The precedent set by the South Dakota v. Wayfair, Inc. Supreme Court decision changed how taxes work on remote sales (like those made through Reverb and any other e-commerce site). As a result, it may cause some initial confusion when you begin selling.
When Using Reverb Payments
If you are set up with Reverb Payments, you are not actually being charged for these taxes as a seller.
- Depending on your buyer's shipping destination (or your location in a local pickup transaction), the buyer is responsible for paying the automatically calculated tax amount during checkout.
- These taxes are then automatically remitted by Reverb, so they will never be added to your statement nor will you be charged any selling fees on the taxed amount.
With Reverb Payments the taxes collected and remitted by Reverb are automatically deducted from your payout, so there is nothing you need to do on your end and you are not actually charged for the taxes. They are collected, and then automatically remitted.
Unable to Use Reverb Payments?
In the event your shop is in a location not supported by Reverb Payments, you may see a tax amount on your Reverb selling statement. Here's why:
- In these PayPal-PayPal transactions, the buyer is still responsible for paying the automatically calculated tax amount during checkout.
- These taxes are paid out to the seller in the initial payout for the order.
- The tax amount is then added to your Reverb Statement, which is collected on the 1st of the month (along with any other Reverb Selling, Bump, Shipping Label Fees, etc). You will not be charged any selling fees on the taxed amount.
For both Reverb Payments and PayPal transactions the payment processing fee is calculated on the full order total (including the tax amount), as this payment processing service is needed to complete the entire online transaction.
For more information, check out How State Sales Tax Applies to Reverb Orders.