Sure, we are charged fees on taxes, but... isn't it simpler than us sending the tax money to states?
I don't mind paying a fee on the tax portion of our sales if it means Ebay continues forwarding the taxes to our wonderful governments across the US.
52 comments
operasales
·3 years agoThis is still only a few years old. But since these states now have a very good new revenue source how are some still broke.
stainlessenginecovers
·3 years agoIndividual Thresholds for each state do NOT count when YOU sell on eBay (a 3rd Party Selling Listing Site; aka 'marketplace facilitator).
The entire point of the MF Law passed by the USSC in 2018 was that MF Sites need to charge, collect and remit Sales Tax to each state that a 'Buyer' resides.
NOTHING to do with Thresholds.
Period.
dbfolks166mt
·3 years agoIndividual Thresholds for each state do NOT count when YOU sell on eBay (a 3rd Party Selling Listing Site; aka 'marketplace facilitator).
The entire point of the MF Law passed by the USSC in 2018 was that MF Sites need to charge, collect and remit Sales Tax to each state that a 'Buyer' resides.
NOTHING to do with Thresholds.
Period.
Agreed in principal. The thresholds or exemption limits would have come into play had not eBay been required to collect and remit the sales tax. Those claiming that they would not have had to collect and remit the sales tax themselves,if they were doing it as opposed to eBay, are claiming they would have fallen under the exemption limit for most states and not have had to collect or remit the sales tax.
That may have held for awhile until the states began to realize the lost revenue opportunity and started changing to eliminating the exemption thresholds. Then it would have become a question of whether having eBay do it for the cost they charge is/was cheaper than having to do it themselves.
az93
·3 years agoSeller doesn't pay sales tax. Seller doesn't distribute sales tax. Yes, it is much simpler to let ebay handle sales tax buyer paid as required by law. It is worth the small fee to avoid the paperwork headache.
luckythewinner
·3 years agoThere is no paperwork to avoid because the paperwork is eBay's legal responsibility, not the seller's.
eBay is not doing a job for sellers, because under the law it is eBay's job not the seller's.
If eBay did not do this for sellers then eBay would get in trouble, not the seller.
We are not paying eBay a fee to do work for us. We are paying eBay a fee because eBay wants to make more money.
luckythewinner
·3 years agoSure, we are charged fees on taxes, but... isn't it simpler than us sending the tax money to states?
Your argument completely ignores the fact that eBay is required by law to do this.
It also ignores the fact that most states have an exemption meaning that most eBay sellers would not have to send taxes to most states.
If eBay did not do this for me, I would not have to do it either.
dbfolks166mt
·3 years agoSure, we are charged fees on taxes, but... isn't it simpler than us sending the tax money to states?
Your argument completely ignores the fact that eBay is required by law to do this.
It also ignores the fact that most states have an exemption meaning that most eBay sellers would not have to send taxes to most states.
If eBay did not do this for me, I would not have to do it either.
At least for the moment. You would have to wonder in the wake of the Supreme Court's decision in Wayfair vs South Dakota how long it would have been before the states started lowering the exemption limits just like several states have already done for the 1099 issuance threshold.
luckythewinner
·3 years agoeBay is required to comply with a law that actually exists.
It is absurd to somehow twist this into an argument that eBay is helping seller avoid having to comply with laws that do not exist.
This was a money grab by eBay. Period.
dbfolks166mt
·3 years agoeBay is required to comply with a law that actually exists.
It is absurd to somehow twist this into an argument that eBay is helping seller avoid having to comply with laws that do not exist.
This was a money grab by eBay. Period. In as much as it was by the states that passed the sales tax laws. Period. 😀
mam98031
·3 years agoIt also ignores the fact that the states are compensating Ebay for the processing of the sales tax. They have to. They couldn't legally put all the expense of this on Ebay, SCOTUS ruling doesn't allow for that. It would be an undue burden. So the states pay Ebay to process and remit the sales tax.
Another thought to consider. Neither Etsy charges only their money processing fee on the sales tax and Amazon charges no fee at all. Ebay is the only site I'm aware of that charges not only a fee for money processing on sales tax but a selling fee too.
Which is exactly why Ebay came up with what they call the Simplified Fee, which is one fee that includes money processing fees and sales fees.
Ebay has just convinced seller they are doing them a favor and saving them for a daunting accounting process regarding sales tax, when in fact most of us would not even qualify to collect and remit them. Again hence the reason why the states created MFLs so they could get sales tax from all the sales on marketplaces like this one.
lonebuck-books
·3 years agoAbsolutely 100%. As someone who has had to file and remit sales taxes for years in multiple states, the tiny bit I pay in the extra fee is well worth it. It is way cheaper than the amount of time I had to spend doing it myself.
mam98031
·3 years agoThat is unlikely do to your Ebay sales, at least not under this account unless you have some big $$$ sales during the year.
As I'm sure you know, determining if sales tax is due is not driven my your total sales but by the sales shipping into any given state. The two are of course not the same.
mam98031
·3 years agoWe 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.
ten_o_nine
·3 years agoJust to note, payment processers charge less than 3% to submit taxes to authorities, but eBay charges a whopping 15-20% and even more.
lonebuck-books
·3 years agoeBay's cost to handle the sales tax is a lot more than the 3% payment processor fee. They also have to pay for software updates, accountants, filing/tax license fees, and compliance/audit costs. There are most likely more costs involved but those are the few I can think of off the cuff.
toomuchstuffagain35
·3 years agoMaybe they should consider that the "cost of doing business", the same thing they always tell sellers every time they cost sellers money?
mam98031
·3 years agoThey [Ebay] does not have to consider this as they do make money on the process just by what the states pay them and that is who should be paying them.
It would be totally unfair of the states to require Ebay in the MFLs to collect and remit sales tax and give them no compensation for the services render. That would be totally unfair and burdensome on Ebay even at the size they are. It was expensive to set up all the programing, staffing, software, hardware, etc. it takes to support this process. You can't put those types of huge costs onto a company and then the states reap all the benefits. So the states pay the Marketplaces for the jobs they do and that is how it should be.
mam98031
·3 years agoEbay has no category that is at 20%. Unless the seller is having to pay penalty fees on top of regular category fees.
https://www.ebay.com/help/selling/fees-credits-invoices/selling-fees?id=4822
slippinjimmy
·3 years agoFees on a $5 sale (total) are 19.25% in most Categories.
While I would never sell anything for $5 I see lots of listings sell at that price or even lower.
dbfolks166mt
·3 years agoFees on a $5 sale (total) are 19.25% in most Categories.
While I would never sell anything for $5 I see lots of listings sell at that price or even lower.
That is the effective rate I come up with also and that is provided there is no sales tax. Add in sales tax and the effective percentage increases to over 20%.
mam98031
·3 years agoYou are correct. And using the 30 cent per transaction fee in the calculation will always inflate the fee percentage on a small $$ sell. The same percentage would NOT apply to a $10, $100, $1000 sale.
But when the per transaction fee is such a large percentage of the FVF charged [for small $$ value sales], you will always get an unrealistic percentage that some depend on to make it seem as if this is the average fee or fees.
mam98031
·3 years agoHow are you arriving at that number. Instead of me guessing, I thought I'd ask.
sakic92710
·3 years agoSince eBay takes a % from the shipping for providing absolutely no service, they can use that money towards handling the taxes.
stainlessenginecovers
·3 years agowhich they've done since 2010 or so (collect on shipping); fast forward 2019 and they are going to just eat into their own pocket to pay the fees to collect as well as the cost to bookkeep, collect, categorize, build and submit reports 4x a year for up to 3600 different counties with different tax percentages? (for example, originally collecting $50,000,000 in fees and now a new law comes along you are supposed to just be happy with $45,000,000 while 'paying' for this 'new' law??
You would NEVER do that.
mtgraves7984
·3 years agoI think it's simpler and a bargain, too.
dolcetreasures
·3 years agoThe vast majority of sellers don’t sell anywhere near the thresholds needed per state to have this qualifier. So they aren’t doing me or you any favors.
slippinjimmy
·3 years agoYes and no, the truth is that most eBay sellers would never have the volume to be required to register as Remote Sellers in the States where it is required. The thresholds vary by State but in most cases is from $50,000 to $100,000 in sales to that State.
Remote Seller requirements predate the Marketplace Facilitator laws and still exist for sellers who do not use a Marketplace like eBay.
dbfolks166mt
·3 years agoYes and no, the truth is that most eBay sellers would never have the volume to be required to register as Remote Sellers in the States where it is required. The thresholds vary by State but in most cases is from $50,000 to $100,000 in sales to that State.
Remote Seller requirements predate the Marketplace Facilitator laws and still exist for sellers who do not use a Marketplace like eBay.
My state use to have a $20K issuance threshold for the 1099's also but they changed that 3 years ago. In the wake of the Supreme Court decision in Wayfair vs South Dakota if the ecommerce companies were not required to collect the sales tax and it was left to the individual sellers I would venture to guess that it would not be long before some states started to lower those numbers. Seems to be a trend these days.
mam98031
·3 years agodbfolks166mt
·3 years agoFully aware of those since I live in one of them. It will be interesting to see if any other states join that list before the end of the year given the bogged down status of the federal requirement.
ladyindecadence
·3 years agoDepending on what your sales volume to any particular state is most sellers would fall under the threshold of transactions to most locations that would require them to collect the sales tax for that state. Most of the marketplace facilitator laws were not designed to require small businesses to collect any taxes. Just large marketplaces or large corporate sellers. This costs me about an extra $2000 a year in ebay fees for ebay to collect the taxes on my behalf Of which most I would be exempt from collecting if the items were sold through my own website. Personally I'd rather pay my accountant the $2000 a year to handle the sales taxes and support a local small business.
femmefan1946
·3 years agoThe point was to protect small local businesses from giant online companies like Amazon and eBay.
Although AZ which is a retailer as well as a marketplace facilitator has a very different business model than eBay.
If eBay fees are 13.5% of sales taxes collected by eBay from a given seller, and the average states sales tax is 5%, what would be the dollar value of sales for a seller to pay FVF of $2000 on sales taxes collected?
slippinjimmy
·3 years agoThe ONLY point was to recapture lost revenue. In virtually all States (that have a State Income Tax) residents were required to report on their Tax Return anything they imported from another State and pay Use Tax (same rate as a local purchase). Compliance was abysmal so they changed their methods, initially applying to Remote Sellers over a certain volume or because the merchant has a "presence" in a State. Amazon was collecting Sales tax for Sellers long before Marketplace Facilitator laws came into play because they had a "presence" (Fulfillment Warehouses) in most States and most important Amazon is always the seller of record even for third-party sellers.
ladyindecadence
·3 years agoEbay collected $16,116.75 in sales taxes on my behalf last year. $12.3% of that is $1982.36, This was ebays fee on that collected tax. This also doesn't take into account that many states give businesses that collect tax for them a percentage of the tax they collect for doing it. Here in Maryland Sales tax is 6% the state lets me keep one of those percent for collecting the tax and remitting it to the state. I'm sure ebay has similar deals with most states, and likely makes enough from that to cover their costs of collecting taxes for the states. Its really simple Ebay charging the full final value fee on the sales tax is a money grab and nothing more.
slippinjimmy
·3 years agoIf eBay wants to grab more money they don't need to do it via fees on tax they could just raise the standard FVF rate (as they did a few months ago).
ladyindecadence
·3 years agoCorrect they could just raise the final value fee on the sale price as that would be much more straight forward. Instead they collect fees on money that just passes through their accounts and is not part of a sellers gross revenue as its not reported on the sellers 1099K So by adding in the fee charged on sales tax and on shipping most sellers effective fee rate on the item sale price is a few percent higher then ebays advertised fee rate.
I understand that ebay started charging fees on the shipping to counteract people selling items for $1 and charging $100 for shipping. But with ebay selling postage labels directly through their site they could always credit back the fee they collected on the actual cost of any labels purchased through their platform. This would be a nice bit of good will from eBay towards sellers, But we know it will never happen.
At the end of they day ebay does what is best for the shareholders not necessarily what is best for the marketplace at large.
isaiah53-57
·3 years ago"I understand that ebay started charging fees on the shipping to counteract people selling items for $1 and charging $100 for shipping"
I get so tired of seeing this undeserved pass for the company - Poor ebay...
1st off, the amount of people doing this was minuscule, though slowly growing, so I can see a need to protect future interests - 2nd most buyers would see this tactic as cheap and borderline criminal and choose to buy from the seller who had it listed at $91 w/$10 shipping...
Do you not realize how many options the company could have utilized to tend to this issue? Look at all the sites right now that have low, scaled, fair flat rate shipping offered on the items sold there to keep the site palatable for its users. Do you think ebay didnt have a choice to go this route?
No, sorry, in my opinion, they went the way they did because the bean counters showed the boardroom that fees on shipping was the best way to take the most money out of its users pockets - Just another money grab. So, to a degree, I would agree with your statement "At the end of they day ebay does what is best for the shareholders not necessarily what is best for the marketplace at large" - The problem this statement fails to address is what is not best for the marketplace over the short term is likely not best for the shareholders over time - I believe the company has just about exhausted its short term money grab options - If they dont do something to start stimulating long term growth, all these short term money grabs used to appease shareholders? They will likely be proven to be EXACTLY what alienates those same shareholders in the long run.
tsme35
·3 years agoI agree, ebay's fee on taxes is higher then what the states charge on taxes. I have no problems ebay charging to collect taxes so I don't have to but 12-15% is a money grab. I'm not sure but read other posts that some states give a discount for collecting for them.
dbfolks166mt
·3 years agoEbay collected $16,116.75 in sales taxes on my behalf last year. $12.3% of that is $1982.36, This was ebays fee on that collected tax. This also doesn't take into account that many states give businesses that collect tax for them a percentage of the tax they collect for doing it. Here in Maryland Sales tax is 6% the state lets me keep one of those percent for collecting the tax and remitting it to the state. I'm sure ebay has similar deals with most states, and likely makes enough from that to cover their costs of collecting taxes for the states. Its really simple Ebay charging the full final value fee on the sales tax is a money grab and nothing more.
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 remit 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. "
In your case that $1,9832.36 in eBay fees on the sales tax was for about $230,000.00 in sales. Every year I am more PO'ed about what the Federal and State income taxes take out of my profits than I am what eBay takes as a FVF on the taxes.
mam98031
·3 years agoLike I stated in my other post. Most small and casual sellers, which is the majority of sellers on Ebay, would never qualify to pay sales tax to all the states they ship to in any given period of time for a year or less. Which is why the states created the MFLs.
https://www.avalara.com/us/en/learn/guides/state-by-state-guide-economic-nexus-laws.html
So I don't see Ebay doing us any favors on this and they are paid by the states. So why do we have to pay them even more.
https://www.taxjar.com/blog/file/state-sales-tax-discounts
And there are likely other negotiated contracts between Ebay and a particular area. Maybe similar to this one.
https://www.californiacitynews.org/2019/09/ebay-san-jose-near-sales-tax-split.html
dbfolks166mt
·3 years agoLike I stated in my other post. Most small and casual sellers, which is the majority of sellers on Ebay, would never qualify to pay sales tax to all the states they ship to in any given period of time for a year or less. Which is why the states created the MFLs.
Fully understand the current situation with regards to the exclusions and the caps. I have to wonder how long those would last if the states began to realize how much revenue they were loosing if it was pushed back down to the sellers to handle on their own.
mam98031
·3 years agoSo are you saying they would ignore the part of the SCOTUS ruling that would not allow them to impose this on sellers such as myself other than for the state I reside in?
glenvonnie
·3 years ago$109,000 ?
monroe67
·3 years ago"Most of the marketplace facilitator laws were not designed to require small businesses to collect any taxes."
Because most Marketplace Facilitators are not small businesses. Marketplace Facilitators are most often corporations like eBay. Marketplace Facilitators offer online platforms (or even physical locations) to smaller businesses and individuals trying to sell all kinds of different things, like, maybe, antique porcelain or crystal decorative pieces from their grandmother's estate.
And the Marketplace Facilitator laws do specifically require Marketplace Facilitators to collect sales taxes appropriately, per the tax laws of the various states, and remit those taxes to the states' treasuries.
"This costs me about an extra $2000 a year in ebay fees for ebay to collect the taxes on my behalf"
That's a ton of annual fees to eBay, as the fee on the amount of sales taxes eBay collects.
Unless I misunderstand what you're trying to say, and knowing that math is not my strong suit, and assuming your sales categories carry a 13.25% final value fee -- let's see -- $2,000 in fees at 13.25% to eBay for processing sales tax would mean eBay processes about $15,095 in sales taxes from your sales. "A year," per your post.
Assuming an average sales tax of 7%, this means your eBay item-price total sales are around $215,644 per year.
Assuming an average sales tax of 8%, this means your eBay item-price total sales are around $188,688 per year.
I guess congratulations are in order, then, for your payment of $2,000 per year to eBay for doing everything that needs to be done with the sales taxes paid by your buyers. I am sure there are many, many eBay sellers who can't imagine even 10% of your total sales per year.
Personally, my selling ID is just a small-time seller, and I am delighted to pay eBay for taking on this task -- processing sales taxes -- that I simply could not do myself, and don't earn enough to pay an account $2K to do.
tsme35
·3 years agoI took a look at last years taxes collect, my FVF is 12% and cost me $436 in fees. Most likely alot less then I would pay for a program, ebay had to front the money to set up and pay some company for the program but wouldn't take long to get their return on it back, then its all profit.
But then again, I'm not tech savvy, so most likely would have had to close shop. It's not even the ebay fees that's going to shut me down but the postage increases 3 times a year, I'm running out of inventory that's sell-able.
kds99
·3 years agoI don't know how you can say that for eBay it was all profit as though the program, as you call it, is a one-time investment. The "program", has to be kept current, upgrading as needed for operations, security and interoperability reasons, and the 1700 taxing authorities involved have to be tracked continuously to make sure periodic tax rate changes and tax authority boundaries are correctly taken into account. And I am not sure that all the variations such as authority no. 1201 taxing some clothing and not others and authority no. 634 taxing some food and not other food are properly hooked up right yet. And once they are right, the state laws will continue to evolve.
tsme35
·3 years agoMaybe not all profit, but doesn't take millions a year to run it
joliztoyco
·3 years agoNo. It doesn't. Ebay grifted about 300 million dollars off their sellers in "sales tax handling fees" last year.
And I've had quite enough of the "Gee...I'm glad I don't have to do it...it's SO complicated".
NO IT"S NOT.
There are a DOZEN software programs that you can purchase that not only track the taxes owed to every STATE, Municipality, County etc, but pays them out of your designated bank account quarterly or yearly. And it updates EVERY DAY> Like Microsoft sends updates? They do too!
And they start at about 5-6 hundred bucks.
Here's just a few:
So just stop with the "Oh, it's sooooo hard.
It's not. It's SIMPLE.
But the only caveat is that for small sellers it wouldn't be cost effective. But If I was a large seller getting 2000 dollars of grift money siphoned off my profit margin?
Yeah. I'd be frustrated. When you know that with a simple tax program you could save 1200-1400 a year.
But it really doesn't matter what we ALL think. Ebay isn't about to let you opt in or out of their "Sales Tax Goldmine" any time soon...too much profit in it.
maxine*j
·3 years agoYes, but if the Supreme Court had not ruled as it did, every state would have begun lowering those thresholds, and seriously lowering them. The states were bleeding desperately-needed sales tax revenues and that had to stop. So, one way or the other, sales-tax-free on-line shopping was going to come to an end, and I think this way is easier on sellers.
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mam98031
·3 years agoSee this is a mistake too. SCOTUS was smart enough to think of this as well which is why in the ruling they also said it could not cause an Undue burden on the seller / company. And it would on small and casual sellers.
Look at it this way, if what you say were to be accurate, instead of creating and passing MFLs, it would have been far easier to just lower their thresholds. And you have to keep in mind that even doing that would not capture all the sellers on Ebay shipping to a US address.
These thresholds are NOT based on a sellers total gross sales, it is based on the amount that ships into any given STATE. So to even ship enough sales into a single state to rack up $100 in sales tax is a lot of sales. At an 8% sales tax rate, that would be around 8,000 in sales into that one state. There are thousands of sellers that would never reach that.
This is exactly why states chose to create MFLs instead as they could collect far more money.
1786davycrockett
·3 years agoConsidering the number of hours that I spend on eBay every day, I don't mind a bit that eBay is filing all that additional paperwork to all the thousands of individual tax entities around the United States.
Some of those reports need to be filed on a monthly basis, while some need to be filed quarterly -- and there are probably some that need to be filed on a weekly basis, as well.
Less headaches and labor for me equals more time to list more items -- and more items should mean more potential profits.
Nope -- I don't mind eBay charging my account for filing all that tax paperwork -- not a bit.
lamber9347
·3 years agoThat's exactly how I see it. Nothing is free in the world, every service has a charge to it. I happily pay eBay in fees for them to handle paying state taxes for my sold items....