I previously blogged the article by James Alm (Georgia State University, Department of Economics) & Mikhail I. Melnik (Niagra University, Department of Commerce), Do eBay Sellers Comply with State Sales Taxes?, 63 Nat'l Tax J. 215 (2010), in the new issue (Vol. 63, No. 2) of the National Tax Journal. Forbes discusses the article in Academic Study: eBay Sellers Shirk Sales Tax Law, by Janet Novack:
Sales tax collection compliance among eBay sellers is "alarmingly low," says a new academic study published as states look for ammunition to bolster tax-collection laws.
When [the authors] downloaded and analyzed data on all consumer electronics sold on eBay during a 24-hour-period in July 2007, they found that only 18% of sellers bothered to collect sales tax even on sales to buyers within their own states. Under current federal law, an online seller has to collect sales taxes on purchases by buyers in his home state, but not on those by buyers from other states in which he has no physical presence, or "nexus." States generally exempt residents who aren't in business and make only "occasional" sales–say at a garage sale–from this requirement.
Not surprisingly, the new study, which appears in the National Tax Journal, found compliance rises dramatically with the size of the merchant. But Melnik said in an interview that he was surprised to find that even among eBay sellers with 10,000 to 15,000 ratings–meaning they have had that many unique customers and hardly qualify as "occasional" sellers–only half bothered to collect sales taxes on in-state sales. "They appear to be real businesses who have decided deliberately not to comply with state sales tax,'' Melnik said. "That's a violation of law." (EBay gives all sellers the option of having sales taxes included when the final purchase price is calculated, allowing the researchers to determine whether the taxes were being charged although not whether the taxes collected were actually remitted to the states.) …
Beginning in 2012 (for transactions taking place in 2011 and later) credit card companies and third-party transaction handlers such as eBay and Amazon.com must report to the IRS annually the gross sales of any U.S. seller doing more than 200 transactions and $20,000 in sales per year. Congress passed this requirement in 2008 to help pay for the first-time-home-buyer tax credit.
