Is eBay Imposing Illegal Sales Tax on Exempt Items?

January 21, 2020

After a new Illinois law went into effect on January 1, 2020, which requires state residents to pay sales tax on most online purchases, some customers have discovered that eBay is exacting sales tax on exempt items .

Illinois’ New Online Sales Tax Law is Causing Problems

Derek Monroe, an Illinois resident whose work requires a significant amount of international travel, recently found that eBay was illegally taxing his currency purchases. Monroe relies on purchasing foreign currency through eBay to ensure he has money on hand as soon as he lands in foreign lands. He gets the best deal through eBay because they don’t charge fees like a currency exchange.

Ordinarily, Monroe’s savings add up. But when eBay recently started enforcing sales tax on his currency purchases, he got a wake-up call. With the added sales tax, Monroe’s pre-travel currency exchange is no longer financially feasible.

CBS-2 Chicago reporters researched the matter by purchasing the same coins as Monroe and buying other products listed as exempt from sales tax, including agricultural pesticides and poultry remedies. Turned out that Monroe was right! In each instance, eBay automatically charged sales tax for all of the exempt items.

The Illinois Department of Revenue confirmed Monroe’s complaint, stating that he shouldn’t have been taxed and pointed out that sellers should provide eBay with information about Illinois sales taxes when they upload items for sale. The Department also suggested that any eBay customer who notices that an exempt item is taxed on an purchase should complain directly to eBay for a refund. Monroe took this advice, submitted a complaint on January 2nd and received an immediate resolution in the form of a refund.

An Ebay spokesperson also confirmed that items exempted from sales tax under the new law should not be taxed. They added, however, that this is a new procedure for eBay and not yet running perfectly.

Connect with an Illinois Tax Lawyer

The Gordon Law Group works with individuals and businesses on all manners of tax issues. We even have a dedicated team that’s well versed in e-commerce tax law.

Sellers are responsible for certain actions under the new Illinois online sales tax rules. If you haven’t reconfigured your procedures to account for the new regulation, get in touch today. We’ll walk you through the changes and make sure you’re operating on the right side of the law.

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