eBay

valkseller · ‎10-02-2019

I received messages from ebay (yesterday) and paypal (today) outlining the new method of collecting the required state/county/city sales taxes starting in November.

Up until now, I as a seller have not seen the sales tax portion of any of my sales, although I know it is being charged to buyers in states where required as a separate charge.

These two messages indicate that the sales tax will now be included in one transaction charge to the buyer and I assume will now be shown as part of the total transaction on the seller's account, even though it is being sent to the appropriate state.

Should I assume that the sales tax will also become subject to the 10% final value fee on ebay and the 2.9% transaction fee on paypal?

The message from ebay is very specific on several points of the new method, but fails to discuss the impact on selling fees. I would have thought that ebay would clarify that, so sellers can consider that in their pricing of items with 'thin' margins.

nobody*s_perfect · ‎10-02-2019

The FAQ says:

Does eBay charge final value fees on the final amount including sales tax?
No. Final value fees only apply to the sale price of the item.

https://pages.ebay.com/seller-center/service-and-payments/tax-information.html#m22_tb_a2_15

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nobody*s_perfect · ‎10-02-2019

The FAQ says:

Does eBay charge final value fees on the final amount including sales tax?
No. Final value fees only apply to the sale price of the item.

https://pages.ebay.com/seller-center/service-and-payments/tax-information.html#m22_tb_a2_15

readabouthorses · ‎10-02-2019

@nobody*s_perfect wrote:
The FAQ says:

Does eBay charge final value fees on the final amount including sales tax?
No. Final value fees only apply to the sale price of the item.

https://pages.ebay.com/seller-center/service-and-payments/tax-information.html#m22_tb_a2_15

That made me laugh. So no more final value fees on the shipping amount included in the final amount? Again, something a good Continuity Department would have caught right away.

the*dog*ate*my*tablecloth · ‎10-02-2019

I don't see how Paypal could charge fees on money that is not going to the seller. When it went through as two separate transactions the fees did not include sales tax. They're just changing this because of buyer and bank complaints.

readabouthorses · ‎10-02-2019

@the*dog*ate*my*tablecloth wrote:
I don't see how Paypal could charge fees on money that is not going to the seller. When it went through as two separate transactions the fees did not include sales tax. They're just changing this because of buyer and bank complaints.

So now the buyers and the banks won't be confused because they will only see one payment on their account. But what happens when that buyer wants to get a refund? Say their credit card has the total amount and that is the amount they will be disputing but since eBay took the sales tax part it will be hard to prove to the buyer because right now they can see 2 payments but after November they will just see 1 which they think went to the seller.

And if the seller doesn't pay a PayPal fee on the sales tax does that mean that eBay will be paying that PayPal fee or is PayPal doing this for eBay for free?

Let's run the scene: the total payment comes into PayPal. Then PayPal has to sort out the amount that goes to the seller and the amount that goes to eBay before they send them off to their respective accounts. Hope that all works out without any hitches.

Or will PayPal put the entire amount in the seller's account and then eBay will pull the sales tax back out after PayPal has processed the fees?

The email I got from PayPal was sort of vague as well and I checked the PayPal Boards this morning and don't see much on there about it either.

readabouthorses · ‎10-02-2019

For transactions that require eBay to collect tax from buyers, the tax amount will be included in the gross purchase amount to be processed. Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.

Above is what it says in the PayPal email I got yesterday.

valkseller · ‎10-02-2019

Thanks, I didn't see that, my bad.

And I'm sort of surprised that ebay doesn't. There would be more justification for a fee to process the sales tax than there is for a fee on the shipping charges. But, I'm sure if ebay could charge a fee for the sales tax portion they would, probably a legal issue why they don't.

the*dog*ate*my*tablecloth · ‎10-02-2019

That doesn't say that fees will be assessed on the total. It just says buyers will see a total payment and they will extract tax after the payment is cleared and before it gets paid to the seller.

the*dog*ate*my*tablecloth · ‎10-02-2019

Ebay is NOT processing the sales tax for sellers. They are processing it for the State and for themselves. Sellers are no longer responsible in any way for the tax so it wouldn't make sense to charge sellers to collect it.

There's a huge justification for charging Final Value Fees on the total but that has been explained ad nauseum.

thehonorabletrader · ‎10-02-2019

@readabouthorses wrote:
@nobody*s_perfect wrote:
The FAQ says:

Does eBay charge final value fees on the final amount including sales tax?
No. Final value fees only apply to the sale price of the item.

https://pages.ebay.com/seller-center/service-and-payments/tax-information.html#m22_tb_a2_15
That made me laugh. So no more final value fees on the shipping amount included in the final amount? Again, something a good Continuity Department would have caught right away.

If you click on the link provided, the question is specifically around sales tax and final value fees. It is saying the Final Value Fee does not apply to sales tax. Context Matters.

thehonorabletrader · ‎10-02-2019

I would like to point out that us sellers that have been collecting sales tax manually for our buyers as required by law have been paying the processing fee on them the entire time. Retailers such as Walmart, Amazon, grocery stores, movie theaters, etc... all pay their credit card processing fees on the total amount of the charge. There is no exemption for Credit Card fees on taxes (sales or otherwise).

the*dog*ate*my*tablecloth · ‎10-02-2019

Yes but in the previous cases sellers WERE responsible for processing taxes so it kind of makes sense for processing fees to be charged to them.

Now EBAY will be responsible for processing taxes so it would be unethical for Paypal to charge sellers for processing money they are in no way responsible for.

thehonorabletrader · ‎10-02-2019

@the*dog*ate*my*tablecloth wrote:
Yes but in the previous cases sellers WERE responsible for processing taxes so it kind of makes sense for processing fees to be charged to them.

Now EBAY will be responsible for processing taxes so it would be unethical for Paypal to charge sellers for processing money they are in no way responsible for.

eBay is responsible to collect the sales tax. eBay is not responsible for paying for the cost of collecting the sales tax. That's the main difference.

When you rent a car, or fly on an airline, or stay in a hotel, they ALL pay processing fees on the sales AND tourism and other taxes they are forced to collect.

What is happening here is that eBay and PayPal are aligning with the industry standard. The only reason eBay is required to collect it is because the states thought it would be easier for eBay to collect it instead of requiring the sellers to try and collect it and file individual sales tax filing in each of the states.

While you will pay a little more in your fees, you are now doing what all other sellers that must charge sales and other taxes that accept credit cards are doing. As I see it, this is MUCH easier than in the past when sellers would have to collect sales tax and file quarterly reports with the state.

autopiacarcare · ‎10-02-2019

@thehonorabletrader wrote:
I would like to point out that us sellers that have been collecting sales tax manually for our buyers as required by law have been paying the processing fee on them the entire time. Retailers such as Walmart, Amazon, grocery stores, movie theaters, etc... all pay their credit card processing fees on the total amount of the charge. There is no exemption for Credit Card fees on taxes (sales or otherwise).

Some states have a sales tax collection allowance where the seller can deduct a certain percent of the taxes if they file on time or meet other criteria. It is not specifically an exemption for credit card fees, and may not cover 100% of the processing costs, but depending on your state, it may at least help to offset those costs.

Here's an article about it from Tax Jar https://blog.taxjar.com/state-sales-tax-discounts/ , but just for example here's the information from the Florida Department of Revenue:

When you electronically file and pay on time, you may take a collection allowance. Be sure to calculate it correctly. The collection allowance is 2.5% (.025) of the first $1,200 of tax due, not to exceed $30 for each reporting location.

The issue I have with your comparison is that if the retailer is collecting and remitting the tax directly to the state, they may be eligible for that kind of deduction which can at least help to offset some of the processing costs.

If eBay is collecting and remitting the tax, especially to a state where the seller is not registered/does not have an obligation to report, I don't see any way for the seller to take advantage of that deduction.

thehonorabletrader · ‎10-02-2019

The issue I have with your comparison is that if the retailer is collecting and remitting the tax directly to the state, they may be eligible for that kind of deduction which can at least help to offset some of the processing costs.

If eBay is collecting and remitting the tax, especially to a state where the seller is not registered/does not have an obligation to report, I don't see any way for the seller to take advantage of that deduction.

eBay is collecting sales tax under a NEW law in each of these states. You are making your assumption based off of the existing laws in those states. Ultimately it's up to the State to decide IF they offer a discount on taxes for processing fees.

Because there are 30+ states with these laws, there is no universal answer, in fact there could be a different answer for each state.

It sounds like you would prefer the law to require sellers to collect the sales tax directly for each of those 30 states and to file a tax return in each of those 30 states. The end result for processing fees would be the same in either scenario.

I am happy to pay 3% of 10% (aka. .3%) to have my sales taxes collected and remitted for you.

FYI, eBay and other marketplaces COULD if they wanted to, charge an additional fee to sellers for the cost of having to review every state law and to ensure all sellers are in compliance with state laws. However, there is no fee being charged despite eBay paying developers and staff to help sellers comply with the laws.