Where's the Sales Tax "Overcharge" go?

[quincydepot]

Good morning,

Please don't answer if you REALLY DON'T know.  I don't need supposition.

eBay now gets 12% FVF on every aspect of my sale. 

Before Mangled Payments, eBay received 9% FVF and I paid 3% to PayPal or whoever I used.

Where does the extra 9% eBay collects on State Sales Tax go?  

1.  Do they pay the extra 9% to the state of PA as required by PA Law?

2. Do they profit from the sales tax collection?

3. Do they pay PA State Income Tax on the profit the made from PA sellers?

Last year, under Mangled Payments eBay collected $1080.72  in "profit" from me with the extra 9%.

eBay has not answered this inquiry and I doubt they will.  Thanks!

[soh.maryl]

My answer includes a little supposition.  Feel free to skip reading it.

The final value fee is calculated on the item price, the shipping cost and the state sales tax, if any.

The state sales tax percentage is based on  the BUYER'S delivery address, not the seller's.

The state sales tax is remitted to the appropriate state treasury by eBay.

The fact that the FVF is charged on the state sales tax reimburses eBay for what it costs them to do so.

They do not profit from collecting state sales tax.  They are required by law to do so.

Exactly what 9% are you referring to? Does the State of PA have a 9% state sales tax rate?

Have no idea what eBay's tax arrangements are.

If eBay hasn't answered your inquiry about fees and sales tax, one would think you would WANT to hear from mentors who come here to explain, instead of fending them off.

That's all -- feel free to trash me in your reply.  

[heckofagame]

The entire FVF is a payment processing fee. Some goes back to the seller, some to the state, and the rest goes to eBay. This is not a free service. 

[donsdetour]

What 9 percent are you talking about??

Your post is a bit confusing.

I will suspect that may be TAX the buyer has to pay: eBay collects and remits to the state the buyer lives in.

This amount will change to the buyers location if tax is charged.

Of course eBay also charges a final value fee on that tax as well:

PayPal did also.

[monica-sells]

I can't resist supposition, because NO ONE would really know, but, that being said.....

1.  Do they pay the extra 9% to the state of PA as required by PA Law?

Show me where ANY CREDIT CARD PROCESSER ON THE PLANET pays the State of PA for the processing fee......what is the extra 9%? 

2. Do they profit from the sales tax collection?

I suspect that, again, EVERY CC Processing Company makes SOMETHING from processing sales tax from virtually every transaction made by anyone with a credit card in any situation....

3. Do they pay PA State Income Tax on the profit the made from PA sellers?

Don't know, but if VISA, Mastercard, Discover, American Express don't, then ebay probably doesn't

Side Note: You have some really cool stuff for sale!

[fab_finds4u]

Do they pay PA state income tax on the profit they make from PA sellers?

I believe you are mixing up taxes. Sales tax versus federal and state income tax.

State income tax has nothing to do with sales tax that eBay collects and remits to each state. 

Before managed payments PayPal charged their fee on the total that included shipping and sales tax. 

If you are a buyer in PA eBay is  charging sales tax on packages delivered to PA. If you are a seller in PA then eBay is going to collect and remit sales tax to each state packages are delivered to if that state charges sales tax. Almost all states charge sales tax but a few don't.  Sales tax is charged to the buyer not the seller.

If I buy a $90 item from you with $10 shipping then eBay will charge me 7% sales tax for a total of $107. eBay takes the $7  from the payment and sends it to FL.

eBay is charging you a FV fee of 9% based on the buyer's total payment then that breaks down to this-  eBay has charged you $0.63 to collect and remit  the sales tax to FL for my $100 purchase from you.

eBay doesn't  do that for free, thus there's a final value fee. 

 I wouldn't  call the 63 cents they charged an overcharge since they are doing the remiting of the sales tax money.

[monroe67]

My comments will be in green, because I like green.  

About your title:  if you truly think eBay is overcharging sales tax, I suggest you contact a lawyer in your state to clarify this.  

"Please don't answer if you REALLY DON'T know.  I don't need supposition.

eBay now gets 12% FVF on every aspect of my sale."

eBay's standard FVF is 12.9%, plus 30 cents per order.   If you are calculating 12%, you will find that eBay actually keeps more than the numbers you come up with.  

"Before Mangled Payments, eBay received 9% FVF and I paid 3% to PayPal or whoever I used."

What are Mangled Payments?  In all the records for my selling ID, she is now enrolled in eBay's Managed Payments program.  

It has been many years since eBay's FVF was 9%.  When I was switched to Managed Payments, about 15 months ago now, eBay's standard fee was 10%, and PayPal's standard fee was 2.9% plus 30 cents per order.  

"Where does the extra 9% eBay collects on State Sales Tax go?  

1.  Do they pay the extra 9% to the state of PA as required by PA Law?

2. Do they profit from the sales tax collection?

3. Do they pay PA State Income Tax on the profit the made from PA sellers?"

What does this mean: "extra 9%"?  I will "suppose" you mean a FVF of 9%.  Except that the FVF is now 12.9%, but . . . .
The "extra 9%" is kept by eBay.  It is their income.  And it is 12.9%.  

1.    Again, the FVF is 12.9%, not 9%, but, no, what you call "the extra 9%" is not sent to Pennsylvania's taxing authority.  It is eBay's income.  It is not required to be sent to Pennsylvania or any other state.  You haven't exactly asked this, but eBay does send the full amounts of collected sales taxes to the appropriate states' taxing authorities.  State sales tax dollars paid by buyers in Pennsylvania will be sent to Pennsylvania.

2.  The FVF is, kinda by definition, eBay's income, if you will, for allowing you and me to sell things on eBay's site.   I don't know if I would say it's eBay's "profit."  There are too many other variables in eBay's full financial picture that I simply do not know, so I can't even suppose how much eBay profits from FVFs.   

3.  Now, this one -- I want to repeat what you wrote:  

"Do they pay the PA State Income Tax on the profit the made from PA sellers?"  

Well, of course, this is an answer that I really, truly do not know, but I must assume -- or suppose -- that, yes, of course, eBay pays their corporate income tax, both federally and in whichever states they may be required to do so.  I cannot imagine that eBay would have stayed in business for close to 25 years now if they had not paid their corporate income taxes.  But I do not absolutely know this for a True Fact because I have no access to this kind of info, I do not work for eBay in their accounting or tax departments, nor do I work for the State of Pennsylvania's taxing authority. 

"Last year, under Mangled Payments eBay collected $1080.72  in "profit" from me with the extra 9%.

eBay has not answered this inquiry and I doubt they will.  Thanks!"

Again, the actual term is "Managed Payments."  People will take you more seriously if you use their preferred terms for things.   

[donsdetour]

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@quincydepot wrote:

Worthless response.

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Hmm again what are you even talking about??

Your post says the 12 percent then goes back to old style with eBay/ PP; and then has some other question relating to 9 percnet witch was the old style fees for eBay.

so its all very confusing..........

I had to assume you were talking about sales tax, I still am not sure you were......

[fab_finds4u]

They did trash your reply, just as you predicted.

[quincydepot]

If you make a profit from collecting a tax and DO NOT forward it to the state, it becomes income and is taxable, even if it's illegal.  

[monroe67]

"Some [of the FVF] goes back to the seller, some to the state, and the rest goes to eBay."

That statement is not true.  The entire FVF is eBay's income from each sale.  
None of it -- not one fraction of a cent -- goes directly back to the seller, under normal conditions.

IF an item is returned to the seller by the buyer and the buyer refunds the seller, eBay will give some of the FVF back to the seller.  

None of the FVF goes directly to any state.    

[quincydepot]

PayPal charged  ~3% to collect the tax while eBay charged 9% more.  

Old System - $100 Item $6 Tax  FVF $9.00 PayPal Fee $3.18 //  $100 - $9 - $3.18 Seller Rec'd $96.8 <$6 to state.

Mangled Payment - $100 Item $6 Tax FVF  $12.72 Seller Rec'd $87.28

Old Way - Seller Gets $90.80

New Way - Seller Gets $87.28 

Is eBay keeping the extra $3.57, sending it to the state since it was generated in sales tax collection?

[fab_finds4u]

Why are you assuming the money eBay collects is all profit?

I'm sure eBay isn't  run on air. They have business  expenses they get to deduct. 

They might have Trump's accountant that knows all the loopholes so they don't pay taxes.

[monroe67]

"If you make a profit from collecting a tax and DO NOT forward it to the state, it becomes income and is taxable, even if it's illegal."

Yes, eBay does earn income from the Final Value Fees (FVF). 
"Profit" is a completely different thing than "Income".
 It sounds to me like you think income and profit are the same thing.  They are not the same thing.  

As I said in an earlier response, I assume that eBay files its federal corporate income tax returns on time, and also files any state corporate income tax returns that might be required by the states.   And I assume that eBay has paid any federal and/or state corporate income taxes that are required.

Why do I assume that eBay does pay their corporate income taxes?  Because they have stayed in business for roughly 25 years now, and grown and expanded and improved their site.  Even if I, personally, don't think that a few of those changes have actually been improvements.  

If you are you really interested in whether eBay files and pays corporate income taxes in your state, there might be an official way for you to find out.   Maybe an attorney in your state could help you with that.  

[monica-sells]

based on current FVF i think your calculations are flawed in your example

when PP was processing 13.07 would have been the deduction (costs)

MP processing 13.67 is the current deduction (costs)

the difference is .60 not 3.57

(and PP has raised the rates since the divorce)

even math 101 shows me the difference would be 6.00 (tax) X .09 (the difference)

or....what am I missing?