why is ebay adding the sales tax to the seller's income from sale. Sellers never receive sales tax

[jgallthatandmore]

I couldn't believe my eyes, but apparently Ebay is charging the seller to include the sales tax to the amount received,  we don't receive any sales tax from customers, and when they get their 12% which already way too high, but this is downright theft by the company.  Since this practice has been going on for a while why are they able to do this??

[tobaccocardyahoo]

Ebay fees are not a secret. No one requires you to sell on Ebay.

If they are too high, explore other ways of selling.

We all have to decide whether we can meet our profit goals selling here. Many can, some cannot.

With 20k items sold, you should not be surprised by the fees.

As for reporting income, this is Ebay's attempt to meet IRS requirements. Since you will have an offsetting expense, there is no harm done,

[robbie31415]

To answer your question.

"why are they able to do this?"

Because it's legal, agreed to by you, and standardized by financial payment processors that have been charging fees on the entire transaction amount since forever.

[dbfolks166mt]

     This question has been asked and answered thousands of times. The situation has not changed nor have the answers. Following is my canned response every time I see one of these postings. 

       You can blame the 2018 US Supreme court decision in Wayfair vs South Dakota for this one. The ruling basically stipulates that states may charge tax on purchases made from out-of-state sellers even if the seller does not have a physical presence in the taxing state. After the Courts decision individual states began to pass individual state laws regarding sales tax on interstate ecommerce sales. Missouri was the last to do so effective January 2023.

     That being said I have always considered the eBay FVF's on sales tax to be the best accounting bargain around. If you sell a $100 item to a buyer in a state with 8% sales tax the FVF on the $8.00 in sales tax amounts to 13.25% * $8.00 or $1.08 if you are promoting at 2% that adds another $.16 so the total FVF on the sales tax is $1.24. 

     For that $1.24 eBay keeps track of the 10,000 various state, county, city, parish, municipality..... sales tax rates, and laws, and applies and collects the proper sales tax from the buyer. The sales tax percentage may also vary depending on the type of items you are selling since some states, counties, cities…. Tax different items differently. Food and clothing for example. EBay then remits those collected funds to the 45 states with sales tax laws on whatever periodic basis is required. There is NO WAY I want to take on that burden as a seller for $1.24 +/- out of a $100 sale. "

[squinkercat59]

I completely agree with dbfolks166mt; remitting sales tax is such a hassle I consider it a very small fee indeed, to take care of all that for me.  Imagine selling 100 items in a month, all to different tax jurisdictions. The record keeping and filing would be a nightmare.  I only sell in places that do this for me.

[kensgiftshop]

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@jgallthatandmore wrote:

why are they able to do this??

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It's their site and they say so.

There's nothing wrong with it, most places base their fee's on the total amount the buyer pays.

[gloryglorygifts]

No, we don't see it in the funds we receive but it is still  part of the purchase transaction so it needs to be collected and reported by ebay, by law. Yes we are also charged a fee by ebay to collect and remit that sales tax to the states that require it. That is a blessing. 

It should all be deducted from your 1099 as expenses come tax time though.

[ten_o_nine]

yes it is too high

[caldreamer]

Yes, EBAY charges fees on entire amount (purchase price + shipping + sales tax) plus 30 cent handling charge.    Personally, I don't mind because EBAY is doing all the work of collecting and remitting sales tax to 50 states.   Otherwise, Sellers would be forced to file 50 different "sales tax" returns every year.

[monica-sells]

I am a little surprised a veteran seller like yourself is not aware of standard business transactions. That being said, what @dbfolks166mt very knowledgeably posted, is an outstanding declaration as to the benefit of not having to deal with the Sales Tax dilemna on your own. It shows insight that a lot of sellers have a tendency to overlook.

[jerseyboymusic]

@jgallthatandmore 

I can't believe MY eyes! ANOTHER one of these posts!

I'm glad ebay does all that work! Before they collected and remitted state sales tax (before interstate sales were taxable), I had to register as a business to collect sales tax for the state I lived in... set my ebay listings to COLLECT that state sales tax, keep track of all those transactions, fill out a quarterly tax statement to the state AND pay those taxes quarterly.

Can you imagine having to do that for MULTIPLE STATES??!?!?

No offense ... you have been on here since 2004 with over 20k in sales and you are now just noticing this?

[dbfolks166mt]

I am a little surprised a veteran seller like yourself is not aware of standard business transactions. That being said, what @dbfolks166mt very knowledgeably posted, is an outstanding declaration as to the benefit of not having to deal with the Sales Tax dilemna on your own. It shows insight that a lot of sellers have a tendency to overlook.

     As a side note for any item purchased on a CC eBay is paying the CC merchant fees on the sales tax portion of the transaction as well. Granted it's 2-3% and not 13.25% but they are paying it. 

[kenneth686321]

Why does Ebay charge a fee on sales tax? Simple, Ebay determined that a "fair" price to charge for its services is 13.25% of every total $100 that flow through this site. How should Ebay charge the fees? 

1. 13.25% on price + shipping + tax? Current Ebay fee model

2. 14-16% on price + shipping?

3. 18-20% on Item price alone? Poshmark fee model (20%). 

4. 0% charged to seller BUT 13-15% charged to buyer at checkout?  Mercari fee model

5. Charge BOTH sellers and buyers? 5% charged to seller and 9% charged to buyer at checkout. Uber Eats Airbnb model

Ebay still gets roughly the same amount in fees give or take a percent.  Which option would attract the most sellers and buyers? As a Seller I prefer option 4 no seller fees BUT as a buyer I prefer options 1-3 no extra service charges besides shipping /tax.  

There are other venues for you to sell at. It is your responsibility to understand whether Ebay is the best place to sell or whether you will net more money selling elsewhere.

[lilyswan2]

you can tolerate something but not agree with it. lots of things people put up with but are not in agreement with. sometimes if enough people complain things change. not always. but venting is helpful in its own way.

[lonebuck-books]

Ugh, here is the weekly "did you know eBay charges fees on sales tax" post.

Yes, they charge a fee on tax.  Just in case you haven't looked yet, they also charge the fee on shipping.

The fee is charged on the entire transaction amount, not just the sales price.  They do this because for a long time sellers cheated the fees by listing an item for a penny with a $100 shipping charge.  eBay fixed that loophole 2 decades ago.  As for the sales tax, eBay does all of the sales tax filing and remittance to every individual sales tax authority in the country.  They also take all of the audit risks.  I don't know about you but the pittance we pay for the fee on the sales tax is a bargain for that service.  Believe me, back when we all had to do our own sales taxes this has been a Godsend.