NEW FEES ON TAXES

[micromos]

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? 

[micromos]

I guess what bothers me is that I cannot predict before I list, how much I will make on an item because the sales tax on the item is not know to me before it sells since it varies from state to state.  I only know after. What business operates not knowing how much they will make before hand. Slapping a arbitrary dollar amount on one's sale price is sloppy business to me. We are just expected to trust eBay (especially in regard to reporting our income to the IRS) unless we want to go crazy with checking into every sale we make.  It's only a few dollars for me due to my small sales numbers but some sellers are  very large . 🤔

[wahlstreetmkt]

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@micromos wrote:

I guess what bothers me is that I cannot predict before I list, how much I will make on an item because the sales tax on the item is not know to me before it sells since it varies from state to state.  I only know after. What business operates not knowing how much they will make before hand. Slapping a arbitrary dollar amount on one's sale price is sloppy business to me. We are just expected to trust eBay (especially in regard to reporting our income to the IRS) unless we want to go crazy with checking into every sale we make.  It's only a few dollars for me due to my small sales numbers but some sellers are  very large . 🤔

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The money you make on a sale is not much different than it was before (excluding items that sell for less than $10 and sale caps). If you don't have a rough idea of what you'll make on a sale, that's on you. It can depend on the processor and the terms, but depending on the card used for B&Ms and whatnot, you can have a variable rate on the transaction too. One card might be ~2.5% +.30c. Others might be as high as ~5% or 6% +30c (usually AMEX). Oh yeah, you also get to pay a monthly fee. Is one of the reasons Square or PayPal is popular with their flat rates.

To make it easier for you. Just assume it will be 15% in fees. More if you do promoted listings.

And no, don't fully trust eBay. But the handful of sales I looked at on my end. The math seems to check out. Either way, you should be keeping track of your sales to make sure things look right.

[mybigsale]

The solution is really simple, if eBay wanted a solution. Instead of having one fee that just added a transaction fee to their commission fee, have a transaction fee and and a commission fee.

Transaction fee (2.9%?) charged against total transaction.

Commission fee (10%?) charged against Item Price + Shipping Charge (0 for free shipping) - Actual  eBay Shipping cost

Add the two fees (and don't forget eBays 30 cents)

A Fair fee that doesn't charge sellers an approximate 10% COMMISION on Tax and Shipping yet still prevents sellers from manipulating the fee with shipping charges (works for sellers using eBay Shipping).

[go-bad-chicken]

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@mybigsale wrote:

The solution is really simple, if eBay wanted a solution. Instead of having one fee that just added a transaction fee to their commission fee, have a transaction fee and and a commission fee.

Transaction fee (2.9%?) charged against total transaction.

Commission fee (10%?) charged against Item Price + Shipping Charge (0 for free shipping) - Actual  eBay Shipping cost

Add the two fees (and don't forget eBays 30 cents)

A Fair fee that doesn't charge sellers an approximate 10% COMMISION on Tax and Shipping yet still prevents sellers from manipulating the fee with shipping charges (works for sellers using eBay Shipping).

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@mybigsale 

You nailed it. This has always been my argument against the way that eBay's Managed Payments fees are structured. For almost the first 2 years eBay led sellers to believe that this is how Managed Payments would be structured. A FVF to include shipping + an additional payment processing fee to include the total sale including sales tax.

I was very ok with this setup as it would somewhat insulate sellers against high sales tax states as well as protect them in the the event that a state raised their sales tax rate, by only assessing a fee of 2.9%.

But now that eBay has combined both the FVF and the payment processing fee, sellers are always going to be left with paying much higher fees now and in the future.

[mycheaperstuff]

My reply to your question is a question.

I calculate that eBay took $0.64 final value fee on the Gil Hodges card you sold for $1 with $1.50 shipping if you sold to a buyer paying 10% sales tax on price and shipping.  How do you justify that to yourself? Does eBay earn $.64 to your $.36 for that sale?

BTW Of the $.64 final value fee, the fee from the sales tax alone is $0.03.

I agree with others in that, it probably isn't illegal to charge a commission or other fee on sales taxes.  eBay lawyers will have checked.... But it seems like it should be.

After all, it has been posted that eBay is already compensated for its collection activity by tax authorities. They remit less than they collect. They remit at a discounted sales tax rate, but collect at the full tax rate.  

Same with shipping costs. eBay charges sellers less than retail postage cost, but eBay pays USPS even less than that.

buy having to remit sales tax at a discounted rate. also receiving payment for sales tax collecting from the tax authorities already compensated for the cost of collecting by remitting at a discount sales tax rate it It isn't a legal issue that eBay charges a fee on sales tax, it's an ethical and Keep in mind, eBay also pays less tax than it collects.

profits from remits less sales tax to tax authorities  than it collects. eBay also makes money from the tax authorities  from sales tax collection made money from the jurisdiction to whom the sales tax is to be paidon the sales tax on the shipping label (they charge sellers less than the retail price, but they pay USPS even less than that ) and sales tax (they collect at the stated tax rate, but many states let them pay the tax at a discounted rate as a consolidated payer). 

[zenlama]

They have been sued and lost before and had to payout to sellers. It's stomach-turning how they just keep taking from the sellers to show profits to stockholders so Execs can keep their overpaid compensation packages. They always seem to take it a bit too far (greed) so I will not be surprised to see another class action suit or other charges in the future.

[toysaver]

"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?"

I have no reason nor the time to predict revenue.  I just count the bank deposits.

[vg7]

I just had to pay $12.35 more in eBay fees because my buyers' sales tax was $100. It is a crime!!!

[micromos]

It's a cheap shot by eBay.

[donv_1]

Legal probably, but bad practice unless you have direct competitors not charging it, or with a lower cost/fee structure that is more seller friendly. Without, there is no limit to the fee abuse that you can charge. IMHO 

[dbfolks166mt]

     I have mixed feelings about the eBay fees that are charged on the sales tax. Given that I don't really want to spend xx hours every month or quarter, depending on the state, filling out, filing and remitting sales tax to some 40+ individual states that have passed ecommerce sales tax laws. So in that respect I am fine with eBay handling this for the additional fee, although I am not sure they really need the money. I would suspect eBay has a lot of technical and people resources allocated to this process. 

     I do agree it makes it very difficult to calculate your pricing structure and you are almost forced to use an average U.S. sales tax rate which is around 7% sometimes you are going to come out ahead and sometimes you will be short. While it is easy to find the individual sales taxes for each state what is not so apparent on the surface is any local municipality tax that may be in addition to the regular sales tax and can add an addition 4-5%. 

but the same problem exists when you offer free shipping in factoring that into your price. You almost have to calculate your shipping cost at the highest cost based on where the buyer is located. For me that is from Virginia to the West coast. Kind of  an injustice to the buyers closer to me where the cost is less 

[sweeetdeals4you]

At this time i was told hold on to all your records. because the time will come when a class action lawsuit will come an you can get in on it.  as it has happen in the past.  company's that are greedy always get it in the end. 

Then they lose it all.

[karriboo]

Upping shipping because you think buyers are desensitized?  Have a look and see just how many items sit being passed over because shipping is too high! Ebay is on it's way out but they don't realize it yet. Sellers like you are helping it even more. There are other sites up and coming. Many with cheaper fees shipping and prices. Sellers who gouge should just go belly up. You don't pay tax in a garage sale (and ebay is the biggest garage sale going) so why should the buyer be forced to first pay a tax to a state/country they don't live in and then eBay again for luxury of them collecting the tax. When you passively sit by and say nothing to scams like these then they get bigger and bigger. Don't be such a fool!

[north40sales]

eBay's pass through sales volume required that they act as a marketplace faciliator for the purposes of collecting and remitting sales taxes on sales generated on their platform.   It was not a business decision or marketing thing for them....they were required to do it.  

For individual sellers like a  B&M store with a company website, your volume may fall under the thresholds for tax remittance other than in your own state.  

But with all of your your sales on the eBay platform, it would be a taxed transaction which eBay collects and remits the correct taxes to the correct taxing entities. 

as for the fees...eBay calculates fees on the total order value collected from the buyer which includes the final value of the item, S&H, and taxes plus the .30 Transaction fee.  If your coming up short, consider upping your S&H amount to help offset the fee load.

[qualityrandomitems]

It is total **bleep** that eBay charges a full final assessment fee on even the tax amount.  So in a high tax state (7-9+%), on expensive items (over $1000), you are going to lose a LOT more money than planned and there is nothing you can do about it!  Effing ebay should only charge the 2.9% on tax like paypal did. Instead, they charging 11-15%... effing thieves.