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

[alcoforever]

Couple reasons.   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.   Another is just to make FVF calculation simpler.   It is much harder to program different FVFs according to what the FVF is on.   Another is that it is normal practice for a money processor to base their fee on the total amount paid by the buyer.

Finally, if ebay were to discontinue FVF on sales tax, it would lower ebay's profit.   That is not something ebay would ever do voluntarily so to make up for it, ebay would increase the FVF on the item and shipping, probably to around 15% for most items.    So, in the end, one way or another, you are going to pay.

[collectfest]

It's the rules they have set up. Same question could go for why the do for shipping fees.

You'll get a BUNCH of opinions, I am sure they are coming, one being they collect all the money and some states are requiring getting their sales tax money. eBay is managing this for us. So, that's how I can live with it. Less work for me. Honestly I am more hung up on it being applied to shipping.

The are ALOT of boards you can search about this subject. I would recommend you give them a look if you are in the mood for a massive venting session. 😡

For me I've just accepted the rule and keep focused on what I can control....

Regards

[kensgiftshop]

@15toon96 

Just like other payment processors, their fee's are based on the total amount the buyer paid.

[luckythewinner]

Because they like money 🙂

[kennys-kollectibles]

They like everyone's else money......

but,  I live in Oregon and we dont' even have a sales tax. 

Since my business is in Oregon, the items are in Oregon, 

and I see the payment coming in to my computer which is in Oregon, 

I should not have to deal with it, but I do.  

[dugoldstuff]

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?

They are the ones benefiting from this whole scheme, not the sellers. 

Why should the sellers have to pay for a service that the states get?

[jaja_2942]

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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.

[dugoldstuff]

@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?

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.

Um so then they are ALSO collecting a percentage of sales tax for sellers TOO?

Wow.

[theteamsetguy]

The laws states use to collect the tax are akin to “Use Tax” which is based on where the buyer is located versus sales tax which located where the sale occurs. Technically buyers were supposed remit the sales tax on their internet purchases when sales tax was not collected in the form of Use Tax but the law are not enforced because of difficulty collecting it. 

Since there are over 11,000 jurisdictions that collect sales tax in the US the fee we pay to eBay is small price to pay in order not to have to collect and send the taxes in myself. For example in Minneapolis, MN in addition to the state tax you have .15% to Hennepin County for the Twins stadium, .5% to Metropolitan Council for mass transit, and .50% to the city of Minneapolis for police brutality settlements, wrongful death settlements, and who knows what.

[mybigsale]

With eBay Managed Payment their fee increased because they just added a transaction fee to their commission fee (instead of keeping the fees separate). 

Reasonably thinking, the transaction fee would be charged on the complete transaction and then eBay would charge the Commission fee on the item cost plus the shipping and handling amount above the actual shipping cost (to keep buyers from lowering item price and increase shipping to try and save fees).

Having one fee is easier for eBay, but also results in an approximate 10% overcharge (estimated commission - estimated transaction fee) on Tax and Actual shipping.

$15 in actual shipping cost and tax for your Sold Item? - you need to charge accordingly to recoup that estimated $1.50 overcharge. Don't forget the extra .15 cent overcharge on your $1.50 recovery charge. 

[inhawaii]

Did you know that when you make a credit card purchase at any retail store the credit card processing company takes their cut from the total INCLUDING tax. It's done all over.  It's done all the time.  It's legal.  

[mybigsale]

Unlike other payment processors -  eBay has one fee that includes an approximated 10% Commission. So they make a processing fee plus a commission on not only the item but also tax and actual shipping costs.

Some sellers are upset, some sellers are concerned, some sellers don't care.

I am concerned, not upset. From a business perspective, eBay appears to be the best place to sell select types of items.

[jaja_2942]

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@dugoldstuff wrote:

Um so then they are ALSO collecting a percentage of sales tax for sellers TOO?

Wow.

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No, eBay collects 100% of the sales tax. None of it goes to the sellers.

[mybigsale]

I think the point you are missing is that credit card and other processors charge a processing fee.

Would you feel the same if your credit company sent notice that they are raising their 2.5% fee to 12.5% (so they can account for an added 10% commission on what you buy?)

eBays MP rate charges one fee that includes a combination of their commission and transaction rate now that PayPal is gone.