Why are taxes included in the ad fee percentage that eBay takes?

[big-time-deals]

I mean, obviously I know why since it allows eBay to charge sellers even more, but does anyone else think it's ridiculous that when eBay calculates the money they take from the ad fee the amount is calculated from the order total after tax is added?

Up until today I never paid much attention to it and just assumed it was taken off the actual pre-tax sale price.

I sold a $49.99 item and had my add fee set at 5.7% so after the buyer paid taxes the total came to $54.24 and I was charged a $3.91 ad fee, but if eBay would have calculated it from the actual pre-tax sale price I only would have paid $2.85. 

Granted, that's only a difference of $1.06 on this one item, but it adds up pretty quickly.

[dbfolks166mt]

There are hundreds of postings on this forum on the exact same subject. Following is my canned response. 

    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. "

[dhbookds]

 5.7% so after the buyer paid taxes the total came to $54.24 and I was charged a $3.91 ad fee,

54.24 x .057 =$3.09  ?

49.99 x .057= $2.85

[seconhandrosie]

Corporate greed. Just like the 'Promoted Listings' fees. Feebay executives need to buy those Spanish Villas and russian vacation homes.

[secondlifetreasures-llc]

That's how payment processors assess their fees. If you swipe your credit card at a store, they are also paying a fee on the entire amount of money that is being processed, including sales tax.

[seconhandrosie]

LOL! Feebay is making huge profits off charging fees on taxes. If you don't believe that, I have some great swampland for sale in florida!

[mybigsale]

@big-time-deals 

Why are taxes included in the ad fee percentage that eBay takes?

Because they can. eBay started adding Tax when calculating Ad Fee over the summer. Vocal eBay sellers are the biggest defender of eBay getting this extra revenue.

While sellers point out credit cards and some marketplaces charge a fee for processing tax, it is usually a 2-3% to cover the cost of processing the transaction. eBay appears to be the ONLY one that earns a transaction fee PLUS COMMISSION on state tax and then goes on to earn the AD FEE  on State Tax on top of their final value fee (eBays one final value fee was created by combining eBays original transaction fee with eBays original final value fee (commission). With the combined fee, math is always in eBays favor.

Sellers must know and understand all their eBays fees and price accordingly.

[ten_o_nine]

All credit card processors charge for the total transaction including taxes and shipping.

The problem with eBay is they are charging an average commission of 13.5% and applying the same to taxes and shipping.

In my opinion, processing the tax should be at separate percentage and should be in line with other credit card processors. It doesn't cost eBay 15% to remit taxes to states, it doesn't even cost 2%, eBay lumped it under their commission, commission is not payment processing.

This article was published in March of 2023.

Doing Your Own Business Taxes? Be Careful About Processing Fees (cardfellow.com)

[allthingssurplus]

Bad analogy,  CC companies are extending money (loan) to the person making the purchase allowing the Seller to make money, ligit fee.  Ebay is charging a high percentage for collecting sales tax that is not paid out as it comes in, only gets paid out this month for last months sales tax.  This allow eBay to earn on the sales tax as it sit until required to be paid out, its another profit center.  The collection of sales tax is a mandate on eBay to do so and should be a cost of doing business just like we have to eat returns.  

[big-time-deals]

Whoops you're right, they took $3.09, not $3.91. Either way, it's still crazy to calculate it this way.

[ten_o_nine]

In other words, eBay can charge a fee of 2.5% for processing taxes but they can't apply the product commission percentage on the tax since it's not the same across all categories, some sellers in different categories pay different percentages and that is not fair practice.

They say it simplifies accounting but applying a 2.5% processing fee is also very simple, any inexperienced developer could do it.

[big-time-deals]

Right, but that's not quite the same thing.... You're talking about a payment processor processing a charge. The ad fee isn't actually part of any charge on any card, it's just an amount that's calculated after the fact and taken out of the money that eBay collects from the buyer before they pay the seller.

[luckythewinner]

---

@dbfolks166mt wrote:

Following is my canned response

{snip}

I have always considered the eBay FVF's on sales tax to be the best accounting bargain around.

{snip}

There is NO WAY I want to take on that burden as a seller for $1.24 +/- out of a $100 sale.

---

Following is my canned response to your canned response.

Almost every state has an exemption for sellers under $100K / 200 transactions into that state. If eBay did not do it, you would probably not have to do it either.

[big-time-deals]

Maybe I worded my original post a little goofy. What I was asking is why the ad fee is calculated after eBay adds tax on the sale?

I understand that eBay collects taxes on behalf of the sellers and I definitely have no problem at all with that. My problem is that if I agree to pay 5% or 10% or whatever percent of a sale to eBay then I should be paying that 5% or 10% on the actual sale price that I'm receiving, not on the full amount after tax is added. 

[isaiah53-57]

---

@mybigsale wrote:

@big-time-deals 

Why are taxes included in the ad fee percentage that eBay takes?

While sellers point out credit cards and some marketplaces charge a fee for processing tax, it is usually a 2-3% to cover the cost of processing the transaction. eBay appears to be the ONLY one that earns a transaction fee PLUS COMMISSION on state tax and then goes on to earn the AD FEE  on State Tax on top of their final value fee (eBays one final value fee was created by combining eBays original transaction fee with eBays original final value fee (commission). With the combined fee, math is always in eBays favor.

Sellers must know and understand all their eBays fees and price accordingly.

---

Or choose to not buy or sell here at all due to unfair and absurd policies like this one as well as MANY others...