eBay

micromos · ‎06-08-2021

Is it legal for eBay to charge fees on taxes? Also, how are sellers able to predict their revenues on sales when eBay charges a fee (that is hidden) on sales tax since sellers can't predict who from which state will be purchasing their item? Maybe the answer is to automatically charge a handling charge to cover this. Any business attorneys want to jump in on this strange/smokey policy?

nickelsanddimes2015 · ‎06-08-2021

It's been going on for a couple years now even through PayPal. Theres no getting around it. Unfortunately a lot of your sales are under $10 so your profit margins will be low regardless because of getting charged the final value fee along with 10% for the shipping fee which hopefully you make a little on that to make up for the tax being taken out so you should be pretty close to breaking even for the taxes. Try and up the dollar amounts on your sales price that may help 🙂

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kensgiftshop · ‎06-08-2021

@micromos wrote:
Is it legal for eBay to charge fees on taxes?

Why wouldn't it be legal?

Payment processors and credit cards have been doing it for years.

Have a great day

collectfest · ‎06-08-2021

This issue has been discussed many, many, many times on these boards. May want to search for this topic in the search bar where you can hear many, many, many people venting and discussing this.😉

As to how I deal with making profit after all the eBay and inventory cost fees is making my starting price higher than all the fees. Don't forget Uncle Sam income tax.

Regards

nickelsanddimes2015 · ‎06-08-2021

It's been going on for a couple years now even through PayPal. Theres no getting around it. Unfortunately a lot of your sales are under $10 so your profit margins will be low regardless because of getting charged the final value fee along with 10% for the shipping fee which hopefully you make a little on that to make up for the tax being taken out so you should be pretty close to breaking even for the taxes. Try and up the dollar amounts on your sales price that may help 🙂

go-bad-chicken · ‎06-08-2021

@kensgiftshop wrote:
@micromos wrote:
Payment processors and credit cards have been doing it for years.

@kensgiftshop

It is true, payment processors have always charged their customers on the total sale price of any given transaction to include sales tax. But the difference is that they charge somewheres in the range of 1.5% to 5%.

With Managed Payments eBay is charging its sellers a significantly higher rate on the sales tax portion of any given transaction. Two of my accounts sell in the media categories and in those categories eBay charges a fee of 14.55% on the buyer's sales tax. And if it's a foreign buyer a 1.65% international transaction fee is added bringing the total fee on taxes collected to 16.2%.

So now when I have a sale of $150 going to the U.K. and the buyer is assessed 20% tax or $30, I now pay a fee of $4.82 (16.2%) on that $30 of tax.

So what eBay is doing through its Managed Payments fee structure is very different and A LOT MORE EXPENSIVE from what a traditional payment processor charges.

micromos · ‎06-08-2021

I think I will up the shipping fee a little every so often. Buyers have generally been desensitized to shipping over the years so that they just accept the cost any more unless it is outrageous. My baseball card shipping is fairly low compared to others I see. Thanks for the reply.

soh.maryl · ‎06-08-2021

You do know that you pay FVF on shipping, right?

soh.maryl · ‎06-08-2021

Wouldn't you imagine that eBay has a few (hundreds) of attorneys on their payroll who have determined that it IS legal?

wahlstreetmkt · ‎06-08-2021

@micromos wrote:
Is it legal for eBay to charge fees on taxes?

Yes.

wahlstreetmkt · ‎06-08-2021

@micromos wrote:
I think I will up the shipping fee a little every so often. Buyers have generally been desensitized to shipping over the years so that they just accept the cost any more unless it is outrageous. My baseball card shipping is fairly low compared to others I see. Thanks for the reply.

And that will be good for states that don't pay sales tax on shipping.

maxine*j · ‎06-08-2021

@go-bad-chicken wrote:
It is true, payment processors have always charged their customers on the total sale price of any given transaction to include sales tax. But the difference is that they charge somewheres in the range of 1.5% to 5%. ... So what eBay is doing through its Managed Payments fee structure is very different and A LOT MORE EXPENSIVE from what a traditional payment processor charges.

True. But when all sales were local, as in a brick-and-mortar, the cash register had to be programmed only for the location the store is in, just for the amount of sales to collect and what to collect it on in that particular jurisdiction. Later, that collected sales tax had to be remitted on a regular basis to the state.

But with sales tax now having to be collected and remitted for on-line sales to numerous states (and ultimately to all of them, I'm sure), it would be well-nigh impossible to handle it for most sellers. The programming would be a huge task, and collecting and remitting it would be a monumental one.

So, eBay handles all that and takes a bigger cut? For me, that is not a problem, although I accept that others may consider it one.

=

go-bad-chicken · ‎06-08-2021

@maxine*j wrote:
@go-bad-chicken wrote:
It is true, payment processors have always charged their customers on the total sale price of any given transaction to include sales tax. But the difference is that they charge somewheres in the range of 1.5% to 5%. ... So what eBay is doing through its Managed Payments fee structure is very different and A LOT MORE EXPENSIVE from what a traditional payment processor charges.
True. But when all sales were local, as in a brick-and-mortar, the cash register had to be programmed only for the location the store is in, just for the amount of sales to collect and what to collect it on in that particular jurisdiction. Later, that collected sales tax had to be remitted on a regular basis to the state.

But with sales tax now having to be collected and remitted for on-line sales to numerous states (and ultimately to all of them, I'm sure), it would be well-nigh impossible to handle it for most sellers. The programming would be a huge task, and collecting and remitting it would be a monumental one.

So, eBay handles all that and takes a bigger cut? For me, that is not a problem, although I accept that others may consider it one.

=

@maxine*j

I sell on multiple platforms, including eBay, as well as my own website. Contrary to popular belief on these boards not all online websites qualify as marketplace facilitators. And therefore I am responsible for collecting and remittance of sales tax for those sites as well as my own. For me that cost of compliance, when the sale is not taking place on a Marketplace Facilitator site, amounts to about an extra 3% of the total sale.

For most sellers who sell exclusively on eBay I under the that for you this extra fee can be chalked up as an extra convenience fee. For other sellers like myself who sell elsewhere and who are already collecting and remitting sales tax for ourselves, are more than likely going to view eBay's extra fees on sales tax as eBay made a conscious decision to monetize an untapped sector of their market place.

Furthermore when I see other sellers on these boards compare eBay's Managed Payments fees on the sales tax portion of any given sale to traditional payment processors I have to wonder. What traditional payment processor charges such dramatic and differentiating service fees based on what a user is selling. But on eBay under Managed Payments a media seller is going to pay $14.55 for every $100 in sales tax collected, while a coin seller is going to pay $70 for every $100 in sales tax collected, and a sneaker seller is going to pay $0 for every $100 in sales tax collected.

In what world other than eBay's would any business accept these types of terms from a payment processor?

go-bad-chicken · ‎06-08-2021

@go-bad-chicken wrote:
@maxine*j wrote:
@go-bad-chicken wrote:
It is true, payment processors have always charged their customers on the total sale price of any given transaction to include sales tax. But the difference is that they charge somewheres in the range of 1.5% to 5%. ... So what eBay is doing through its Managed Payments fee structure is very different and A LOT MORE EXPENSIVE from what a traditional payment processor charges.
True. But when all sales were local, as in a brick-and-mortar, the cash register had to be programmed only for the location the store is in, just for the amount of sales to collect and what to collect it on in that particular jurisdiction. Later, that collected sales tax had to be remitted on a regular basis to the state.

But with sales tax now having to be collected and remitted for on-line sales to numerous states (and ultimately to all of them, I'm sure), it would be well-nigh impossible to handle it for most sellers. The programming would be a huge task, and collecting and remitting it would be a monumental one.

So, eBay handles all that and takes a bigger cut? For me, that is not a problem, although I accept that others may consider it one.

=
@maxine*j

I sell on multiple platforms, including eBay, as well as my own website. Contrary to popular belief on these boards not all online websites qualify as marketplace facilitators. And therefore I am responsible for collecting and remittance of sales tax for those sites as well as my own. For me that cost of compliance, when the sale is not taking place on a Marketplace Facilitator site, amounts to about an extra 3% of the total sale.

For most sellers who sell exclusively on eBay I under the that for you this extra fee can be chalked up as an extra convenience fee. For other sellers like myself who sell elsewhere and who are already collecting and remitting sales tax for ourselves, are more than likely going to view eBay's extra fees on sales tax as eBay made a conscious decision to monetize an untapped sector of their market place.

Furthermore when I see other sellers on these boards compare eBay's Managed Payments fees on the sales tax portion of any given sale to traditional payment processors I have to wonder. What traditional payment processor charges such dramatic and differentiating service fees based on what a user is selling. But on eBay under Managed Payments a media seller is going to pay $14.55 for every $100 in sales tax collected, while a coin seller is going to pay $70 for every $100 in sales tax collected, and a sneaker seller is going to pay $0 for every $100 in sales tax collected.

In what world other than eBay's would any business accept these types of terms from a payment processor?

Edit to my post above.

A coin seller would be expected to pay $8.50 for every $100 in sales tax collected. Not $70.

wahlstreetmkt · ‎06-08-2021

@maxine*j wrote:
@go-bad-chicken wrote:
It is true, payment processors have always charged their customers on the total sale price of any given transaction to include sales tax. But the difference is that they charge somewheres in the range of 1.5% to 5%. ... So what eBay is doing through its Managed Payments fee structure is very different and A LOT MORE EXPENSIVE from what a traditional payment processor charges.
True. But when all sales were local, as in a brick-and-mortar, the cash register had to be programmed only for the location the store is in, just for the amount of sales to collect and what to collect it on in that particular jurisdiction. Later, that collected sales tax had to be remitted on a regular basis to the state.

But with sales tax now having to be collected and remitted for on-line sales to numerous states (and ultimately to all of them, I'm sure), it would be well-nigh impossible to handle it for most sellers. The programming would be a huge task, and collecting and remitting it would be a monumental one.

So, eBay handles all that and takes a bigger cut? For me, that is not a problem, although I accept that others may consider it one.

eBay most like uses an API or a tax rate table that is updated or added to daily so it's probably not that bad. Both would require a fee though. But it wouldn't be a lot of money.

Chances are, tax rate is included now because they can, maybe eBay thinks it makes sense to include it, or it just got overlooked.

Funny thing is, with how many people post here not even knowing shipping was part of the FVF or just didn't seem to realize those monthly invoices to eBay accounted for ~10% in fees. Making the math easier by including sales tax in the FVF fee was probably a happy accident. Can only imagine the algebraic equations posted here trying to figure out their fees from that.

mybigsale · ‎06-08-2021

eBays one fee is actually a transaction fee and a commission fee.

Charging an approximate 2.9% transaction fee like other "transaction processors" may be legal. Adding your 10% commission on top of the transaction fee may not be legal.

If it's legal then I am sure other "transaction processors" will soon raise their fees on Tax by over 300% to match eBay.

eBay is getting away with it because they are charging the sellers instead of adding their commission on top of the State Tax where it belongs. Who are the sellers charging? So the buyers pay - they just don't know it.