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Sales Tax Excessive
My eBay purchases are always charged more tax than if I bought the item locally in a store. And this applies even for items with free shipping, so the tax doesn’t include tax on shipping.
How is the eBay tax rate calculated? I know the total tax rate locally for my address, so how does eBay justify charging me a higher rate than that, even on free shipping items?
12 comments
kh-shakhib
·1 year agoHi everyone,
Due to the age of this thread, it has been closed to further replies. Please feel free to start a new thread if you wish to continue to discuss this topic.
Thank you for understanding.
bordr4lyf
·1 year agoEbay charges you tax on the shipping cost. Not standard practice on other sites I buy from, just ebay. I am in CO and knew about the retail fee, but you should only have to pay tax on the net cost, not the net + extras cost.
According to Colorado.gov "Delivery and freight charges are generally not subject to sales tax, so long as the charges are both separable from the purchase and separately stated on the customer invoice."
valueaddedresource
·3 years ago@fuzz1002 if you are in Colorado, there is an additional Retail Delivery Fee of $0.28 per order added on that would not be applied to your local retailers when you shop in store (eBay's help page still says $0.27, but it went up to $0.28 as of July 1, 2023)
https://tax.colorado.gov/retail-delivery-fee
https://community.ebay.com/t5/Report-eBay-Technical-Issues/eBay-collected-Denver-Colorado-sales-tax-too-high/m-p/33847951/highlight/true#M113675
https://www.ebay.com/help/buying/paying-items/paying-tax-ebay-purchases?id=4771#section9
Colorado retail delivery fee
eBay, as a marketplace facilitator, is required to collect the Colorado retail delivery fee when taxable goods are shipped into the state of Colorado. This retail delivery fee is $0.27 applied to each sale. More information about the Colorado retail delivery fee can be found on the Colorado Retail Delivery Fee site.
fuzz1002
OP3 years agoYes, I live in Colorado. This is the best explanation anyone here has given me.
mudshark61369
·3 years ago@fuzz1002,
If you live in a state that allows counties and/or municipalities to add their own tax to the state rate, and you did not register a plus 4 zip code, Ex: (12345-6789) when you signed up to use ebay. You are then taxed at the highest sales tax rate in your state.
State sales tax + Highest County/Municipality sales tax = total sales tax.
If your state does not tax the shipping cost, but you buy an item with Free shipping,
(a misnomer) since the shipping cost is not given, you are taxed on the total sale price not the item price alone.
As others have said, your State Govt. is who tells eBay who is the Tax Facilitator how to apply taxes.
fuzz1002
OP3 years agoI haven’t used the +4 zip code, just the regular one. But the tax for my city is the same across the entire zip code area. However, it appears that what I am being charged matches the tax rate in another Colorado city with an higher tax rate. That city is nowhere near mine. If it s necessary to add the extra four digits to get a tax rate that matches everywhere in my city, eBay should point that out.
fuzz1002
OP3 years agoTurns out my eBay account does have the zip+4 address, so that doesn’t explain it.
monroe67
·3 years ago"How is the eBay tax rate calculated? I know the total tax rate locally for my address, so how does eBay justify charging me a higher rate than that, even on free shipping items?"
eBay has no tax rate specific unto itself.
Just as Amazon has no sales tax rates that are paid only by people who buy Things they find on Amazon.
Just as QVC.com has no sales tax rates that are paid only by people who buy Things they find on QVC.
Buyers pay the sales tax rates in effect at the zip codes where their purchases will be delivered.
If you buy a Thing from an eBay seller and have that purchase delivered to you,
and you are are charged what seems to be a higher sales tax rate than you would pay if you walked into Walmart in person and bought that Thing,
it is possible that you live in a state that requires sales taxes on the costs of postage/shipping/delivery,
in addition to the cost of the Thing itself.
Of course, you haven't mentioned what state you live in, so nobody can tell you for sure just based on this one post.
mtgraves7984
·3 years ago@fuzz1002
I am Tennessee and our state and local taxes (for my county) total 9 1/4%... just like on eBay. Groceries (bought locally in a store) are a bit cheaper. And eBay doesn't calculate the tax; they collect according to the rates set where the items are sent.
ms.rodriguez*
·3 years agoEbay charges the sales based on your zipcode . Free shipping does NOT mean free shipping. The seller added the cost to the price of the item. An intelligent seller would have a listing like this:
4.99 + 4.00 shipping = 8.99 + tax
8.99 + free shipping = 8.99
In both examples, the buyer is paying sales tax.
A seller that has no clue of what they are doing would list the item this way and they would lose money.
4.99 + free shipping. Only in this example would you pay less sales tax and only because the seller did not roll the shipping into the sale price.
fuzz1002
OP3 years agoTax on eBay is always more than 10% of the total when sent to my address. My total local tax rate is 9.05%. For example, I just bought a book for $10.50. No additional charge for shipping. EBay charged me $1.23 in tax. How did eBay come up with that amount?
bordr4lyf
·1 year agoThat's the way it should be, but I'm here because eBay is charging me tax on the total, not the cost of goods sold.