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Etsy to collect seller sales tax in line with new laws

By Sasha Fedorenko January 15, 2019 - 4:17 pm

Etsy announced their plans to start collecting seller sales tax on purchases made in selected US states as a result of the introduction of new laws.

The marketplace say that they “are calculating, collecting, and remitting state sales tax on all orders shipped to the following states.”

The new state sales tax law comes as a result of the United States Supreme Court’s ruling in South Dakota v. Wayfair Inc, which says that states may charge tax on purchases made from out-of-state sellers. The ruling enables for states to require a merchant to collect or remit sales tax on purchases made into the affecting states if a seller reaches a certain revenue or transaction threshold in the state.

State

Date

Washington 1st January 2018
Pennsylvania 1st April 2018
Oklahoma 1st August 2018
Minnesota 1st October 2018
Iowa 1st February 2019
Connecticut 1st February 2019
South Carolina 1st February 2019
South Dakota 1st March 2019
New Jersey 1st April 2019
District of Columbia 1st April 2019
Alabama 1st July 2019

Etsy calculates the state sales tax rate (they can vary from location to location, and item to item) for the shipping address, charges the buyer, and sends the tax owed to the state. For orders placed through standalone PayPal, the sales tax collected is sent to you as a part of the payment. Then, Etsy will add the sales tax amount to your Etsy bill so that we can remit the tax to the state. If you’ve made sales to these states since these changes went into effect, we’ve got it covered – Etsy has collected and remitted any sales tax owed. If you are required to file a sales tax return in these states, you do not need to report sales tax on Etsy sales; all you need to do is state that the sales were made through Etsy.
– Etsy

Sellers response

Etsy says that similar regulatory changes might be passed on by the US states in the future. However, the marketplace assures their sellers that they will be informed by Etsy on the coming changes that might affect merchants’ trading.

While the US is aiming to bring more revenue via new sales taxes on residents’ online purchases, Etsy sellers have voiced their concerns about being treated as “an easy target.” Yet, one of the sellers has expressed their appreciation for Etsy’s management of sales taxes by saying “let Etsy use their resources to pay the various hodgepodge of sales taxes methods in every state on behalf of the seller.” However, the marketplace have also received criticism from merchants for not providing sellers with administrative documentation to help them understand how the taxation system works in practice.

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