Clarification on sales tax requested

[bill-pdx]

I'm a novice seller - looking for confirmation that my understanding of taxes is correct.

Assume an auction ends at a price of $15.  The fixed rate shipping is $5.  $20 so far.

The buyer is in a zip+4 where EBay determines a tax rate of 10% applies.

Is it correct that - absent any custom invoicing or tax table work by me, the seller will get a reminder to pay $20?  (That is, EBay does NOT add $2 to the amount invoiced to the buyer; the buyer is NOT invoiced for $22.)

The Buyer pays the requested $20 (not $22).  From the $20 payment, Ebay will deduct 10%, or $2, as a debit in figuring out how much to pay me (paying that $2 instead to the taxing jurisdiction).

Other debits will include the Final Value Fee, which is, e.g., 14.6% (for a book) plus $0.30.  That Final Value Fee is computed on item price ($15) plus shipping ($5) plus tax ($2), or on a base of $22.

If my understanding is correct, Ebay is sort of double-dipping in its Final Value Fee - assessing that 14.6% percentage (1) on the buyer-invoiced $20 that includes the $2 tax that will be forwarded to the taxing authority; and (2) on the $2 tax (again).

I get that these are the terms under which we operate; I'm just seeking confirmation that my understanding outlined above is correct.  Can someone confirm or clarify?

Thanks!

Bill

[hartungcards]

Your understanding is not correct.  Your buyer pays the 10% sales tax on the item and the shipping, and eBay deducts their cut of that total amount from your payout.  If my understanding is correct, Ebay is sort of single-dipping.

[southern*sweet*tea]

The buyer is invoiced for the item cost, shipping cost plus any sales tax.  That's what they'll pay, so in your example they pay $22. 

You will be charged final value fees on the total amount the buyer pays for the sale (item cost, shipping cost and sales tax),  so FVF is charged on $22.

You do NOT receive the $2 sales tax, Ebay submits that to the state.

[monroe67]

Lots of words, but your premise or "understanding" is not correct.

Buyer pays (A) price of item, plus (B) postage (if the item does not have "free shipping"), plus (C) maybe sales tax.  "Maybe" because some states do not charge taxes.  Postage is taxed by some states, but it is not taxed by other states.   

A+B+C = The Final Value, the amount paid by the buyer.
The Final Value is subject to eBay's Final Value Fee. 
See?  Very simple!  Not double-dipping!  AND legal !!

This is all spelled out in the User Agreement, which you can access via a hyperlink in the small print at the bottom of this page.  Go to Item 5, Fees and Taxes.   In the second paragraph, there is another hyperlink to Seller Fees.  

[luckythewinner · Accepted solution]

Is it correct that - absent any custom invoicing or tax table work by me, the seller will get a reminder to pay $20?  (That is, EBay does NOT add $2 to the amount invoiced to the buyer; the buyer is NOT invoiced for $22.)

First you mention a "reminder", and then you mention an "invoice". I have no idea what a reminder looks like and no idea what it looks like when eBay "invoices an amount to the buyer".

But what happen when the buyer PAYS is that any applicable sales tax amount is added to the price + shipping amount and that is what the buyer pays.

There is no "custom invoicing" or "tax table work" required by you; that is the whole point of the state laws that require eBay to do all that work on your behalf. 

[bill-pdx]

Thanks to all who've responded.  Being in a no sales tax state, the invoices I've received for EBay purchases haven't detailed any tax, so the process was particularly opaque to me.