Why does ebay include sales tax in FVF?

[15toon96]

I don't understand why buyers sales tax is included in the calculation of sellers FVF

[johnrj1226]

eBay's previous payment processor (PayPal) did the same thing.

[mybigsale]

No they didn't. PayPal charged a low processing fee. They didn't earn a COMMISSION off our sale like eBay.

When PayPal was eliminated, eBay MP added a low processing fee to their  COMMISSION instead of keeping their Commission fee and then charging a processing free.

The result is eBay is earning an approximate  commission on top of what should be the transaction fee.

Processing fees are normally around 2.5%, commissions are normally around 10%. eBay MP only has one 12.5% charge. Sellers are charged a commission + transaction fee on Sales Tax and Actual Shipping cost (included in the new 12.5% rate).

[valueaddedresource]

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@jaja_2942 wrote:

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@dugoldstuff wrote:

One is ebay incurs a large cost in collecting, reporting and remitting the sales tax to the 43 states that currently require it. Ebay wants some compensation for that cost.

So why don't the states that get the sales tax that eBay is collecting for THEM pay eBay?

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Um @dugoldstuff they do pay eBay to collect the sales tax for them: eBay pockets a percentage of the sales taxes collected, then remits the remainder to each respective state.

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Then there's this nice little deal they made with the city of San Jose to count all California sales as occurring in San Jose so the city gets the extra % above the regular state rate - and eBay gets 30% of any collected taxes over $5 Million.

https://news.bloomberglaw.com/daily-tax-report-state/no-strings-attached-tax-deal-shows-depth-of-eba... 

https://www.sanjoseinside.com/news/san-jose-draws-scrutiny-from-state-leaders-other-cities-over-tax-... 

[inhawaii]

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@mybigsale wrote:

No they didn't. PayPal charged a low processing fee. They didn't earn a COMMISSION off our sale like eBay.

When PayPal was eliminated, eBay MP added a low processing fee to their  COMMISSION instead of keeping their Commission fee and then charging a processing free.

The result is eBay is earning an approximate  commission on top of what should be the transaction fee.

Processing fees are normally around 2.5%, commissions are normally around 10%. eBay MP only has one 12.5% charge. Sellers are charged a commission + transaction fee on Sales Tax and Actual Shipping cost (included in the new 12.5% rate).

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 So you would rather pay 2 separate fees , 1 to ebay and 1 to paypal, than 1 single combined fee to just ebay?   

[katzrul15]

Because they can.  So they do.

Easiest way for e-Bay to work to offset their tax compliance requirements. 

Never mind they cut deals all over the US to maintain tax collection compliance, so they negotiated to their benefit there as well. 

[artdecorri]

It doesn't make any difference what the fees are.

Learn how to apply margin to your expenses and price accordingly.

If your markups don't make you competitive with other sellers,  find another product or see if you can offset your expenses by lowering your costs. Pricing is all in the numbers. Don't blame the platform. Maybe your product will sell better on another platform that requires lower margins. Maybe you have to find a new source of merchandise or buy in greater quantity. Look to yourself for solutions. You run your business and the platform runs theirs. If sellers look to themselves for solutions instead of pointing their finger at the platform, they will see greater success and a confidence that will keep them moving forward. 

[artdecorri]

It doesn't make any difference what the fees are.

Learn how to apply margin to your expenses and price accordingly.

If your markups don't make you competitive with other sellers,  find another product or see if you can offset your expenses by lowering your costs. Pricing is all in the numbers. Don't blame the platform. Maybe your product will sell better on another platform that requires lower margins. Maybe you have to find a new source of merchandise or buy in greater quantity. Look to yourself for solutions. You run your business and the platform runs theirs. If sellers look to themselves for solutions instead of pointing their finger at the platform, they will see greater success and a confidence that will keep them moving forward. 

[mybigsale]

Of course not. I would rather eBay have 2 fees instead just adding a transaction fee on top.

TFEE = 2.5% Transaction Fee

CFEE = 10% Commission Fee

TotalTran  = Total Trans Cost (Item Cost + Shipping (0 for free shipping) + Tax)

ItemCost = Item Cost + Shipping (0 for free shipping)  - eBay Calculated Shipping 

EbayFee  = (TotalTran x TFEE) + (ItemCost x CFEE) , problem solved.

The result would be eBay getting a transaction fee on the transaction plus their commission on the Item. It also offers a way for eBay to be fair with shipping charges. They could definitely fix the shipping overcharge at least for sellers who use eBay Shipping (by only charging commission on shipping costs above the  actual shipping charged on eBay)

This would only charge the higher commission on the item and handling fees (Handling fee is their to keep eBay happy. No matter how sellers adjust item and shipping - they would still pay a commission on the shipping they charge above eBays calculated shipping rate).

[bimm_corp]

@alcoforever

>One is ebay incurs a large cost in collecting, reporting and remitting the sales tax to the 43 states that currently require it.

As my old Hungarian boss used to say. "Lofas". eBay, if they are following what has become standard online marketplace practice, has negotiated an arrangement with the states they are required to collect takes for and makes a nice percentage on the taxes it collects from the states. Just another profit center for eBay.

[dugoldstuff]

No they didn't. PayPal charged a low processing fee. They didn't earn a COMMISSION off our sale like eBay.

When PayPal was eliminated, eBay MP added a low processing fee to their COMMISSION instead of keeping their Commission fee and then charging a processing free.

The result is eBay is earning an approximate commission on top of what should be the transaction fee.

Processing fees are normally around 2.5%, commissions are normally around 10%. eBay MP only has one 12.5% charge. Sellers are charged a commission + transaction fee on Sales Tax and Actual Shipping cost (included in the new 12.5% rate)

I wonder why people on this thread can't grasp this, and you have explained it clearly again and again?

My take, therefore, is that's WHY eBay did it, because it wouldn't be grasped by the vast majority of sellers, PLUS would earn them just a tad more money on billions of individual sales, which would add up to a tidy sum in the long run. 

[dugoldstuff]

Then there's this nice little deal they made with the city of San Jose to count all California sales as occurring in San Jose so the city gets the extra % above the regular state rate - and eBay gets 30% of any collected taxes over $5 Million.

Yes.

   A woke corporation, shamelessly putting profit first! I'm shocked! [SARC]

   And, to top it off,  all the while, squeezing each penny out of sellers.

   Ya gotta love it:

"State Sen. Steve Glazer (D-Orinda), who’s been trying to outlaw such covenants, minced no words when asked about the bargain. “This deal represents the worst kind of corporate welfare,” he told San Jose Inside."

[mybigsale]

Thank you. Sellers seem to be for a fee and don't care or against a fee; when in actually eBay should just charge the CORRECT fees. Transaction fee for the transaction and commission on the item being sold.

There is really no justification for eBay earning the commission portion on Tax and Actual shipping costs. When you account for Tax and Shipping commissions I (and all sellers) need to price items to pay eBay this bounty. Either that or price your item based on a 15%-20% eBay commission to account for your item also having to pay eBays bounty on Tax and shipping.

I feel like I am preaching to the choir. For now I will adjust my prices (as all eBay sellers must do) so I can donate to eBays Tax/Shipping bounty. I have way to many unlisted items so I need to get back to business.

[mybigsale]

in response to  @dugoldstuff  

[valueaddedresource]

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@mybigsale wrote:

Thank you. Sellers seem to be for a fee and don't care or against a fee; when in actually eBay should just charge the CORRECT fees. Transaction fee for the transaction and commission on the item being sold.

There is really no justification for eBay earning the commission portion on Tax and Actual shipping costs. When you account for Tax and Shipping commissions I (and all sellers) need to price items to pay eBay this bounty. Either that or price your item based on a 15%-20% eBay commission to account for your item also having to pay eBays bounty on Tax and shipping.

I feel like I am preaching to the choir. For now I will adjust my prices (as all eBay sellers must do) so I can donate to eBays Tax/Shipping bounty. I have way to many unlisted items so I need to get back to business.

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@mybigsale  -  to add to your thoughts here, the way Amazon handles this on seller fulfilled orders is they do not charge any fees for Amazon collected Marketplace Facilitator taxes.  On seller collected tax orders, if the seller has opted to use Amazon's automated tax calculation feature, they charge a 2.9% processing fee on just the sales tax amount only, separate from the commission they charge on the rest of the order.

I think most sellers here would find a similar policy from eBay to be fair and acceptable (not to mention more in line with "industry standard").

[buyselljack2016]

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