CVSharkey, the only reason they do it is because there’s money. New York State pays vendors a tiny percentage for collecting tax on the state’s behalf. These online payment processors keep that payment after an algorithm does the work. Also, you’re on your own if they screw up and trigger an audit. As always, you’re responsible for their behavior even when you can’t change it, and they’ve taken the money that might cover the costs.

who really thinks marketplaces have small sellers interest on this or any other lobbying
(the one about not giving contact info, gets me all the time lol)

@tsme35 – If I am not mistaken, we’re talking apples and oranges – State income tax vs. Federal income tax. It may be $1,200 in your state but it’s going to be $600 nationwide. Why do you think all those thousands more IRS tax examiner positions were created — in anticipation of what’s always been the case — most Little Guys do not have the wherewithal to challenge audits and they sure need hard money to pay for the billions they’ve been giving away. I’m not a tax expert, but it looks like Missouri residents will be facing two thresholds: $1200 at the state level AND $600 at the federal level that didn’t use to be a problem because before it was $20,000/200.

@cvsharkey – I agree! Because I can’t know what happens to funds collected by others, I am doing my best to keep documentation that the marketplaces I use have collected any taxes due on my transactions, effectively removing me from any responsibility for collecting/remitting those funds. I don’t see any of these marketplaces going to the time/expense of sending sellers reassuring confirmation that they’ve remitted the funds to individual states.

Indeed, another side of this coin is that for years, states have been working to collect tax on purchases people make from BOTH out-of-state sellers and “undocumented” transactions within the state. Technically there are two types of state tax on purchases: Sales tax, paid at time of purchase to a seller in your state (sellers are responsible for collecting it), and Use tax, owed on items that someone buys without paying state sales tax on (regardless of in which state – or country – the purchase was made). Use tax is remitted later by any buyer who doesn’t pay state sales tax at the time of purchase, regardless of where the purchase was made.

Second, I recently read that some states were pushing to enact payment of income tax from sellers for items purchased & shipped to their state. (I believe it comes to the nexus on this but that didn’t protect us for state sales taxes.) If this happens it may very well be the demise for micro businesses.

(I know from experience that NY State throws the burden of paying sales tax on purchases brought into the state of NY onto the buyer.)