Paying fees on taxes collected by eBay

[bigpops65]

Hello all,

I wanted to start a conversation around the fees collected by eBay. I have returned to selling after about a 3 year hiatus. I was looking at the fees collected by ebay and noticed that they collect taxes from a buyer, but then I, as the seller, is pay a fee on those collected taxes. That has to be illegal, right? I am not receiving those funds, I am not responsible for those funds, it is collected by eBay, but I pay a fee on that before they deduct it from the sale?

I am crazy on this? What can be done because I don't believe this is legal. Interested to hear others opinions on this. Thanks in advance and sorry if this has been covered previously.

[mordecai8614]

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@bigpops65 wrote:

sorry if this has been covered previously.

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Almost daily...

[soh.maryl]

It is not illegal.  (Wouldn't eBay have an established crew of a few (hundred) lawyers to make sure of this?

A few years ago, the Supreme Count established that STATE SALES TAX could legally be charged on online purchases.  There are about 45 or so US states that have started doing this.  eBay has to keep track of multiple state sales tax rates not to mention the variations in counties, districts etc that charge sales tax.  If they didn't do this, individual sellers would have to do it.  This would involve at least thousands of variables.  Many sellers don't resent the fees they are paying for eBay to do this for them.  

[buyselljack2016]

Thread # 892,567 on the subject.

It's legal to charge a fee on the entire amount of the payment being processed.

To be noted, you agreed to it when you listed your items for sale.

PayPal, when processing payments charged a fee on the sales tax amount, so nothing new.  The fee was at a lower %age, but they did charge a fee.

[kensgiftshop]

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@bigpops65 wrote:

What can be done because I don't believe this is legal.

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Nothing.

What makes you think it's not legal?

Payment processors have been basing their fee's on the total amount paid forever, it's nothing new.

[inhawaii]

Yes, it is legal.

What can be done? 

Nothing, except you leaving the platform in protest.

[marnotom!]

As per the user agreement, fees are based on the entire transaction value.  Taxes add to the transaction value, as does shipping.

When you use a credit card to pay for an item online or in a store, the credit card processor also bases its merchant fees on the entire transaction value, which includes taxes and tips.  Nothing illegal about that, either.

[onlinecentral]

Old timers who owned or worked in a store 55 years ago will tell you the industry standard thing is to compute the fees on the ENTIRE amount. Paypal has been doing it since 1998. You were paying fees on the ENTIRE amount before you started your hiatus 3 years ago.

[funfactorychannel]

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@inhawaii wrote:

Yes, it is legal.

What can be done? 

Nothing, except you leaving the platform in protest.

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wrong, run for congress, make a voting block to ban this type of charge! Maybe he be inspired by this travesty to do this.. 🙂

[chapeau-noir]

A conversation, you say?

[dbfolks166mt]

     This has come up so often I actually have a canned response that I cut and paste in. 

       You can blame the 2018 US Supreme court decision in Wayfair vs South Dakota for this one. The ruling basically stipulates that states may charge tax on purchases made from out-of-state sellers even if the seller does not have a physical presence in the taxing state. After the Courts decision individual states began to pass individual state laws regarding sales tax on interstate ecommerce sales. Missouri was the last to do so effective January 2023.

     That being said I have always considered the eBay FVF's on sales tax to be the best accounting bargain around. If you sell a $100 item to a buyer in a state with 8% sales tax the FVF on the $8.00 in sales tax amounts to 13.25% * $8.00 or $1.08 if you are promoting at 2% that adds another $.16 so the total FVF on the sales tax is $1.24. 

     For that $1.24 eBay keeps track of the 10,000 various state, county, city, parish, municipality..... sales tax rates, and laws, and applies and collects the proper sales tax from the buyer. The sales tax percentage may also vary depending on the type of items you are selling since some states, counties, cities…. Tax different items differently. Food and clothing for example. EBay then remits those collected funds to the 45 states with sales tax laws on whatever periodic basis is required. There is NO WAY I want to take on that burden as a seller for $1.24 +/- out of a $100 sale. "

[stainlessenginecovers]

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@funfactorychannel wrote:

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@inhawaii wrote:

Yes, it is legal.

What can be done? 

Nothing, except you leaving the platform in protest.

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wrong, run for congress, make a voting block to ban this type of charge! Maybe he be inspired by this travesty to do this.. 🙂

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Not everything can be 'brought up to a vote'. This is one of them. 

Stores, way before the internet, have been charged that by their processors since the advent of the credit card. 

But if somehow it miraculously did get 'banned' then ebay could just either charge 20% Final Value Fee, or a flat rate per order to 'cover the sales tax processing' using some type of 'average'. 

Ebay will STILL win (and they are NOT even the ones charging that- it's Ayden, the processor)

Plus- it's ONLY so VERY transparent and clear when a member lists an item

[johnrj1226]

At one time  American Express was the only company to charge a money processing fee.  Visa & Master Card D\did not.  On a business trip to Mexico in the late 80s I checked to a hotel and they would not accept  my AX card (company issued).  Had to use my personal card Visa - no issue.   That the was strange 'cause Carl Mauldin advertised for  AX "Don't Leave Home Without It".  Asked why the wouldn't  accept AX, reply 'cause they charge a a fee.  Now every one I know charges a processing fee.

[dbfolks166mt]

@inhawaii wrote:

Yes, it is legal.

What can be done? 

Nothing, except you leaving the platform in protest.

wrong, run for congress, make a voting block to ban this type of charge! Maybe he be inspired by this travesty to do this.. 

     Even if you managed to get a law passed to prohibit the application of merchant fees to sales tax business would already be one step ahead of the bills passage in putting something else in place to avoid the loss of the revenue. 

     Even if the bill passed into law it would probably immediately come under review by the US Supreme Court. 

[funfactorychannel]

means lots of re-elections 😄