Introduction
Running a retail store with Shopify POS and selling on eBay seems like a dream combo—until sales tax nightmares begin. In 2025, more states are cracking down on multi-channel sellers who collect taxes in-store but forget online obligations.
This blog is your survival kit for managing sales tax between Shopify POS and eBay without burning out or overpaying.
IRS and State Rules That Impact Sales Tax
- IRS rules govern income tax, while sales tax is handled by individual states
- Most states have economic nexus laws for online sales (over $100K sales or 200+ transactions)
- IRS Form 1040 doesn’t directly report sales tax—but improperly deducting or ignoring sales tax liabilities can trigger audits
Sales Tax Obligations for POS and Online Sellers
- Collect and remit sales tax for in-person sales using your state’s Department of Revenue portal
- For eBay, either:
- Let eBay collect/remit on your behalf (Marketplace Facilitator rules), or
- Register in states where you exceed economic nexus thresholds
- Shopify POS and eBay must be tracked separately and integrated into accounting
Example: In-Store to eBay Sales with Tax Confusion
Seller: Marcus runs a toy store using Shopify POS and sells overstock items on eBay
- Shopify POS Sales (Florida): $90,000
- eBay Sales (nationwide): $60,000
- Florida handles in-store tax
- eBay auto-remits sales tax to applicable states under Marketplace Facilitator rules
Mistake: Marcus deducted collected sales tax as an expense and failed to properly reconcile eBay reports—triggering a sales tax compliance notice during a state audit.
Step-by-Step Guide to Sales Tax Compliance
Confirm Nexus for In-Person and Online Sales
- Nexus = physical store (POS) + sales volume
- Review state rules for thresholds
Register for Sales Tax Permits Where Required
- For Shopify POS: your home state
- For eBay: usually not needed if eBay auto-collects under Marketplace Facilitator rules
Don’t Deduct Sales Tax as a Business Expense
- Sales tax collected is not income
- Do not include it in your revenue or expenses
Reconcile Sales Tax from Each Platform
- Shopify reports vs. eBay reports
- Ensure taxes collected are remitted or recorded as liabilities
File Returns Timely (Monthly/Quarterly)
- Use your state’s Department of Revenue account
- Include all POS and eBay taxes where applicable
Conclusion
Sales tax confusion is common when retail stores expand online. But getting it wrong can lead to state penalties or overpayment. Keep your Shopify POS and eBay tax systems aligned in 2025—your profit depends on it.
Call to Action
Selling through Shopify POS and eBay?
Schedule a meeting with Anshul Goyal, CPA EA FCA, a U.S. Certified Public Accountant and cross-border tax expert. He helps sellers simplify sales tax, stay compliant, and avoid costly errors.
- Schedule: https://calendly.com/anshulcpa/
- Email: anshul@kkca.io
- Website: www.kkca.io
About Our CPA
Anshul Goyal, CPA EA FCA, has 15+ years of experience helping retail and e-commerce sellers manage multi-state sales tax obligations and IRS compliance. He’s helped 2,000+ businesses save millions in penalties and filings.
Disclaimer
This blog is for educational purposes only. It does not constitute legal or tax advice. For guidance specific to your state and setup, consult a tax professional.
FAQs
1. Does Shopify POS automatically handle sales tax?
It can be set up to calculate and collect, but you must remit to your state manually.
2. Does eBay collect sales tax on my behalf?
Yes, in most states under Marketplace Facilitator laws. Check your seller hub for remittance info.
3. Do I need to file a separate sales tax return for eBay sales?
Usually no—eBay remits directly. But keep records in case of audits.
4. Can I deduct sales tax I collect from customers?
No. Sales tax is not income and should not be deducted.
5. What if I sell through both Shopify POS and eBay?
Track each source separately. Report total income, but manage sales tax by state.