Anonymous asked in Business & FinanceOther - Business & Finance · 12 months ago

how do taxes work with drop shipping, it seems like the government is doubling up on this?

I found out about this by basically being "scammed" or so it felt. I bought something on ebay and it came shipped from another store. This lead me to the thought process of the "buyer" technically being the ebay store, paid sales tax to the store, yet so did I on purchase of ebay's site. So i paid something like $6 and they paid something like $4 or 5$. Are they somehow getting this money back or is the government just banking all this and laughing


FYI item was roughly $70 with tax but i could have gotten it from the store for around $50 but all the fees and taxes made the price that much higher and made it feel like a scam...not saying it actually is since the 3rd party seller made minuscule amounts

Update 2:

Thanks for the resale info. this didn't cross my mind as part of the transaction

7 Answers

  • 12 months ago
    Favorite Answer

    In a free market economy, there is no set price. MSRP is the manufacturer's SUGGESTED retail price. Competition usually drives the price lower and the retailer relies on volume to make up for the lost margin.

    Caveat Emptor - Buyer Beware

    It is the buyer's responsibility to know the value and reasonable price by researching.

  • 12 months ago

    If you are a reseller who collects tax, you are exempt from paying that tax when you purchase your own stock...since you are going to sell the item for a higher price anyway, implying more tax in the long run.

    You are operating your business without taking advantage of the tax benefits of being a reseller...this is your mistake.

  • 12 months ago

    The "sales tax"is payable by the consumer, not by every middle-man. However, some people do buy things at retail (paying the sales taxes, if any in that jurisdiction for that type of product) and then resell the goods (with or without modifications), making their customer again responsible for paying the sales tax (if any). If you do a lot of that (i.e., want to make it a business), you can get a "reseller's" registration from the tax authority, showing that you are not the "end consumer" and thus don't have to pay the sales taxes at that level.

  • Eva
    Lv 7
    12 months ago

    Wholesalers don't pay sales tax on their purchases. They file a resale certificate with their supplier. Some products have sales taxes collected on them each time they're sold and re-sold, like cars. Doesn't seem quite fair, does it?

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  • Judy
    Lv 7
    12 months ago

    If you buy items for resale, and have a resale licence, you don't pay sales tax on those items when you buy them.

  • Anonymous
    12 months ago

    If you were a reseller, you tell the merchant and provide proof and you do not have to pay sales tax.

    I ran a pizza hut when I was young and if we ran out of something, we would give the store our tax number and did not pay tax since it was for resale. A few times we ran out of garlic bread and once our ice machine broke and we had to buy ice. But, generally, having to buy things was evidence of bad manager and I was a good manager.

  • 12 months ago

    You are the only one who paid sales tax. No one else paid sales tax. The government is not doubling up.

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