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Amazon, Ebay Sales Tax Question

by Mduck32
6 replies
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Please forgive me if I am asking a question that has already been answered. I have done my best to research this. But, I can't seem to find an answer.

I am selling products on site A and drop shipping them from company B. However, company B charges sales tax in CA, NY, and TX. This sometimes reduces my profits by over 50%. Is it acceptable or common practice for me to "pass" this tax on to my customer by charging it on site A sales that ship to these states and use the tax funds they pay to cover the taxes charged by company B?

Any help would be greatly appreciated.
#amazon #ebay #question #sales #tax
  • Profile picture of the author noxid101
    Yes this is standard practice and it works for me.
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  • Profile picture of the author Auctiondebteliminator
    Common practice? Yes.

    Best practice?

    No.

    It is only required to remit sales tax, not charge it.

    One of my pitches that I tell my potential customers is that I pay your shipping AND your sales tax. This increases my conversion rates - which increases my total sales.

    There is nothing worse (as a customer) where you find out that an item is - say - 29.99, but then you have a shipping charge of 9.99, then sales tax of 6.5%

    At the end of the day, it is no longer the 29.99 you THOUGHT it was - and you'd rather go somewhere else. You want to pay what it was 'advertised' it was at, rather than 'the checkout price.'

    It is so frustrating as a customer.

    In fact, just last night I booked a hotel in Las Vegas - They had the room at a base price, but, they then had sales tax, (which they told me they had) but at check out - they said they had a 13% 'resort fee' that wasn't disclosed at the beginning.

    So, naturally, I went elsewhere.

    So, they called me up and said - 'We see that you started to book a hotel with us, but didn't complete it - we wanted to call you up to see if we couldn't help you finish that.'

    I told them WHY I wouldn't be staying with them. It wasn't their price, which was reasonable, it was their marketing practice, and their upsell tactic that I didn't agree with.


    There is no difference between 90 dollars and 10 dollars shipping versus 100 dollars and free shipping.

    Just tell me what I'm paying, and leave it at that. It will reduce your shopping cart abandonment rate like crazy. Customers don't like to be gouged - because frankly, YOU don't like it either.

    So - tell your customers - 'I PAY YOUR SHIPPING, SALES TAX, and ALL FEES!'

    You're still making a profit, and you'll notice that the uptick in sales volume will MORE than cover any opportunity cost.
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    • Profile picture of the author Mduck32
      Thanks you guys. Another quick question based on something Auctiondebteliminator said. When you said:

      "It is only required to remit sales tax, not charge it."

      So, I am interpreting this correctly by thinking that whether I charged my customer or not, when I pay my supplier the sales tax, I have remitted it then? I do not need to seek any method to pay sales tax in the states which I shipped from? I paid it upon placing the order, right?

      Also, I get that it might be better to pay the taxes for the customer. However, I only plan to charge the taxes on the items that it is absolutely necessary. For instance, some of the items would require me to lose over 65% of the profit to the taxes. So, there is really not point in offering this product without charging the taxes.

      Thanks again for the help you guys.
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      • Profile picture of the author OnlineStoreHelp
        As a wholesale customer, you should have supplied them with a resale certificate showing they can sell to you without sales tax, and it would be your responsibility to collect it in locations where you have nexus.

        Technically, if you live in Mississippi (as an example) and have no location outside of Mississippi, you are only required to remit sales tax in Mississippi.

        But, if you are buying retail or from a retail vendor, you don't get this benefit. Are they a true wholesale vendor or are you doing some kind of arbitrage where you are buying from Amazon and selling to someone on your website or eBay?
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        • Profile picture of the author spwerewolf
          Originally Posted by OnlineStoreHelp View Post

          As a wholesale customer, you should have supplied them with a resale certificate showing they can sell to you without sales tax, and it would be your responsibility to collect it in locations where you have nexus.

          Technically, if you live in Mississippi (as an example) and have no location outside of Mississippi, you are only required to remit sales tax in Mississippi.

          But, if you are buying retail or from a retail vendor, you don't get this benefit. Are they a true wholesale vendor or are you doing some kind of arbitrage where you are buying from Amazon and selling to someone on your website or eBay?
          Every time I buy something from Amazon and sell it on eBay, should I pay Sales Tax every time.
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          • Profile picture of the author noxid101
            Amazon charges sales taxes in some states and you can setup your eBay seller account to only charge sales taxes in those states. This way the system is automated.

            I would rather have a slightly lower conversion rate than to have a mountain of sales tax conversions to keep up with.

            This way all my customers in States with no sales tax get the best deals. I don't want to have one high price for everyone just because some states charge tax. Margins are too low anyway.
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