eBay

yveandall · ‎01-28-2023

When did Ebay start charging fees/commission on sales tax? Do we have any input on this? It's rather greedy.

wastingtime101 · ‎01-28-2023

@yveandall wrote:
When did Ebay start charging fees/commission on sales tax?

I don't remember exactly, but I think it was in 2020.

dbfolks166mt · ‎01-28-2023

EBay started charging FVF's on sales tax when they started collecting sales tax in the wake of the Supreme Court decision in Wayfair vs South Dakota in 2018. The dates differ on the individual states but 45 states implemented ecommerce sales tax at various times after the courts decision.

In addition to the state sales tax there are over 10,000 separate town, city, county, parish..... tax laws that eBay also collects and charges fees against.

paraphernalia_palace · ‎01-28-2023

Well you do know corporate greed IS the American way.

m60driver · ‎01-28-2023

@paraphernalia_palace wrote:
Well you do know corporate greed IS the American way.

Uh, once the courts ruled that online merchants must collect state sales taxes then it was always going to be part of the transaction fees that they too applied to the taxes in the same way that merchant fees have been applied to sales taxes for generations.. Ebay may very well be greedy but this was a result of a legal ruling and not due to greed.

dbfolks166mt · ‎01-28-2023

Well you do know corporate greed IS the American way.

I would be surprised if eBay is making much, if anything, on collecting, remitting and managing the software required to handle the sales tax. For a $100 item with a state sales tax rate of 8% and a 12.9% FVF you are talking a whopping $1.03 addition to the FVF's. Factor it into your pricing.

In exchange eBay has to manage the collection and remittance of the tax to the states on a periodic basis and adjust software programs as the tax laws change. All of this requires resources: people, software, office space, etc. which gets paid out of that minor fee. From my perspective it's cheap accounting service.

lepke1979 · ‎01-28-2023

@dbfolks166mt wrote:
Well you do know corporate greed IS the American way.

I would be surprised if eBay is making much, if anything, on collecting, remitting and managing the software required to handle the sales tax. For a $100 item with a state sales tax rate of 8% and a 12.9% FVF you are talking a whopping $1.03 addition to the FVF's. Factor it into your pricing.
In exchange eBay has to manage the collection and remittance of the tax to the states on a periodic basis and adjust software programs as the tax laws change. All of this requires resources: people, software, office space, etc. which gets paid out of that minor fee. From my perspective it's cheap accounting service.

Realistically, it's probably not that bad. After some up front programming. They most likely are subscribed to feeds that keep track of all the stuff based on zip codes and what is taxed depending on category.

For instance, back when I did support on POS software we had to answer questions for some stores that sell clothing and I guess it's tax free if it's under $100. Not to mention some states do tax free days.

In any event. After the service figures out the amounts. They'll be tied into whatever services the states have to transfer the money at least once a month. Possibly even daily. Although it wouldn't surprise me if some states are mailed a check.

Barring that. Even if they didn't take a percentage on sales tax. They'd probably just increase their cut. So in the end it's a wash. At least the current way, you have a chance to not pay the fee on states with low or no sales tax.

chapeau-noir · ‎01-28-2023

A brief search will bring up hundreds of posts about this. 😒

“The illegal we do immediately, the unconstitutional takes a little longer.” - Henry Kissinger

"Wherever law ends, tyranny begins" -John Locke

joliztoyco · ‎01-28-2023

10-27-2022 06:12 AM

@casewayproducts wrote:
For Ebay, why in the world are fees being applied to Taxes?

"Is Ebay your first foray into retail sales? I fear you lose credence when you ask this question as applying such fees on tax is universal and long predates the advent of online sales. "

Why do people keep SAYING THIS???
Charging you fees on taxes is NOT the norm.!!
My employer doesn't charge me 12.9% to pay my Federal and State taxes.
It's "baked" into their business model and it's part of making money off my labor.
We went to Olive Garden. When I paid my bill they "withheld" my sales tax. Did they charge me 12.9% for doing so? Not in a million years. Because it's "baked" into their business model .
And Darden has OG's in almost every state. Evidently they must be smarter than Ebay, as they have figured out how to pay ALL these taxes to myriad states and cities without charging a fee to the people making them money.
Credit cards are NOT charging "fees" to handle taxes. So quit saying it!!!
They are charging "fees" because they lend you the money to make a purchase. Or pay a bill. HUGE difference!!! They don't care if there's sales tax or not. They just charge a fee on the TOTAL amount of what they're lending you. Period!! Remitting sales tax to whatever entity the tax is owed is a cost that's baked into their business model. And if they dared to start charging an extra fee to process taxes?
They find their cards shredded in microseconds.
And Ebay is not "lending" any money to anyone. Not even close.
And we could have a whole new debate as to why the "buyers" aren't paying the tax processing fee instead of the sellers.
I can EASILY find small business tax programs online (cost:6-7 hundred dollars) that track and pay sales taxes to ALL towns, cities, and states! It updates DAILY on changing rates and at the end of the quarter, or year, you hit a button and BOOM> All taxes are paid. It's simple. It's easy. A 14 year old could do it.
But Ebay won't allow us to do this. Why?
Ebay is probably generating hundreds of millions of dollars of profit annually by charging these "tax handling" fees.
For those claiming it's only a "small amount" let's do some hypotheticals.
Using Ebay's stats they did 100 BILLION in merchandising volume in 2020. Tax rates vary...so let's round it off to 5% sales tax. Which means Ebay collected 5 Billion in tax revenue to be doled out. So what's 12.9% of that?
A "paltry" 645 MILLION??? For something that can be accomplished with a few simple tax programs and a half dozen employees? Yeah....that's a pretty cool income stream for Ebay.
I can talk myself blue in the face over this but too many sellers have just resigned themselves to "that's the way it is".
Okay then...."that's the way it is".
Rant over.....

dhbookds · ‎01-29-2023

But Ebay won't allow us to do this. Why?

Because the states added the "marketplace" tax remittance requirement in their laws..........ebay had no choice.

joliztoyco · ‎01-29-2023

And almost ALL apply to a minimum of 100,000 to 500,000 dollars in gross sales. I don't know about you, but I hardly qualify.
Next?

soh.maryl · ‎01-29-2023

The state sales tax that is charged to a buyer is applied to every purchase eligible per the laws of every state. There is no minimum. When I buy a bag at my local grocer (Save-A-Lot) the state sales tax is applied to my 15 cent purchase.

valueaddedresource · ‎01-29-2023

@dbfolks166mt wrote:
EBay started charging FVF's on sales tax when they started collecting sales tax in the wake of the Supreme Court decision in Wayfair vs South Dakota in 2018. The dates differ on the individual states but 45 states implemented ecommerce sales tax at various times after the courts decision.
In addition to the state sales tax there are over 10,000 separate town, city, county, parish..... tax laws that eBay also collects and charges fees against.

@dhbookds not exactly - eBay didn't actually start charging the full FVF on sales tax until they introduced the "simplified fee structure" for Managed Payments in 2020, so there was a period of time when eBay was collecting taxes for some states under marketplace facilitator laws but not applying the full FVF on that amount.

As eBay was enrolling the first batches of sellers in MP, they still had FVF split out separately from the payment processing fee. When the Final Value Fee was separate, it was charged on the item price + shipping, not including sales tax. Sellers still paid whatever Final Value Fee was applicable for their category and store subscription level, plus a 2.7% payment processing fee (later adding a $0.25 per item fee as well). So it was basically like how it had been before with PayPal.

Then in May 2020, eBay announced the change to a new "simplified" fee structure starting July 20th, 2020. The simplified fee would be Final Value Fee and Payment Processing Fee rolled into one, plus a $0.30 per transaction fee.

In the original announcement eBay had said the new fee would include tax starting on August 12th. This was later pushed back to September 1st. So from September 1st 2020 onward, the full simplified fee has been applied to the total order amount of item price + shipping + sales tax.

valueaddedresource · ‎01-29-2023

@m60driver wrote:
@paraphernalia_palace wrote:
Well you do know corporate greed IS the American way.
Uh, once the courts ruled that online merchants must collect state sales taxes then it was always going to be part of the transaction fees that they too applied to the taxes in the same way that merchant fees have been applied to sales taxes for generations.. Ebay may very well be greedy but this was a result of a legal ruling and not due to greed.

@m60driver when these laws were initially passed and eBay was initially rolling out Managed Payments, eBay had kept the FVF and payment processing fees separate, which meant the FVF was not being charged on sales tax.

That put them much more in line with industry standard, like PayPal and credit card companies which do apply processing fees on the full amount including tax, usually in the realm of about 3%.

It was 100% eBay's decision in 2020 to move to a "simplified" fee structure for Managed Payment that lumped payment processing and FVF together and 100% eBay's decision to then apply that full ~13% average to the total including tax.

That part was absolutely a business decision made by eBay to profit off of their tax collection obligations and is not at all the result of any legal ruling whatsoever.

No other competing marketplace (that I'm aware of) applies their full commision fee on sales tax amounts. eBay is absolutely way outside industry standard on this one and that is 100% on them, not anything to do with the law.

valueaddedresource · ‎01-29-2023

@lepke1979 wrote:
@dbfolks166mt wrote:
Well you do know corporate greed IS the American way.

I would be surprised if eBay is making much, if anything, on collecting, remitting and managing the software required to handle the sales tax. For a $100 item with a state sales tax rate of 8% and a 12.9% FVF you are talking a whopping $1.03 addition to the FVF's. Factor it into your pricing.
In exchange eBay has to manage the collection and remittance of the tax to the states on a periodic basis and adjust software programs as the tax laws change. All of this requires resources: people, software, office space, etc. which gets paid out of that minor fee. From my perspective it's cheap accounting service.
Realistically, it's probably not that bad. After some up front programming. They most likely are subscribed to feeds that keep track of all the stuff based on zip codes and what is taxed depending on category.

For instance, back when I did support on POS software we had to answer questions for some stores that sell clothing and I guess it's tax free if it's under $100. Not to mention some states do tax free days.

In any event. After the service figures out the amounts. They'll be tied into whatever services the states have to transfer the money at least once a month. Possibly even daily. Although it wouldn't surprise me if some states are mailed a check.

@lepke1979 - you're right, the incremental ongoing costs to eBay beyond the initial set up years ago are likely not that high (relatively speaking for a company their size/available resources).

I believe early on eBay may have partnered with Avalara, though not sure if that's still true today, but it's likely they are using a customized version of existing 3rd party SaaS solutions instead of building their own program from the ground up.

Either way, in my opinion, if other marketplaces and payment processors can somehow manage to cover their costs of compliance at around 3%, there's no good reason eBay *needs* ~13% to cover theirs.

Not to mention I'm pretty sure the 15 year tax sharing deal eBay cut with the city of San Jose goes a long way toward covering those costs as well.

The deal designates all sales on the site that ship anywhere in California as having occurred at eBay HQ - thus allowing the city to collect the local tax that would normally be spread out amongst various cities in the state where buyers actually reside.

San Jose gets 1% of all CA sales and eBay gets a kickback of 30% of anything they collect over $5 million a year - estimated to be worth $150M to eBay but of course that could be more or less depending on how much tax they collect.

https://news.bloomberglaw.com/daily-tax-report-state/no-strings-attached-tax-deal-shows-depth-of-eba...