How eBay Handles Gross sales Tax on 1099Ks

Now that eBay is processing funds (reasonably than permitting patrons to pay sellers instantly), 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 neighborhood 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 information on this for eBay sellers?”

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

How you can 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 overall quantity. Which means that the quantity reported in your Kind 1099-Okay will not be totally reportable in your tax return. It’s best to seek the advice of along with your tax advisor to find out how finest 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 won’t be in your Kind 1099-Okay. It’s because eBay mechanically 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 varieties and revenue tax on eBay gross sales for extra data.

Nevertheless, it isn’t clear that web page affords probably the most up-to-date data. As we wrote in Could 2020, eBay started charging FVFs on the overall quantity processed, together with gross sales tax. “Below the brand new payment construction, as an alternative of paying a Closing Worth Charge (fee) on price-plus-shipping and a fee processing payment on the overall transaction quantity (together with gross sales tax), sellers pays a single share payment on the overall transaction quantity, together with gross sales tax.”

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

“The entire quantity of the sale consists of the merchandise worth, any dealing with expenses, 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 expenses or charges for eBay mechanically calculating, amassing, and remitting gross sales tax.”

It seems that eBay will 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. 

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