New Internet Sales Tax changes - Seller is charged 2.9% of tax collected by paypal

[collins53422]

In the announcement regarding new changes to the internet sales collection, no one mentioned that paypal is charging sellers 2.9% of total sales tax collected. Oops!  

[hurryagain]

Hello @collins53422 

Yes, you are correct.  The PayPal percentage fees are being assessed on the sales tax as well.  One person commented (correctly) that a B&M store also gets charged the CC fee and the entire transaction including the tax...based on that info, I doubt that PayPal is going to change their way of processing the transactions.

...sigh...

[ga-8370]

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@collins53422 wrote:

In the announcement regarding new changes to the internet sales collection, no one mentioned that paypal is charging sellers 2.9% of total sales tax collected. Oops!  

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Previously, it was TWO (credit-card, etc) transactions (so PayPal pays two sets of credit card processor fees):

1. Buyer pays $1000 purchase, then PayPal takes 2.9% + 30 cents

2. Buyer pays $100 tax, then PayPal takes 2.9% + 30 cents

> Problem: eBay doesn't get the $100 it needs to remit to the state

Now, it's ONE (credit-card, etc) transaction (and just one credit card processor fee):

1. Buyer pays $1000 purchase + $100 tax, then PayPal takes 2.9% + 30 cents

Seller's PayPal account transfers (free, no fee)* $100 to eBay's PayPal account

> eBay gets the full $100 for the state

*eBay and PayPal share the kickback for collecting sales tax

[mam98031]

All payment processors like PP, Etsy, Amazon, etc., they all charge their fees based on the TOTAL amount processed.  They always have.

The difference you are seeing with PP right now is because as of Nov. 1st Ebay is having the sales tax put on our invoices for our buyers when Ebay has to collect and remit the sales tax.  Then it goes through either MP or PP.  Since it is now on the total, we are now paying the processing fees for the tax.  

In the past if you had to charge your buyer sales tax that you would remit to your state, it appeared on the buyer invoice and they included it in their payment via PP.  Those had the processing fee charged too.  It is always on the total amount that the money processor processes.