Exorbitant & misleading

[ernest1983]

I wish to lodge my frustration with both the way eBay calculates the fees I pay and the way eBay, in my opinion, misrepresents my earnings.  

As to the fee calculations, I was surprised to learn that I pay a fee on the taxes my buyer's pay and on the shipping costs they pay.  eBay portrays the "shipping discount" offered to sellers as an advantage offered to us sellers but then eats into/eliminates that by charging me a fee of what the buyer paid in shipping costs.  I go out of my way to never make money off shipping charges because I believe it is not fair to the buyers to pad the shipping costs & essentially build in a hidden profit for me but seems like I should in order to pass the fees eBay charges me on to the customer.  But the fairest option would be for eBay to not charge me a fee on the taxes buyers pay to the government because I have no control over that.

As to the way eBay misrepresents the total purchases, as a for instance my platform currently says my 90 day total is $1,183.  But, in reality, my net earnings in the past 90 days are roughly $872...a full 36% less than what is stated.  So more than a third of what eBay says I earned in the last quarter is, in reality, fees, shipping & taxes (and the fees on shipping and taxes).

I understand how calculating the totals the way they do makes for a better "headline" for eBay and the way they calculate the fees generates more money for eBay, but neither seems fair to me the seller.

[solidguitar1961]

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@ernest1983 wrote:

Bottom line, I pay a fee to eBay based on the taxes a buyer pays to the government.  Seems unfair.  

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Imagine that at the end of the year you had to manually yourself send that tax money to every state that the tax was collected for. When they switched to manage payments and all the other states started making then charge tax they lowered their fee to compensate for that. Before I moved to managed payments I was at 10% to Ebay and 2.9% to Paypal = 12.9% then it was straight up 11.9% to Ebay .

[soh.maryl]

Actually, the way you have made your statement is somewhat misleading.

eBay's final value fee for the seller is calculated on the total of (1) the item price; (2) the shipping and (3) the state sales tax, if applicable.

Therefore, if a buyer purchases something from you where the item price is $75, the shipping fee is $15 and the state sales tax is $10, you, the seller, will be paying the final value fee on that total, or $100.  

[buzzapparel]

Huh? Those state minimums are $50,000-$200,000 per state, so that was never a directive for the vast majority of sellers here. 

[ernest1983]

Just seems like it would be fairer to sellers if they did not have to pay fees on taxes paid by buyers & if the totals were reported in a more seller-friendly way.  Guess we just see the world differently. 

[ernest1983]

My point is that it seems fairer as a seller to only be paying fees to eBay based on the $75 sale price & not on the $25.  The latter is not coming to me so any percentage of that taken by eBay seems to be unfair.  That is my point.  And perhaps we just see the world differently.  

[evry1nositswindy]

eBay reports the GROSS.  When you do your taxes, the fees are part of the deduction that leads to your NET.  The extra fees are written off as deductions.  Fees have always been charged on the total transaction, which is the item + tax + shipping.  It doesn't really matter if we like it or think it is fair...it is just the way it is. 

[doc-holmes]

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@ernest1983 wrote:

My point is that it seems fairer as a seller to only be paying fees to eBay based on the $75 sale price & not on the $25.  The latter is not coming to me so any percentage of that taken by eBay seems to be unfair.  That is my point.  And perhaps we just see the world differently.  

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Here's the problem...business has never been about being fair. It's about making as much money as you possibly can. That's the only reason eBay exists. They're never going to lower fees and make less money, their shareholders would throw a fit. So, most people realize getting worked up about it will only raise your blood pressure, it won't accomplish anything else. 

[solidguitar1961]

Ebay as a collective generates way more than that. 

The ruling also allowed states to pass laws requiring out-of-state sellers to collect the state’s sales tax from customers and send it to the state. Thirty-one states have since enacted legislation allowing them to collect sales taxes from online businesses.

A South Dakota law that went into effect March 1 requires companies that provide a platform for sellers, such as E-Bay and Amazon, to pay online sales taxes.

[mam98031]

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@ernest1983 wrote:

What I am saying, though, is that eBay calculates fees I pay to them based off the sale price, taxes & shipping.   So I pay a fee to eBay on the taxes the item’s buyer paid to the government.   

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We all know that.  It states it in the Seller Fee policy.  

When Ebay became our Money Processor, the FVF on sales tax started.  As I explained earlier in the thread, before that PayPal was our money processor and it was PP that charged us the fees on sales tax.

So yes, for every $10 of sales tax the buyer pays, you would pay about $1.32 in FVFs to Ebay.

And yes we all pay this and yes we have all paid the FVF on shipping for more than a DOZEN years and the FVF on sales tax since the summer of 2020 or whenever it was that you transitioned into Manage Payments.

It appears you have been selling for awhile.  Odd that it took you this long to learn about the details of how the FVF is charged.  This is new to you, but not to most sellers.

[mam98031]

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@ernest1983 wrote:

The 90 day total of what my items sold for when I add it up is a much lower figure than what eBay says.   Because they are including taxes & shipping in the total sale price & that is what they report out.  Not a helpful number for me & seems misleading.  

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Do you mean report on the 1099K?  If so, here is the policy.

What's included in Form 1099-K

As Form 1099-K is an IRS information return, it includes the gross amount of all reportable payments within a calendar year, based on when funds settle to eBay, not necessarily when funds are received by sellers. This amount does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts. This means that the gross amount on your Form 1099-K may not be the final reportable amount on your tax return. You should consult your tax advisor to determine how best to use the information on your Form 1099-K when filing your personal and/or business income tax return.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794

For clarity, in the policy where it uses the word "settle or settled date" that is actually the Payout date.  The date Ebay releases the Payout to the seller [not when it reaches the seller's bank].

Yes, you are responsible for keeping your own sales records and your COGS [cost of goods sold].  Ebay is not our personal bookkeeper nor have they ever been that.  Yes, you need to track all your costs, not just your costs that happen in Ebay.  You need to capture your shipping supply costs, product costs, etc.  Ebay does not have those numbers but you should.

You keep saying this or that is "misleading".  In reality it is not.  Ebay does clearly explain things, you have just chosen not to read the controlling policies or learn the details.  That is on you, not Ebay.

[mam98031]

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@ernest1983 wrote:

Bottom line, I pay a fee to eBay based on the taxes a buyer pays to the government.  Seems unfair.  

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As does everyone else.  You are not being singled out.

Why has this suddenly became "unfair" to you?  Why is it different for you now as opposed to 4, 5 or 10 years ago?  What has changed for you?

[monroe67]

"Bottom line, I pay a fee to eBay based on the taxes a buyer pays to the government.  Seems unfair."

Bottom line, my selling ID also pays a fee to eBay based on the sales taxes her buyers pay to their states' governments.  
That seems fair to me.  

[mam98031]

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@yoonix1 wrote:

EBay is, and always has been transparent on fees and taxes. It's up to Sellers and Buyers to read it and understand it. There is No Exorbitant & misleading. You're mistaken by assuming that you pay fees on included sales tax. EBay collects sales tax paid by the Buyers, and does not include this amount in your total sale while calculating your fees.

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That is not correct.  Ebay does charge the FVFs on sales tax.  They have since they took Managed Payments site wide.  Before that we paid PayPal their fees on the sales tax.

[mam98031]

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@goodbrakes wrote:

Not sure what state you are in but if we make a sale of $1 or $10,000 there is sales tax that is due. There is no threshold on that amount. Threshold is for the amount that you have to report as income not sales they are considered different.

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Sales tax is a tax charged by some STATESl

Income taxes are Federal.

[mam98031]

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@boomersbiz46 wrote:

Every one of ebay's screens shows a different total. If you want to know what you REALLY made , you have to look at your payout. Ebay shows totals that the buyer paid to show case  the grand totals and make you feel better...just figure about 30% of that "grand total" is what you really made. Also their 1099 shows that "grand total" so make sure you don't use it to report your income taxes.  Just saying. 

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Not exactly.  Payouts don't = "what you really made".  Payouts do not take into consideration your shipping supply costs, inventory costs, etc.  

Ebay shows you the grand totals / Gross amount paid, NOT to "make you feel better", but to tell you how much money has entered your MP account.