Ebay Question: Tax

[Steve_Paulus]

General information I live in NY State, the Empire State, the state that tries like hell to be like California when it comes to taxes and policies…

 

 

So, my accountant has told me that any EBay sale that I make to residents of NYS is subject to NYS sales tax (8%)… He went on to say that even if I were selling just as a hobby, sales tax must be charged. The penalty for not charging and reporting these sales are punitive to say the least, $50 per item per quarter, plus the actual tax and interest…

 

My question is… Do you (the reader) who sell on EBay charge sales tax?

 

[Dr. Balls]

 

Holy shamoly. Thankfully, I live in Montana.

[miraclemet]

Yep I do.

 

my ebay account is location bound (GA) and when a buyer who is also located in GA wins my auction it adds in the GA state sales tax.

 

Similarly I've won auctions before from GA sellers and had to pay the sales tax % on top of the winning amount.

[RedL]

Death & taxes they say...

[shadroch]

You do not charge sales tax. You collect it.

[jop]

Always pay the taxman.

 

Here you can automate it for you on Ebay

 

Setting up a tax table

You can charge sales tax for any or all states by setting up a tax table in My eBay.

 

To set up a tax table:

Click My eBay at the top of most eBay pages. You may need to sign in.

Place your pointer over the Account tab, and then click Site Preferences.

Click the Show link in the Payments from buyers section.

Click the Edit link in the Use sales tax table section.

For any state where you want to charge sales tax, fill in the sales tax rate. If you're also required to tax shipping and handling in that state, select the Also charge sales tax on S&H check box.

When you're done, click the Save button at the bottom of the page.

To stop charging sales tax

At any time, you can stop charging sales tax in a particular state or in all states.

[revat]

I don't think anyone here would admit to or actively encourage circumvention of the law

[joecgcmaniac]

General information I live in NY State, the Empire State, the state that tries like hell to be like California when it comes to taxes and policies…

 

 

So, my accountant has told me that any EBay sale that I make to residents of NYS is subject to NYS sales tax (8%)… He went on to say that even if I were selling just as a hobby, sales tax must be charged. The penalty for not charging and reporting these sales are punitive to say the least, $50 per item per quarter, plus the actual tax and interest…

 

My question is… Do you (the reader) who sell on EBay charge sales tax?

 

Dang skippy you should be collecting the sales tax.

 

Like the others mentioned, the IRS will catch up with you.

 

And not only will you have to pay the penalties, plus the charge per item, and actual tax, but the interest that they will charge you will be the back-breaker. Especially if they catch you 2 or 3 years later, the interest increases very quickly.

 

Remember, it wasn't the cops that caught Capone, it was the IRS.

[jsilverjanet]

is this for all states or just some? Anyone in Illinois know if Illinois requires this?

 

 

[youmechooz]

is this for all states or just some? Anyone in Illinois know if Illinois requires this?

 

Check with your accountant. I charge in state tax as well. You don't have to charge for any other state but your own, for now.

[jop]

is this for all states or just some? Anyone in Illinois know if Illinois requires this?

 

 

I always thought if you did business in the state you were located in that you had to collect the sales tax.

 

Looking @ Illinois web site is very confusing. I would ask your accountant

[jsilverjanet]

Will do.

 

Thanks

[Steve_Paulus]

General information I live in NY State, the Empire State, the state that tries like hell to be like California when it comes to taxes and policies…

 

 

So, my accountant has told me that any EBay sale that I make to residents of NYS is subject to NYS sales tax (8%)… He went on to say that even if I were selling just as a hobby, sales tax must be charged. The penalty for not charging and reporting these sales are punitive to say the least, $50 per item per quarter, plus the actual tax and interest…

 

My question is… Do you (the reader) who sell on EBay charge sales tax?

 

Dang skippy you should be collecting the sales tax.

 

Like the others mentioned, the IRS will catch up with you.

 

 

 

And not only will you have to pay the penalties, plus the charge per item, and actual tax, but the interest that they will charge you will be the back-breaker. Especially if they catch you 2 or 3 years later, the interest increases very quickly.

 

Remember, it wasn't the cops that caught Capone, it was the IRS.

 

 

Yeah,

I was under the misconception that until I was selling comics as a business VS a hobby I did not have to "collect" sales tax.... I was so hyper focused on INCOME taxes that the sales tax fell of my radar DUMB . So I've worked things out with my accountant and we are back paying the sales tax and are collecting them going forward... I'm not really the type to play fast and lose with tax regs... The reason I posted this was two fold... One, I was wondering if I started collecting sales tax if I would be the only one on EBay doing so... and Two, I thought if I was operating under this web of denial, maybe others were simply unaware those EBay sales my not be considered income (As long as you are under a certain level) but collecting sales tax for instate sales is mandatory… and the penalties for not doing so are severe….

 

Your welcome?

 

One other thing my account told me was that the FEDS have been debating HOW not IF, they are going to collect taxes on EBay sales, by effectively eliminating the hobby level exemption. So imagine the thrill we will all have when EBay and Pay Pal start sending us W2 forms every January of February, so we can declare the “the non-taxed income” from sales on EBay…

 

 

 

[lonetree]

Yes, I collect sales tax for in state sales.

 

PayPal will send you a 1099 form if you have $20,000 is gross sales

 

https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W

[Dr. Love]

PayPal will send you a 1099 form if you have $20,000 is gross sales

 

Couple of things. Great to include this point, and if we're talking about the IRS, details count. PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year.

 

maybe others were simply unaware those EBay sales my not be considered income (As long as you are under a certain level) but collecting sales tax for instate sales is mandatory… and the penalties for not doing so are severe….

 

I am unaware of any circumstances under which any profit, no matter how small, on any item you own, comic or otherwise, is considered exempt from reporting. If you've got info on IRS regulations that say otherwise, please post a link.

 

Great topic, thanks for bringing it up! (thumbs u

 

[Steve_Paulus]

PayPal will send you a 1099 form if you have $20,000 is gross sales

 

Couple of things. Great to include this point, and if we're talking about the IRS, details count. PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year.

 

maybe others were simply unaware those EBay sales my not be considered income (As long as you are under a certain level) but collecting sales tax for instate sales is mandatory… and the penalties for not doing so are severe….

 

I am unaware of any circumstances under which any profit, no matter how small, on any item you own, comic or otherwise, is considered exempt from reporting. If you've got info on IRS regulations that say otherwise, please post a link.

 

Great topic, thanks for bringing it up! (thumbs u

 

 

I guess I've been under the impression (for the last few years) that if you were selling items on ebay as a hobby (Cleared less than $10K in sales)... you did not have to report the income to the IRS... Several of my friends on this board, have indicated that...

 

Well, mass ignorance is not an excuse that will appease an IRS Auditor... so I've had a 'come to Jesus" moment and have changed my ways

 

Thanks everyone for your comments and such. I think this has been a good discussion.

[Dr. Love]

I guess I've been under the impression (for the last few years) that if you were selling items on ebay as a hobby (Cleared less than $10K in sales)... you did not have to report the income to the IRS...

 

Thank you Steve for bringing it up.

 

The hobby vs business distinction has nothing to do with $ in sales. Rather than put words in the IRS' mouth, here's the short version:

 

 

Is Your Hobby a For-Profit Endeavor?

 

FS-2008-23, June 2008

 

The Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is engaged in for profit, such as a business or investment activity, or is engaged in as a hobby.

 

Internal Revenue Code Section 183 (Activities Not Engaged in for Profit) limits deductions that can be claimed when an activity is not engaged in for profit. IRC 183 is sometimes referred to as the “hobby loss rule.”

 

Taxpayers may need a clearer understanding of what constitutes an activity engaged in for profit and the tax implications of incorrectly treating hobby activities as activities engaged in for profit. This educational fact sheet provides information for determining if an activity qualifies as an activity engaged in for profit and what limitations apply if the activity was not engaged in for profit.

 

Is your hobby really an activity engaged in for profit?

 

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business or for the production of income. Trade or business activities and activities engaged in for the production of income are activities engaged in for profit.

 

The following factors, although not all inclusive, may help you to determine whether your activity is an activity engaged in for profit or a hobby:

 

Does the time and effort put into the activity indicate an intention to make a profit?

Do you depend on income from the activity?

If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?

Have you changed methods of operation to improve profitability?

Do you have the knowledge needed to carry on the activity as a successful business?

Have you made a profit in similar activities in the past?

Does the activity make a profit in some years?

Do you expect to make a profit in the future from the appreciation of assets used in the activity?

 

An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).

 

If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.

 

What are allowable hobby deductions under IRC 183?

 

If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity.

 

Deductions for hobby activities are claimed as itemized deductions on Schedule A, Form 1040. These deductions must be taken in the following order and only to the extent stated in each of three categories:

 

Deductions that a taxpayer may claim for certain personal expenses, such as home mortgage interest and taxes, may be taken in full.

Deductions that don’t result in an adjustment to the basis of property, such as advertising, insurance premiums and wages, may be taken next, to the extent gross income for the activity is more than the deductions from the first category.

Deductions that reduce the basis of property, such as depreciation and amortization, are taken last, but only to the extent gross income for the activity is more than the deductions taken in the first two categories.