisor to find out how greatest to make use of the knowledge in your Kind 1099-Okay.

Beginning in 2019, any gross sales tax collected by eBay on gross sales made by you within the varied market states is not going to be in your Kind 1099-Okay. It is because eBay routinely collects and remits such gross sales tax on to the state (i.e. the gross sales tax for these states is not paid to you).

Please see 1099 kinds and revenue tax on eBay gross sales for extra data.

Nevertheless, it is not clear that web page affords essentially the most up-to-date data. As we wrote in Might 2020, eBay started charging FVFs on the whole quantity processed, together with gross sales tax. “Below the brand new payment construction, as a substitute of paying a Last Worth Payment (fee) on price-plus-shipping and a cost processing payment on the whole transaction quantity (together with gross sales tax), sellers can pay a single share payment on the whole transaction quantity, together with gross sales tax.”

“We cost one closing worth payment when your merchandise sells, and you do not have to fret about third-party cost processing charges. This payment is calculated as a share of the whole quantity of the sale, plus $0.30 per order.

“The whole quantity of the sale consists of the merchandise worth, any dealing with fees, the transport service the client selects, gross sales tax, and another relevant charges.”

However on one other eBay assist web page about tax coverage, it states: “As soon as eBay begins to gather tax within the required states, no motion is required in your half, and there shall be no fees or charges for eBay routinely calculating, accumulating, and remitting gross sales tax.”

It seems that eBay might not be updating assist pages when it makes adjustments in the best way it handles sales-tax assortment and charges, resulting in seemingly contradictory data. 

A thread on the eBay dialogue boards exhibits our reader wasn’t the one vendor questioning how eBay was dealing with tax on 1099Ks.

One other situation that sellers raised within the thread: when ought to they anticipate eBay to make Kind 1099Ks obtainable to sellers for tax yr 2020? Colleagues pointed to the identical assist web page as above the place it states:

In the event you’re a managed funds vendor, we’ll mail you a Kind 1099-Okay by February third in the event you exceed each of the next thresholds:

– You obtained greater than $20,000 in gross funds from the sale of your objects.

– You had greater than 200 cost transactions.

Sellers must also bear in mind that some states have instituted decrease threshold quantities, akin to Massachusetts and Vermont, which require cost processors to ship them Kind 1099Ks for sellers who’ve processed gross funds as little as $600 (the final time we checked).

Sellers could be smart to proactively verify all cost processing companies they use, together with marketplaces like eBay and Etsy in addition to PayPal and bank card service provider accounts – and search tax help from knowledgeable in the event you need assistance with Kind 1099Okay.

Leave a Reply