New Jersey – I sell on eBay. How do I report sales tax collections?

Q. I have a small business and sell exclusively on eBay, which now collects sales tax from the buyers on items sold in a number of states, including New Jersey. In the past, I always reported my total sales, deducted sales not in New Jersey, and was left with New Jersey sales, on which I then calculated and remitted the sales tax due. But because eBay is now collecting the New Jersey tax and remitting it directly to the state, how do I show this on the quarterly Sales and Use Tax form? — Seller

A. Great question.

Let’s get technical.

eBay, as a marketplace facilitator, is required to collect and remit sales tax to New Jersey.

A marketplace seller is a seller that makes retail sales through any physical or electronic marketplace owned, operated or controlled by a marketplace facilitator, said David Ritter, David Ritter, chair of the tax practice at Brach Eichler in Roseland.

He said a marketplace seller may be a remote seller or a seller with physical presence in New Jersey.

“A marketplace seller is not required to collect and remit sales tax on the sale of tangible personal property, specified digital products or services delivered into New Jersey when a marketplace facilitator is required to collect and remit Sales Tax on the transaction,” he said. “Accordingly, sales made on eBay by a marketplace seller are not taxable sales with respect to the marketplace seller.”

Ritter said you should reduce total sales by the sales facilitated through eBay.

With that said, the Sales Tax form instructions provide that “You may deduct the amount of all sales included in gross receipts that are not taxable under New Jersey law.”

It goes on to provide that “Examples of exclusions and deduction include, but are not limited to:” and then lists various types of transactions.

“The examples do not include a marketplace facilitator sale,” he said. “Nonetheless, the sale is not a taxable sale with respect to the marketplace seller and the sale should therefore be deducted from the total gross receipts. Of course, keep all records.”

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July 17, 2020