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eBay Profiting Off Sales Tax Collection
This has been discussed here before, but I thought I'd give it a refresh for the sake of discussion and attention. eBay's selling fees includes the sales tax collected on your sale. I just sold a higher priced item and was surprised that they included the sales tax amount in their final fee collection.
eBay is essentially charging sellers for handling state tax collection. This is tax that is never given to or handled by the seller. It's a tax charged by eBay, then sent, by eBay, to the customer's state. The whole thing seems like a racket to skim off sales tax collection, just to make final selling fees appear lower.
Collecting state sales tax is a necessity for some state's infrastructure upkeep. Infrastructure that we all use, including eBay, to get customer's their stuff. It seems slimy to charge for this service, yet we'll blame the tax man instead of questioning eBay's fees. It all feels very sneaky and is deterring me from selling higher priced items on their platform.
Any thoughts or complaints out there?
kh-vince
·2 years 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.
1524johns
·2 years agoIt is all about eBay profiteering! First, they do not pay your tax immediately, it is held in an account that they have with each entity be it state or national. They profit off of how long it is in that account. Next, they profit by charging different shipping fees to Seller and Buyer. If the Seller combine shoppes , then more likely eBay has limited the size of box to accommodate the extra items, and therefore increase profit for eBay. Next, by introducing Auto Pay unannounced to many Sellers. Auto pay requires the Buyer to pat any tax and delays immediately return om over taxation. They profit on selling more boxes, increasing both fees for Seller and Buyer. They have done this for over a year now! Ebay Profiteering.
soh.maryl
·3 years agoHow much do you figure it costs eBay in terms of employee hours to collect and remit state sales tax for 45 states and many different jurisdictions within those states?
gkids.kevandmik
·3 years agoAgree 100% I live in Pennsylvania where coins are non taxable while paper money is taxable . I''m not sure what the difference is but if anyone is charging Sales Tax, it should be the seller. I can't get in touch with eBay to voice a complaint, so eBay gets $16.94 they are not entitled to.
laserpartshq2
·3 years agoA store owner can't charge a customer a fee for collecting sales tax, why can EBAY ?
dbfolks166mt
·3 years agoA store owner can't charge a customer a fee for collecting sales tax, why can EBAY ?
A store owner may not be able to but the CC companies sure do. Ever been to an estate sale and seen a sign that says we charge 3% fee if you pay by CC? That 3% is on the entire purchase item cost and sales tax.
theteamsetguy
·3 years ago@laserpartshq2 ,
If you owned a brick and mortar store and accepted credit or debit card payments. I’ll bet my bottom dollar that Visa, MC, Amex, and Discover will charge their fees on the sales tax portion of the ticket total. The store owner still has to file monthly, quarterly, or what ever is required by their state and local jurisdictions require to remit the sales taxes collected.
Ebay takes care of all of the filing and remittances to the authorities for you. That to me is worth the fees I pay to eBay on the sales tax. There’s probably software out there that can do it for you but that has a costs too.
My average ticket is about $30.00. The fee on the sales averages about 20 cents per ticket. I just price it in to my prices and pass it along to the buyer like all of my other costs to sell on eBay. There are thousands of different jurisdictions that collect sales tax all over the country. I don’t need the headache of figuring who gets paid and when.
I’m also seeing more and more restaurants and other small businesses adding 3 or 4 percent surcharges if paying by credit or debit cards.
Unavailable member
·3 years agoHere's a thought.
Try collecting and remitting all that sales tax yourself.
Then come back here and tell us all about it.
valueaddedresource
·3 years ago@ebooksdiva here's a thought, how many states would you meet the economic nexus threshold and have to collect sales tax for?
https://www.avalara.com/us/en/learn/guides/state-by-state-guide-economic-nexus-laws.html
For frame of reference, I previously worked for a company that did ~$25 Million/year in sales, ~$7M of which was through marketplaces, the rest through direct websites.
At the time I was there, with ~$18 Million/year in direct sales, that company met the economic thresholds in 38 states.
As I said previously in this thread, the large majority of sellers posting here would likely be nowhere near the thresholds in most states.
maxine*j
·3 years agoTrue. But that would have changed had not the so-called "marketplace facilitators" finally been required to collect and remit sales taxes. The states were losing far too much tax revenue to allow internet sales go untaxed for much longer.
If the states had been ultimately unsuccessful in getting the big guys (eBay, Amazon, Etsy, et al) to do this, they would have begun lowering those thresholds, dramatically, and otherwise finding ways to get the sales taxes collected and remitted by small, individual sellers -- and they may yet still, to catch more revenue from those sellers.
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valueaddedresource
·3 years agoIt still amazes me how much confusion there is over this.
1.) eBay isn't handling sales tax on behalf of sellers, they handle it on behalf of buyers and the states.
Sales tax is and always has been the buyer's obligation to pay to their state - the seller (or now the marketplace) has simply been required to facilitate that collection in certain circumstances.
For those who claim they would rather eBay charge them fees for this "service" than have to do it themselves, I would ask how many of those many states and jurisdictions would you legally be required to collect for if it wasn't eBay's obligation under Marketplace Facilitator laws?
My guess is for the large majority of sellers it would be 0-1, just like it was previously, with a few having more than that if they are large companies with physical nexus in multiple states or make enough sales to each state to pass the economic nexus thresholds.
If you don't know what economic nexus is, here's a breakdown, but generally speaking most states you would have to have a minimum of $100,000 in sales to that state in a year.
https://www.avalara.com/us/en/learn/guides/state-by-state-guide-economic-nexus-laws.html
2.) Everyone else does it...kind of.
PayPal and credit card processors charge their fees on sales tax - usually in the ~2-3% range.
Etsy charges their 2.9% payment processing fee on the tax amount, but not the 6.5% commission.
For seller fulfilled orders, Amazon does not charge any fees on Amazon collected Marketplace Facilitator taxes. If the seller has direct tax collection obligations and opts to use Amazon's tax calculation service, a 2.9% processing fee applies to the tax amount only, separate from Amazon's referral fee on the item price + shipping - and even this will be pretty much a moot point as the few states with sales tax that didn't have Marketplace Facilitator laws before finally get on the band wagon.
So yes, it's fair to say others do it too, but I also believe that's an argument of false equivalency as ~3% is very different from the variable percentages here on eBay which can go as high as 15% in some categories.
3.) eBay has to cover their cost of compliance
Many states offer incentives that provide credits or rebates for filing sales tax early or electronically. These incentives may allow the merchant (or marketplace) to retain a small percentage of the tax collected, which can help offset the costs of compliance.
Presumably eBay would at least be eligible for the same incentives as any seller, if not possibly even more favorable terms - like the sweet 15 year tax sharing deal they cut with the city of San Jose to designate all sales on the site that ship anywhere in California as having occurred at eBay HQ, thus allowing the city to collect the local tax that would normally be spread out amongst various cities in the state where buyers actually reside.
That means in California, other cities aren't even getting their share for infrastructure upkeep or anything else the local portion of the tax would normally be used for.
San Jose gets 1% of all CA sales and eBay gets a kickback of 30% of anything they collect over $5 million a year.
https://news.bloomberglaw.com/daily-tax-report-state/no-strings-attached-tax-deal-shows-depth-of-eba...
If other companies and payment processors can cover their costs of compliance at ~3%, not to mention a tax sharing deal estimated to be worth ~$150 Million...eBay absolutely does not need to charge the full FVF on sales tax just to cover their costs.
Can they do it? So far it would appear so since it hasn't been successfully legally challenged.
But that doesn't mean it's unreasonable to question the ethics of it or to feel like it's a bit sneaky or slimy.
gromexe
·3 years agoIt drives me crazy to see so many sellers here just "accepting" these insanely high fees. eBay is clearly profit gouging. And don't get me started on the promoted listing fees. How can we really know that a buyer purchased an item by clicking a promoted listing? I created a promoted listing and quickly removed the promotion. You're telling me that someone who purchased that listing at least 2 months after me removing the ad still clicked on a promoted listing?! BC! There's more shady things going on. We need a check and balance entity to examine these corporations.
slippinjimmy
·3 years agoThe best part of the Marketplace Sales Tax system is that it has eliminated the scam sellers who were charging Sales Tax to buyers and pocketing the money.
theteamsetguy
·3 years agoI couldn't agree more.
dhbookds
·3 years agoIt seems slimy to charge for this service
Why is it slimy? They have to set up the structure, keep it up to date for all tax districts (not just a state)....remit money to the district......etc.
Would you rather do it yourself for each and every sale?
sarcodes
OP3 years agoIt's great that they do the leg work, but just be upfront with your sellers. Don't just bury that info. somewhere on your platform. Something tells me if eBay informed sellers of exact fees during the selling process, sellers would have second thoughts about selling here or at least pass that cost onto customers. I know I am.
dentalsales4u
·3 years agoI would say eBay is upfront about it if sellers read the policy.
https://www.ebay.com/help/selling-fees/selling/selling-fees?id=4822&st=3&pos=2&query=Selling%20fees&intent=final%20value%20fees&lucenceai=lucenceai&docId=HELP1456
Final value fees
We charge one final value fee when your item sells, and you don't have to worry about third-party payment processing fees. This fee is calculated as a percentage of the total amount of the sale, plus $0.30 per order.
The total amount of the sale includes the item price, any handling charges, the shipping service the buyer selects, sales tax, and any other applicable fees.
theteamsetguy
·3 years ago@dentalsales4u ,
The issue isn't ebay not being upfront as much as sellers not doing their research before they start selling!
joliztoyco
·3 years agoYes. As a matter of fact I would rather "do it myself". It's a simple program you can buy in hundreds of places.
Simply google: Davo....it not only tracks and collects sales taxes by states...it also files and pays it when it's due.
I don't need Ebay to do it....and take MORE of my money. But this is neither here nor there.
Ebay doesn't give us an option.....
bonjourami
·3 years agoIve often thought with all these complainers, that Ebay should allow them to collect their own sales tax, and remit it to the proper states..at least it would give the boards a break from the constant repetitive posts about it.
chapeau-noir
·3 years agoThey'd be replaced by posts howling about having to collect and remit sales tax, and that eBay should do it.
dbfolks166mt
·3 years agoThey'd be replaced by posts howling about having to collect and remit sales tax, and that eBay should do it.
Probably followed closely by the news reports of all of the ecommerce third party sellers that were failing to remit the sales tax to the states.
pburn
·3 years agoThe law requires eBay, as a third-party marketplace, to compute, assess, collect and distribute sales taxes for purchases made through their website. They don't have a choice--nor do TPMP sellers.
dave-katz
·3 years agoeBay charges enough fees already. They should collect the tax on behalf of the sellers, and not charge us an additional fee. They make money hand over fist, and when we have to eat a 10% California tax, that cuts down on profit, especially for those of us who sell on a commission basis.
dbfolks166mt
·3 years agoYes. As a matter of fact I would rather "do it myself". It's a simple program you can buy in hundreds of places.
Simply google: Davo....it not only tracks and collects sales taxes by states...it also files and pays it when it's due.
I don't need Ebay to do it....and take MORE of my money. But this is neither here nor there.
Ebay doesn't give us an option.....
It's not eBay that is not giving you an option its the way the court decision and individual state laws have set it up. They are/were smart enough to anticipate all the problems if this was delegated to the individual level.
Even if they did give you the "option" can you imagine the quagmire if 50% decided to do it themselves and 50% stayed with the ecommerce provider handling it?