ebay selling fees on taxes
When I sell an item, I notice that ebay takes its 13% fee based off the selling price plus taxes. Why is that?
If i sell an item for $100, they should take out $13.
But instead, if the buyer pays, say, $10 in taxes, ebay deducts 13% of $110 rather than $100.
That doesn't seem right.
Can someone please explain what I might be missing here.
58 comments
johnrj1226
·2 years agoRead and understand eBays Selling Fees
https://www.ebay.com/help/selling/fees-credits-invoices/selling-fees?id=4822&st=3&pos=1&query=Selling%20fees&intent=Selling%20fees&lucenceai=lucenceai&docId=HELP1456
coolections
·2 years agoYes you are missing something. Ebay ALSO takes 13% of your shipping cost. I sell may heavier items and my average payment to Ebay is 23% selling cost.
mam98031
·2 years agoI'm not sure what you mean by "selling costs"? If you have the costs of shipping in that number, that isn't a fee paid to Ebay and it is a cost you would have no matter what site you were shipping from. I know some sellers include that in the percentage they calculate they are paying to Ebay, but that is incorrect.
Ebay does not have any category that has a 23% FVF. Unless the seller has chosen to use Promoted Listings. Then it is the seller that chooses the additional FVFs they are WILLING to pay to get a sale.
coolections
·2 years agoHere we go again. If you sell an item for $20 and end up with $15.40 do the math.
mam98031
·2 years agoOh wait, if you want to call shipping fees as part of the Ebay fees, why not count the cost of your product you are selling, shipping supplies, etc. etc. etc. as part of the fees paid to Ebay. And what about those seller that do not purchase their shipping on the Ebay site? Are their costs still Ebay fees?
Good grief there are categories of costs when selling. Ebay fees are exactly what Ebay charges the sellers to sell on this site, PERIOD. Other costs are simply a part of COGS: Cost of Goods sold.
You know this of course, but it doesn't make Ebay look like they charge hefty fees if you don't add the shipping costs as part of the fees, even though you know full well that Ebay gives that to the Carrier you have chosen.
It helps no one to publish half truths and misleading statements.
dbfolks166mt
·2 years agoHere we go again. If you sell an item for $20 and end up with $15.40 do the math.
Details are missing so I filled in some blanks. Sold a $20 item and buyer paid $10 for calculated shipping, state sales tax was 8%. Total FVF basis $32.50. Total FVF's = $4.59. Actual shipping $7.95. Payout $17.46. EBay effective fee rate 15.31%.
mam98031
·2 years agoHow did Ebay get paid over the amount of FVFs as stated in the policy for Selling fees? It is OK, I know the answer, it just doesn't comply with the way Ebay calculates fees.
On the policy page it will tell you that the FVF for that category is XX and it is based on the total amount received from the buyer that includes sales tax. Because you want to take out the sales tax and then show that Ebay charges a higher fee than they say they do is disingenuous at best.
Ebay's FVFs are what they share with us on the policy page. They don't change because some want to account for them differently that Ebay's stated policy. It is fine if you want to account for it differently, just not portraying it as being the Ebay fee.
We have the amount we get paid for any sale. From that amount we subtract our costs to arrive at what profit we made on the item. Ebay fees are part of COGS [cost of sales], just as shipping, shipping supplies, product cost, etc.
dbfolks166mt
·2 years agoHow did Ebay get paid over the amount of FVFs as stated in the policy for Selling fees? It is OK, I know the answer, it just doesn't comply with the way Ebay calculates fees.
On the policy page it will tell you that the FVF for that category is XX and it is based on the total amount received from the buyer that includes sales tax. Because you want to take out the sales tax and then show that Ebay charges a higher fee than they say they do is disingenuous at best.
In my example I didn't take out the sales tax I applied the 13.25% FVF to the entire amount of the transaction including the sales tax.
Ebay's FVFs are what they share with us on the policy page. They don't change because some want to account for them differently that Ebay's stated policy. It is fine if you want to account for it differently, just not portraying it as being the Ebay fee.
But in terms of $'s it IS the eBay fee.
We have the amount we get paid for any sale. From that amount we subtract our costs to arrive at what profit we made on the item. Ebay fees are part of COGS [cost of sales], just as shipping, shipping supplies, product cost, etc.
My COGS is what I paid to acquire the item(s) and what I enter on my schedule C. All other expenses go into section 2 lines 8-27 and there are separate line items for fees, supplies, POV, etc. I have always considered the acquisition to be my investment cost and separate from all selling expenses. Everyone has different accounting methods and as long as it suits their needs and would hold up under an IRS audit I have no issues with that.
mam98031
·2 years agoYes, then the Ebay fees is 13.25 percent of the total received from the buyer. You then subtracted the sale tax from that amount and came up with an "effective Ebay rate" which doesn't represent the reality of Ebay fees.
Using your logic, then other COGS could be calculated into that to come up with an even higher Ebay rate asn many sellers add the shipping fees into the Ebay fees, which is of course incorrect as shipping fees are not fees charged by Ebay.
COGS are COGS, yours won't be any different than anyone else's, as for as the types of expenses included in the numbers.
Which is similar to Ebay fees. They are what they are and are stated in the policy pages for Seller Fees. Switching numbers around do not change the fees that Ebay charges. Those are simple. There is a percentage charged on the entire amount the buyer pays, period. Any manipulation of that is a manipulation of the facts.
monroe67
·2 years ago"Here we go again."
"We?" You mean You.
Most of the rest of us read well enough to understand that eBay's Final Value Fees (FVFs) are a percentage of the total amount paid by the buyer, which is the cost of the item plus usually a shipping charge and most likely some sales taxes.
And because of that fact, we know it is inaccurate to compare the FVFs on any one eBay transaction to the cost of the item alone.
At the time an eBay listing is created, the best many of us sellers can do is estimate the amount of payout we could get from eBay if/when the item sells, because of two important variables: (1) sales taxes and (2) shipping costs, when we use calculated shipping.
susanb1872
·2 years agoI agree with @coolections that there is an effective FV fee rate based on the just the cost of the item. I do not believe that "it is inaccurate to compare FVFs on any one eBay transaction to the cost of the item alone". We just have to agree to disagree since no one will convince the other side of their beliefs.
inhawaii
·2 years agoYes, there are definitely 2 sides to this.
Side 1: Those who understand the fees.
Side 2: Those who don't.
mam98031
·2 years agoYes, isn't that the truth.
dbfolks166mt
·2 years agoI agree with @coolections that there is an effective FV fee rate based on the just the cost of the item. I do not believe that "it is inaccurate to compare FVFs on any one eBay transaction to the cost of the item alone". We just have to agree to disagree since no one will convince the other side of their beliefs.
Exactly. Even eBay reports out a different percentage that is in a constant state of flux. Since I don't purchase my labels off eBay he only "selling expense" I have with regards to eBay is the FVF's. For the last 90 days this is what eBay shows for my sales reports. The effective rate is only slightly higher than the 13.25% that was applied to the order amount. I have never had this go above 15%.
When I was TRS this was often under the 13.25% applied fees but slow sales have me bouncing between TRS and above average do to sales volume.
mam98031
·2 years agoSelling "COSTS" are not only selling FEES if you buy your shipping on Ebay. Other than that, Ebay has not a clue what your costs are. All they have access to are the fees you pay to them and shipping costs IF you buy your shipping on Ebay. But Selling Costs does NOT equal Selling FEES. Two different things.
coolections
·2 years ago@susanb1872 I do not like the high 23% cost but can deal with it. I just can't believe Ebay has many here fooled into thinking it is only 13% is all. Do the math, don't be fooled. Buyer pays the shipping and has nothing to do with me. I sell an item for $20 and only get 74% of it.
dbfolks166mt
·2 years ago@susanb1872 I do not like the high 23% cost but can deal with it. I just can't believe Ebay has many here fooled into thinking it is only 13% is all. Do the math, don't be fooled. Buyer pays the shipping and has nothing to do with me. I sell an item for $20 and only get 74% of it.
Mind showing us the math on that? What was the total value of the sale? How much did the buyer pay minus the sales tax? What did the buyer pay you for shipping? What was the actual shipping cost? How much of that 26%, in dollars, you are not getting went to eBay fees and how much went to the shipping cost? I agree is is NOT 13.25% but it is certainly not 26%.
monroe67
·2 years ago"@susanb1872 I do not like the high 23% cost but can deal with it. I just can't believe Ebay has many here fooled into thinking it is only 13% is all. Do the math, don't be fooled. Buyer pays the shipping and has nothing to do with me. I sell an item for $20 and only get 74% of it."
I am more than happy to disagree with someone who agrees to disagree, and is agreeable about it.
But I cannot agree to disagree with someone who "can't believe Ebay has many here fooled into think it is only 13%" and says directly "don't be fooled."
My selling ID has an auction ending within this hour. It has been bid up to all of $20.00 last time I checked. It is in a category that carries a FVF percentage of 13.25%, plus 30 cents per order. Buyer will pay the calculated USPS postage amount. I am very sure that this item will sell on its own, meaning the "order" that this buyer completes will include only this one item.
According to "coolections", I have been fooled into thinking that "it" -- eBay's fee -- is only 13.25%.
Well, then, I guess I have been fooled because my reading of eBay's fee structure in eBay's User Agreement tells me that the fee percentage is 13.25% -- of the Total Amount Paid By The Buyer. Wonder how many other eBay sellers will fall into that FOOL category -- because we understand words that we can read.
The high bidder on my auction is in the United States but I don't know if the shipping address will be in Los Angeles with a 10%-plus sales tax percentage or in Montana with a zero-percent sales tax. I don't know if the high bidder is in Texas, which taxes the amount of postage that the buyer will pay for delivery to a Texas address. So, I have an estimate in my mind that I will have a payout of $14.00 -- an estimate of fees and postage running around 30%, resulting in my payout at 70% of the item's price.
I think I have done the math. And I believe my math is easier than "cool's". My estimated payout of 70%, eBay's fees of 30%, is easier to calculate in my head than 13.25%. $20.00 x .3 = $6.00. $20.00 x .1325 -- yeah, where's my calculator?
mam98031
·2 years agoOK, lets do the math. What are you including in that 23%?
What you net after costs is NOT what Ebay's fees are. You are deducting other costs that have nothing to do with Ebay fees, like shipping costs that are paid to the carrier or something.
To try and get to what your profit was is a good thing.
Price of product sold
less cost of that product
less shipping
less Ebay FVFs
less shipping supplies
-------------------------
Equals Gross Profits before over head costs or taxes
soh.maryl
·2 years agoCan you show us a screen shot of that 23%?
doc-holmes
·2 years agoWhy do they do it? Because 13% of $110 is bigger than 13% of $100. That's why.
monroe67
·2 years agoOP posted: "When I sell an item, I notice that ebay takes its 13% fee based off theselling price plus taxes. Why is that?
If i sell an item for $100, they should take out $13.
But instead, if the buyer pays, say, $10 in taxes, ebay deducts 13% of $110 rather than $100.
That doesn't seem right.
Can someone please explain what I might be missing here."
As others have pointed out, it seems that this forum has seen close to one million posts about this issue.
Yes, it does stem from the 2018 Supreme Court decision in South Dakota v Wayfair, which created the concept of a Marketplace Facilitator for e-commerce. eBay is a Marketplace Facilitator.
I have considered doing a comprehensive project of research into the laws of the 45 states which do charge state-wide sales taxes, but that is quite a daunting chore. So I started with my own state, California, which also happens to be the OP's state (according to his listings).
For those who want to double check me . . . . .
California Revenue and Taxation Code
Division 2. Other Taxes, Part 1. Sales and Use Taxes, Chapter 1.7 Marketplace Facilitator Act.
Article 1. General Provisions and Definitions
Section 6040. This chapter shall be known as and referred to as the Marketplace Facilitator Act.
(Added by Stats. 2019, Ch. 5, Sec. 2. (AB 147) Effective April 25, 2019. Section operative October 1, 2019, pursuant to Sec. 6049.5.)
6041. For purposes of this chapter, the following definitions shall apply:
(a) "Marketplace" means a physical or electronic place, including, but not limited to, a store, booth, internet website, . . . .
(b) "Marketplace facilitator" means a person who contracts with marketplace sellers to facilitate for consideration, regardless of whether deducted as fees from the transaction, the sale of the marketplace seller's products through a marketplace . . . .
(Emphasis Added.)
There is a whole lot more, of course, but I can't take the time this morning to retype it all.
It seems to me that --
those two highlighted words -- "for consideration" -- in the definition of a marketplace facilitator (such as eBay) --
are the specific words in California's laws --
that allow eBay to collect or retain money as fees for the processing of sales taxes --
which eBay, as a marketplace facilitator, is required to calculate, collect, and pay to the treasury of the State of California.
I would not be surprised to see those words -- "for consideration" -- in other states' Marketplace Facilitator laws as well.
Note that these statutes went into effect in California on October 1, 2019. Not even four full years have passed since that date. These laws may be like so many others in that they take a lot of time for the general public to accept them fully as "right" or "normal", until they are eventually seen as "common sense" and/or "obvious."
cool.jewels.by.jeff
·2 years agoThey take it on your shipping too. Im sure its in the fine print somewhere.
johnrj1226
·2 years agoOld news - eBay has been doing that since 2011.
On the other hand and about the same time eBay REDUCED the cost of of each photo to a total of 12 to zero vs just one no charge; provided 50 monthly free listings vs paying for each one (its 250 free monthly); the graduated listing price was eliminated.
All this was clearly stated in policy and in eBay Announcements in a type size I could read without my readers and easy to find in the Help and Contact search feature at the top of Overview Page. Not bad for a '44 model EH?
mam98031
·2 years ago@johnrj1226
That is not accurate. Before Ebay became the Money Processor for all sellers [roll out started the summer of 2020], sellers did NOT pay FVFs on sales tax.
The site changes you noted has NOTHING to do with the FVF on sales tax. Ebay's excuse for implementing this was because they were now the Money Processor, so like PayPal and all other money processors they charge a fee for processing the entire amount of money received from the buyer regardless of what it was for.
The problem is that Ebay took it a step further. The other sites charged approximately 3% in fees. Ebay decided to go to what is called here a Simplified Fee. This way there is simply one fee with no break down of what is for what. In doing that Ebay charges us the full rate they charge on products sold here instead of a small money processing fee and then the FVF for the sale itself. With the Simplified Fee there is one fee charged to everything. Therefore Ebay makes more on this type of situation.
It should also be noted that other sites that have their own money processing programs on their sites do NOT charge a fee at all on sales tax. You will find this true on Etsy, Amazon and likely others.
johnrj1226
·2 years agoWas responding to post #11 as so noted in my post.
mam98031
·2 years ago@johnrj1226
Yes I know, but you seem to be confusing FVFs on shipping [2010] and FVFs on sales tax [2020]. Which is why I posted to your post. This did not start in 2011. We did not pay FVFs on Ebay for sales tax back then. We only started paying that when Ebay started going Site Wide with Managed payments in the summer of 2020.
johnrj1226
·2 years agoFYI Here is a cut & past of all the text by the author of post #11"
"They take it on your shipping too. Im sure its in the fine print somewhere."
Sold my first eBay item on Jan 20, 2010 feel strongly the FVF on shipping was added the early the following year . but 2010 or 2011 is still "OLD" news.
Nothing confused at my end.
lakefor94
·2 years agoYou are not missing a thing. Your understanding is correct.
luckythewinner
·2 years agoThe eBay fee schedule says they will charge fees on the buyer's entire payment, and that is exactly what they do.
If that surprises you, then what you are missing is an understanding of how eBay fees work.
heckofagame
·2 years agoMost sellers that sell to buyers in a variety of states will gladly pay eBay that extra bit of fees to collect and remit the sales tax to numerous states. I personally don't want to be responsible for 50+ quarterly tax returns. No thanks. No way. Thank you for your cooperation.
jerseyboymusic
·2 years agoPost 987,743,090 of the same subject!
dbfolks166mt
·2 years agoMy standard response to the 100's of postings on this topic.
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. Prior to the courts ruling most interstate commerce sales were exempt from sales tax. After the courts decision individual states began to pass 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. "
soh.maryl
·2 years agoTo be blunt, what you are missing here is the eBay fee schedule, which is available for anyone to read.
And that fee schedule has remained the same now for more than a few years.
The seller's final value fee is calculated on the item price, the state sales tax, if applicable, and (surprise to you?) the shipping cost.
mam98031
·2 years agoThat isn't quite accurate. It changed in 2020 before that we never paid FVFs for sales tax on the Ebay site. To PayPal yes, but remember that was about a 3% fee on the total money they processed. Ebay is charging us over 13%. Just a little difference.
inhawaii
·2 years agoIt may not "seem" right, but it is.
You're not missing anything.
You have it exactly right.
mam98031
·2 years ago@inhawaii
Humm, yes and no.
We must realize Ebay started collecting sales tax on the states that required them to starting January 2019. Each month more and more states came on board. At that time Ebay did NOT make us pay FVFs on sales tax. By the end of 2019, most states were onboard with the exception of a couple of stragglers. Still we did not pay FVFs on sales tax. And we should note that even today other similar sites do not charge their FVFs on Sales Tax. Not Etsy or Amazon and likely other sites.
Ebay did not start charging sellers a FVF on sales tax until they entered Managed Payments sometime between August of 2020 and the end of 2021. So prior to that they were doing just fine getting paid by the states for collecting and remitting the money. And that is exactly who should be paying for this, the states. They give a discount to Ebay for processing and remitting the taxes. Ebay has never done it for free, they have always gotten paid, they are just now getting paid more because of the FVFs on taxes.
Another note, around 80% of sellers are small and casual sellers. Most if not all of those sellers would not qualify EVER to have to collect and remit taxes to individual states. We would never hit their minimum thresholds for doing so. Then there is also the fact of how much time and money it would cost us to do that and for a small business like most of us, it would be too much.
SCOTUS accounted for this in their ruling and no state is allowed to put an undue burden on a small business to process and remit taxes. Because of that and their inability to legally make each and everyone of us collect and remit taxes, they started creating the MFLs [Marketplace Facilitator Laws]. It was their way around the caveat in the SCOTUS ruling.
So being concerned that the job of collecting and remitting sales tax would fall back to us is not going to happen for the vary things I speak of above.
IMHO Ebay should not be charging us a fee of any kind on the sales tax. Ebay is going against what industry standard is on this matter.
Lastly it is important to remember that PayPal, Credit Card companies and other similar money processing companies ONLY charge the money processing fee on the total amount received. Ebay not only charges us the Money Processing fee, but the fees for selling the item. Money processors around 3% fees on sales tax. Ebay over 13%.
jinnhybrid
·11 months ago100% not right, just eBay being greedy.
mam98031
·2 years agoPlease excuse my surprise as you have been a seller for a long time. Since the day Ebay became your money processor we paid FVFs on sales tax.
Before that we paid fees on sales tax to PayPal.
Money processors charge their fees on the ENTIRE amount received regardless of what it was received for.
Have you ever spent any time with the Seller Fees Policy page? It might be in your best interest to do so.
https://www.ebay.com/help/selling/fees-credits-invoices/selling-fees?id=4822
robbie31415
·2 years agoI'm guessing because credit processors have been charging a % based on the total amount for ages so when they changed from PayPal to eBay managed payments they took the opportunity to make the fee come out from total not subtotal.
It is what it is.
I could be wrong, I based it on pure speculation.