When you purchase handcrafted jewelry or a refurbished laptop on eBay, Etsy or Amazon Marketplace (not purchases made directly from Amazon.com), you typically haven’t had to pay sales tax.
That could change in the near future — and it may cost you extra.
The state of New York is engaged in a major legislative battle over a proposal that would require online marketplaces to collect sales tax on purchases shipped to New York customers. The measure may or may not pass this session.
If it does become law, New York would likely be only the beginning.New Mexico and Rhode Island are contemplating similar moves, and if they proceed, the concept could rapidly spread to many of the 45 states that impose sales taxes.
“If it’s successful in one state, others will almost certainly follow,” Max Behlke, director of budget and tax at the National Conference of State Legislatures, told Time magazine.
This is the newest phase in a long-running dispute.
For years, brick-and-mortar retailers have argued it’s unfair that many online sellers don’t charge sales tax.
For years, Amazon — the biggest online retailer — resisted paying state sales taxes.
But that chapter is winding down. Starting April 1, Amazon will begin collecting sales taxes for all 45 states that have sales taxes. (Alaska, Delaware, Montana, New Hampshire and Oregon still do not levy statewide sales taxes.)
Now the conflict moves to the next front. Online marketplaces such as eBay, Etsy and Amazon’s third-party marketplace usually don’t collect state sales taxes unless the buyer and seller are located in the same state.
New York Governor Andrew Cuomo wants to alter that. He proposes requiring online marketplaces that process at least $100 million in annual sales from New York purchasers to begin collecting sales taxes. That threshold would capture platforms like eBay, Etsy and Amazon’s marketplace.
Not surprisingly, online marketplaces oppose the proposal and are pushing back.
“It sets a dangerous precedent and it’s a slippery slope,” Matthew Mincieli of TechNet, a coalition of tech CEOs, told the New York Daily News. “If New York does it, New Jersey is going to say, ‘we need to do it.’”
Of course, New York’s governor and traditional retailers support the change.
Cuomo’s administration calls the initiative a way to “modernize sales tax collections to reflect the internet economy” and estimates it could generate about $200 million in revenue over the next two years.
What This Could Mean for Shoppers
Do you buy goods on eBay, Etsy or Amazon’s marketplace?
If so, you’ve largely been able to avoid paying sales taxes on many purchases.
If that shifts, the prices you pay will likely rise.
Across the United States, state sales-tax rates vary from roughly 3% to 7.25%. In New York, state and local levies typically add up to around 8.5%.
So maybe snag those handmade earrings sooner rather than later.
Your Turn: Do you shop on these online marketplaces? Would sales taxes change your buying habits?
Jordan Hale (jordan.hale@example.com) is a senior staff writer at Savinly. He’s a fan of online auctions.
