Final value fees on shipping and taxes

[vidsolutionsllc]

Does anyone else find it odd that ebay is charging a final value fee on shipping and sales taxes.  I understand that some people May charge excessive shipping in order to make up for a low selling price. But no one has any control over sales taxes. That's money that never under any circumstances goes to the cellar, and as a matter of fact the cellar has no hand in determining what the sales taxes are.  

[mam98031]

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@theteamsetguy wrote:

@vidsolutionsllc ,

How would you feel if instead of charging the FVF on the sales tax they raise their FVF on the item sales price plus shipping to 14% from 13.25%? Which would come out about the same in the end. 

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It is important to remember that how Ebay charges Fees on the Sales tax is NOT industry standard.  They are the ONLY site that I'm aware of that charges the Money Processing fee AND the Seller final value fees.  No other site does that.

Ebay is compensated by the States for collecting and remitting Sales tax.  So it is no like they need what they are getting from the sellers so they can process sales tax.  They are getting paid twice.  Once by the states and once by the sellers on the site.  

Amazon and Etsy don't even charge a money processing fee on sales tax much less a selling fee.

For Ebay it is likely the entire reason they went to a Simplified Fee structure, all rolled into one fee, so they can collect the higher rate on taxes.

[dbfolks166mt]

@dbfolks166mt wrote:

     Ecommerce has for sure make the concept of sales tax foggy to say the least. Ironically if buyers purchase from you in Florida you collect the sales tax and remit it to Florida without ever knowing whether the buyer was from Florida or not. Prior to the Courts decision in Wayfair vs South Dakota little to no sales tax was being collected on interstate ecommerce sales. 

Remember, though, that most states did have a mechanism for collecting taxes on interstate ecommerce sales prior to "internet tax," however.  Most states did have some form of Use Tax on the books.  Unfortunately for those states, those mechanisms didn't have a lot of teeth and some if not many buyers were unaware or didn't care that they were supposed to pay Use Tax on most of their out-of-state purchases made online.

     There is a difference between sales tax and use tax although people often use them interchangeably. The lack of clarity and interpretation is exactly what got the case in front of the Supreme Court. Even after the decision it took some states a long time to revise their laws with the proper language. Missouri just got theirs in place as of 1 January 2023. 

Use Taxes and "internet tax" are in place to discourage the practice of making a purchase out of state to avoid paying taxes at the local level.  Yes, this means that online sales are subject to different applications of sales tax than brick and mortar sales, but who says they have to work the same way?

      While that may be the intent but I suspect that was not the intent of a lot of buyers, although it was a plus for while. I live in a large metropolitan area so I don't buy much online since I can easily jog to about any retailer and pickup whatever I need without having to pay shipping or wait for the item to arrive. I have friends in more rural areas that do a lot of online purchases not so much to avoid the taxes when there were not but simply because it is more cost effective than driving 30-40 miles to pickup what you need. 

     I really don't complain about paying sales tax on ecommerce purchases when I do buy something online because I cannot find it locally I simply consider it more of a convenience fee than I do sales tax. 

[coolections]

@vidsolutionsllc   Yes, Ebay doubled their profit taking advantage of sellers. $8 item plus $8 shipping and tax. Instead of the 13% they get 26%. Great news huh.

[monroe67]

"Average sales tax is about 8 or 8.5%.  Very few if jurisdictions would have a 12% rate."

True.  The highest tax rate on your chart is 11.5% in Arkansas. 
My example suggested "Assume the worst, that a buyer will be paying 10% to 12% on the cost of your item . . . "

What's worse? 
You assume an 11% sales tax rate, but the buyer pays only 4%, so you, the seller, get more than you estimated,
OR
You assume a 4% sales tax rate, but the buyer pays 11%, so you, the seller, get less than you estimated?  

[mam98031]

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@coolections wrote:

@vidsolutionsllc   Yes, Ebay doubled their profit taking advantage of sellers. $8 item plus $8 shipping and tax. Instead of the 13% they get 26%. Great news huh.

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Your math leaves a lot to be desired.  

[mam98031]

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@monroe67 wrote:

"Average sales tax is about 8 or 8.5%.  Very few if jurisdictions would have a 12% rate."

True.  The highest tax rate on your chart is 11.5% in Arkansas. 
My example suggested "Assume the worst, that a buyer will be paying 10% to 12% on the cost of your item . . . "

What's worse? 
You assume an 11% sales tax rate, but the buyer pays only 4%, so you, the seller, get more than you estimated,
OR
You assume a 4% sales tax rate, but the buyer pays 11%, so you, the seller, get less than you estimated?  

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IMHO it is better to use averages instead of something that happens once in a blue moon if your desire is to better understand the process.  Using numbers that rarely if ever happen gives you bad data to work with.

I DID NOT ASSUME ANYTHING.   I clearly stated that the average rate is about 8 to 8.5%.  Why you cut that in half and then said it was what I said is ridiculous.  

[coolections]

13 plus 13 = 26   😀

[coolections]

Your math leaves a lot to be desired, either that, or Ebay has you completely fooled.

[monroe67]

"I DID NOT ASSUME ANYTHING.   I clearly stated that the average rate is about 8 to 8.5%.  Why you cut that in half and then said it was what I said is ridiculous."

Oh, my.  I looked again at the chart you posted.  There are at least four states listed in which the buyers might be required to pay as low as 4% as their sales tax rate.  

I was trying to help a poster who believes it is improper for eBay to charge a FVF on sales tax.  I was trying to explain how he can estimate the FVF on the postage amount that his buyers have to pay.  Apparently I need to reword the comparison I posted.  Here's what I posted that has caused consternation:

"What's worse? 
You assume an 11% sales tax rate, but the buyer pays only 4%, so you, the seller, get more than you estimated,
OR
You assume a 4% sales tax rate, but the buyer pays 11%, so you, the seller, get less than you estimated?"

I did not intend to suggest that you, yourself, mam98031, assume all your buyers pay only a 4% sales tax rate.  

To be clearer, more precise, and to try to make myself understood, it might have been better to have phrased this comparison more like this:

"What would be the highest estimate of what eBay might retain as the FVF on the buyer's sales tax?  
(1) On each individual sale, a seller could assume the buyer will have to pay an 11% sales tax rate, but the buyer pays only 4%.  This would mean that eBay's FVF on the sales tax would be less than the seller assumed or estimated, so the seller would receive more in his payout than he estimated,
OR
(2) On each individual sale, a seller could assume the buyer will have to pay a 4% sales tax rate, but the buyer pays 11%. This would mean that eBay's FVF on the sales tax would be more than the seller assumed or estimated, so the seller would receive less in his payout than he estimated."  

Isn't it better to receive more than one estimates than to receive less?  

I tend to approach situations with an attitude of "What's the worst that could happen?", without expecting the worst.  As another example, on eBay, I know that the FVF is usually 13.25% of the total amount paid by the buyer.  And I know that the buyer's sales tax and postage/delivery amounts cannot be known at the time I create a listing.  
SO -- in my own [insert adjective] mind, I estimate eBay might retain as much as 30% of the only known portion of my listing, the item's price.  Then, if it turns out at the end of the transaction, that eBay has retained only 25% of the item's price, I will receive more than I expected.  To my mind, that's a good thing.  

[mam98031]

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@coolections wrote:

13 plus 13 = 26   😀

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As you know there is a real problem with that math as it is 13 for all, NOT times two.

[mam98031]

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@coolections wrote:

Your math leaves a lot to be desired, either that, or Ebay has you completely fooled.

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Nope.  I can calculate my fees accurately.

[mam98031]

IDK what it is you are trying to do.  But I made no assumptions about 4%, but I did post my opinion.  Which in this posting it was "Average sales tax is about 8 or 8.5%.  Very few if jurisdictions would have a 12% rate."

https://community.ebay.com/t5/Selling/Final-value-fees-on-shipping-and-taxes/m-p/33843257#M2237044

[dbfolks166mt]

@vidsolutionsllc   Yes, Ebay doubled their profit taking advantage of sellers. $8 item plus $8 shipping and tax. Instead of the 13% they get 26%. Great news huh.

     You would have to know what the shipping was and what the tax was out of that $8 but they actually get a little over 13.25% in either of the following cases. 

1. $8 item plus $8 shipping and tax

2. $16 item where seller has free shipping built into the listed cost of the item.