Sales Tax Guide for eBay Sellers

Table of Contents
  1. Introduction
Guidelines
    eBay
    Platform
    eBay

    Last Updated
    May 3, 2016

     
     

     
     

    This guide will provide recommendations for collecting sales tax on eBay and take you step by step through how to integrate TaxJar with your eBay account. Your TaxJar integration will enable real-time sales tax calculations and reporting – along with the ability to automate your filing.

    Sales tax is complex, with regulations changing constantly. For a primer on the basics of sales tax, including nexus, registration, filing, reporting, calculations and more, please visit Sales Tax Fundamentals. Also, be sure to take a look at our Resource Center, with articles, webinars and videos for beginners and experts alike.

    Please note that TaxJar for eBay requires a TaxJar Professional or Premium subscription. To sign up, or to upgrade your existing account, please contact our sales team.

    Collecting Sales Tax on eBay

    eBay only allows sellers to collect one sales tax rate per state. This system isn’t ideal for sellers based in a destination-based sales tax state or sellers who have sales tax nexus in more than one state. So how much do you collect?

    But there’s one exception! If you live in one of the “origin-based” sales tax states, charge the rate at your business location. You can look this rate up with TaxJar’s Sales Tax Calculator.

    Note: If you do NOT have a location in a state, our accounting advisors recommend taking an average of the sales tax rates in the 5 most populous cities in the state. While this is imperfect, it gives you the best chance of collecting as correctly as possible.

    Origin based states:

    • Arizona
    • Illinois
    • Mississippi
    • Missouri
    • New Mexico
    • Ohio
    • Pennsylvania
    • Tennessee
    • Texas
    • Utah
    • Virginia

    How to Connect your eBay Store

    To connect TaxJar and eBay, your first step is to set up sales tax collection in your eBay store. We have a step-by-step guide to setting up eBay sales tax collection here.

    Keep these key recommendations in mind when setting up your eBay sales tax collection:

    1. If you live in a destination-based state or have some other reason to charge more than one sales tax rate, use our eBay Average Sales Tax Rates chart to determine which rate to enter in each state.
    2. eBay allows you to choose whether or not you will charge sales tax on shipping. Check here to find out if your state (or states) requires sales tax on shipping.
    3. Keep in mimd that some products (such as food and clothing) are taxed differently in some states. Find your state (or states) in our sales tax by state guide to determine if you are selling any tax exempt or differently taxed items.

    Connecting TaxJar to Your eBay Account

    1. If you haven’t already, sign up for a TaxJar account. (There’s a 30-day no risk free trial. No credit card required to test TaxJar out!)
    2. Connect TaxJar to your eBay account - From your TaxJar dashboard, click Account > Linked Accounts > Connect to PayPal. From here you’ll be asked to login to your PayPal account. Do that, and we’ll take you to a page asking you to grant permission for TaxJar to access your account. Click “Grant Permission.” From here, TaxJar will begin importing your transactions from eBay (PayPal.) This generally takes a couple of hours, but may take longer if you have very high sales volume.
    3. If you sell on multiple channels, connect your other accounts with TaxJar. This allows us to pull in all of your online transactions and create return-ready sales tax reports.

    Using TaxJar with your eBay Account

    Once you have TaxJar set up with your eBay Account (and all of the other accounts you sell on) the real magic begins.

    When it comes time for you to file your sales tax return, TaxJax has created a return-ready sales tax report so you can quickly and easily file. Just click the state in which you are filing on your TaxJar Dashboard.

    If you want to take sales tax completely off your plate, TaxJar will also AutoFile your sales tax returns for you in most states.

    If you have additional questions or need help integrating your eBay and TaxJar accounts, please contact our support team.

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