uploads///Sales Tax

eBay Tackles Its Sales Tax Issue Head-On

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Jun. 21 2019, Published 1:49 p.m. ET

eBay to collect sales tax on behalf of sellers for free

eBay (EBAY) is expanding its state sales tax collection, showing that the company is trying to face this contentious issue head-on. The company announced on June 18 that it would begin collecting online sales tax in more states. eBay says it won’t charge its sellers any extra fee for the service of collecting the sales tax on their behalf, signaling an attempt to make its sellers more comfortable with and loyal to its platform.

eBay competes with the likes of Amazon (AMZN) and Shopify (SHOP) to woo sellers to its marketplace—hence its efforts to play nice with its sellers.

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eBay wants to avoid tax compliance problems

Although eBay says it won’t charge sellers for the service of collecting state online sales tax on their behalf, it also says sellers can’t simply decide to stop selling items to states where it collects sales tax.

The collection state sales tax online is one of the contentious issues currently facing e-commerce companies. Therefore, eBay’s making its marketplace sellers compliant with state online sales tax requirements will go a long way toward giving its leadership peace of mind and generally reducing the company’s risks associated with tax compliance.

eBay generated $2.6 billion in revenue in the first quarter, representing an increase of 2.0% YoY (year-over-year). Amazon (AMZN), Etsy (ETSY), and Shopify (SHOP) recorded first-quarter revenue increases of 17%, 40%, and 50% YoY, respectively. Revenue fell 8.0% YoY at Groupon (GRPN) in the first quarter.

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