Etsy Will Collect Sales Tax in Pennsylvania and Washington

The e-commerce website Etsy has announced that they will collect sales tax on all purchases made by customers residing in the states of Pennsylvania and Washington.  The decision on the part of Etsy follows a similar move by Amazon a month ago.

Both Pennsylvania and Washington State have enacted laws that require online marketplaces that maintain a physical location within their states to collect sales tax on all purchases made by residents of their state.

In the case of Amazon, the establishment of a physical location in these states is a simple matter as the company owns and operates warehouses in both states.  The situation is a little murky with Etsy as the company is not known to have any offices in either state.

Etsy has notified sellers that they will not be required to make any changes to their settings regarding sales tax collection for Pennsylvania or Washington State as these settings are used only for states that Etsy does not automatically collect the taxes themselves.

Etsy will take sole responsibility for collecting sales tax in these two states and sellers do not have the option to opt out of the collection of these taxes by Etsy.

The process is handled differently and is a little more complicated if customers in Washington State or Pennsylvania choose to pay for their products by using a Paypal account.  When this happens, Etsy will include the sales tax when payments for goods are delivered to the seller. Then, the seller will be assessed a fee for the amount of the sales tax when their Etsy bill is received.  The money for the sales tax will then be remitted to the state in question.

When using Etsy to make sales in all other states, sellers are given the option to either include applicable sales tax in their product listings or exclude the sales tax from their listing price and later calculate and fulfill the tax for making the sale on their own.