Final Value Fees
Although I've been an eBay member since the beginning, I've been away from selling for a couple years. Things have changed. Question: Does anyone know why eBay is collecting taxes on our behalf and basing the tax they collect on our final value fees? The seller never sees taxes deposited in their account, nor are taxes included with the actual sale of the item purchased. The buyer pays the tax, but the seller pays for it. I am not a tax collector, and not all states tax garage sale items that have been taxed and resold on ebay for a fraction of the price originally paid. So, my next question is where does the tax money go that ebay collects?
10 comments
monroe67
·5 months ago"Question: Does anyone know why eBay is collecting taxes on our behalf . . . ."
It goes back to the US Supreme Court case of South Dakota v Wayfair, Inc., decided in June of 2018. That case said that South Dakota is allowed to collect sales taxes on things that are sold/purchased on Wayfair and delivered into the state of South Dakota.
The remaining 44 states that charge sales taxes essentially said, "Hey! We want sales taxes on those Wayfair purchases, too! And how about all the stuff our citizens buy on Amazon and Etsy and eBay and other internet sales platforms?"
So, now, the laws of all the 45 states that charge sales taxes now require eBay to collect sales taxes on things that are purchased and delivered to addresses within those states.
(The five states that do not charge sales taxes are, alphabetically, Alaska, Delaware, Montana, New Hampshire, and Oregon.)
" . . . and basing the tax they collect on our final value fees?"
Your understanding on that is not correct.
eBay collects sales taxes at the rate in effect at the zip code in the delivery address. People in Los Angeles, California, pay 10% or more in sales taxes, while many people in San Diego, California, pay 7.75%, and in other states or counties or cities pay a mere 4% or 5%.
"The buyer pays the tax, but the seller pays for it."
I'm not sure I understand what you're trying to say here. Are you talking about eBay's Final Value Fee (FVF)? In that sense, yes, the seller does pay eBay for the whole process of collecting sales taxes.
eBay applies its FVF percentage to the Total Amount Paid By The Buyer, which usually does include some sales taxes. eBay's general policy is that eBay's fees are paid by sellers.
(Many experienced eBay sellers, however, take the position that their buyers pay their eBay fees, through careful pricing.)
stainlessenginecovers
·5 months agoAlthough your question is convoluted, I think you are asking 'why ebay is charging their final value fee on the total of the sale which included the sales tax??
Answer: That 'TOTAL' is what the processor charges THIER fee on.
No different that a Credit Card Processor charging their 3% to Walmart on the TOTAL of that customers purchase that is processed.
$10 item
$10 shipping
$1.60 sales tax
$21.60 total customer pays
Processor charges their fee on that $21.60.
If you were asking 'why they collect sales tax', that is due to the Supreme Court decision to allow states to FORCE 3rd Party Market Places to collect and remit sales tax from buyers in their state, as if though they had purchased from any store in their state.
If ebay didn't collect a fee on that amount, they would actually be digging into their own pockets when it came to remitting sales tax because they would be short.
The 'about' 3% portion of the fee covers Adyen (the processor) and the additional (about 10%) ebay collects covers the payment to a company that has to manage the collection and remittance of quarterly tax payments to up to 3600 counties in the USA alone.
cheech2021
·5 months agoI hear that Ebay pays each State their sales tax collected and for that service they charge a small fee on a small number. I rather pay that small fee on that small number, then to send out sales tax money, to 50 states, on different dates due, with different amounts, and different forms to file in.... all the states. WOW thank you Ebay for doing this for me, thats how I look at it.......
kensgiftshop
·5 months agoThe sales tax money goes to the state where the item was shipped.
grann-4629
·5 months agoDoes that apply to Canadian Provinces also? Your posts also suggests that the seller pays the tax (the shipper's State). Is this correct, normally buyers pay sales tax.
Tks
house*of*paws
·5 months agoTax is paid to the state the item is shipped to. [The actual locations of the buyer, seller, and item are irrelevant.]
Tax is collected according to the laws of the state to which the item will be shipped.
@ccook19
The seller’s fees are based on the total amount of the buyer’s payment, which might include tax. [eBay is processing the entire payment, so charges fees on the entire amount … just like credit card companies do.]
monroe67
·5 months ago"Does that apply to Canadian Provinces also?"
IF the laws of the various Canadian provinces require eBay (and other online sales platforms) to collect a sales tax, then, yes, eBay will collect that sales tax.
You could change the eBay site to ebay.ca, then open the User Agreement, look for the section pertaining to Fees and Taxes, and see what it says about eBay's collection of provincial sales taxes.
reallynicestamps
·5 months agoCanadian seller here.
EBay Canada charges on the customer's entire payment just like dotCOM.
That includes the sales taxes, not only for Canada, (PST/GST/HST/QST) but for the US if the customer is there, and for other countries like Australia (GST) or the members of the European Union (VAT).
kensgiftshop
·5 months agoNo, the seller doesn't pay the sales tax
Sales tax is based on where the item is being shipped to, has nothing to do with the sellers location.
As far as Canada, If they have sales tax that Ebay collects, it would be sent to Canada.
bashort
·5 months agoebay distributes the tax to where it goes, that charge the seller a fee on sales tax, shipping and delivery tax because they can