commission charged on sales tax

[lupimania]

I am just wondering why ebay is charging commission fees on the sales tax.  The seller receives no monies from the collection of sales tax so why does ebay consider it part of the sale and taking our money.   I ask that ebay stop charging commission on my sales tax as sales tax is not part of my sale but added on by them.

[479*frost]

Hey Lupimania, don't cha just love how everyone turns things inside out here on the forum? Seems most of the people here making wacko remarks might just be a team of nits that work for etsy just to anger the people asking legitimate questions!!! I closed my store way back because of all the fees and hidden jargon they pull! Watch someone slam my response!! 🙂

[dbfolks166mt]

     This question has been asked 100's if not 1,000's of times on this forum. The responses are going to be the same as they were for the 100's of other postings asking the same question. 

[femmefan1946]

Sellers on here have no idea what it will be or if there even will be sales tax. It is impossible to calculate cost which any business that wants to succeed needs to know upfront

How much is sales tax in the USA?

Here in Canada it varies from 5% to 15% depending on province, so I'll use that as parameters.

We pay our fees based (in part) on how much sales tax is processed.

So on a $100 sale the tax might be $5 or $15.

But we don't pay that.

We pay 12% (or so) on the tax.

Which is 60c to $1.80.

Now if your business is going to fail because of $1.20, perhaps you should be looking at your business plan.

Remember as has been said before, you are required to charge Internet (state) Sales Taxes, but you are not actually doing any work to assess, collect or remit them. That job has been taken over by eBay.

Is it worth $1.20 not to have to think about how much to collect from each customer?

[pburn]

@espresso_warehouse wrote:

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🤣Another attempt at making things personal based on account statistics.

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That's exactly what you do every time you mention posting ids--which is pretty much every post.

I see others are catching on . . .

[jda04121]

If you can't take the heat you should be careful what you post.

[espresso_warehouse]

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@pburn wrote:

@espresso_warehouse wrote:

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🤣Another attempt at making things personal based on account statistics.

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That's exactly what you do every time you mention posting ids--which is pretty much every post.

I see others are catching on . . .

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The posting ID accounts are obviously the most problematic and intentionally disruptive to the OP. That's my consistent stance.

Meanwhile, you can't seem to decide and twist whatever way the wind blows. If an account posts something which upsets you, then it's fine to bring up account stats. But if someone else brings up account stats, you hide behind the 'posting ID' thing.

Whatever. I maintain a principled community would would encourage a principled marketplace. It's no wonder things are how they are.

[frugality_inc]

It's truly comical how I see people every day defending eBay charging the full FVF on the sales tax portion.

eBay will be charging the promoted listing fee on the sales tax portion beginning June 1st, 2022 as well. I guess that's just the cost of eBay collecting and filing it on your behalf in addition to charging the full 10%+ FVF.

These people have no idea how hard they're being screwed. Do you truly think eBay has that much overhead on remitting the sales tax? Let's dive further to get a good estimate on how much eBay makes.

Per eBay's 10K filing:

"In 2021, we generated $87 billion in GMV, of which approximately 54 percent was generated outside the U.S. We believe that GMV provides a useful measure of the overall volume of paid transactions that flow through our platforms in a given period."

Let's calculate an estimate eBay's US GMV:

$87B*0.46= $40.02B

Let's say an average sales tax rate of 6%. eBay makes it clear that they include sales tax in their GMV per their 10K filing.

Let's calculate an estimate of the sales tax eBay collected for US GMV:

$40.02B/1.06=$37.75B (before sales tax)

$40.02B(included sales tax)-$37.75B (excludes sales tax) =$2.27B rough estimate of sales tax for US GMV.

Now the fun part. eBay charges the full FVF on the sales tax portion.

Let's be generous and for example purposes assume all US sellers are top rated plus, have a Basic level eBay store or higher, and are also enrolled in eBay's Managed Payments. Your FVF in most categories would be 10.80%. This includes the top rated plus discount.

Taking the estimate of $2.27B in sales tax from US GMV and multiplying it by .108, you come out to $245,160,000 in fees eBay generated off of sales tax.

Of course there are payment processing fees and some overhead involved in handling this amount of sales tax.

Being generous again, let's give a 5% total cost of payment processing fees and overhead eBay incurs for the sales tax they collect.

Taking the total estimated sales tax from US GMV of $2.27B and multiplying it by 0.05, we come to a figure of $101,350,000.

A very generous estimate of the amount eBay profits in this example is $143,810,000. This figure is higher knowing that not all US sellers are top rated plus and overhead/payment processing fee for eBay is definitely not as high at 5%. I also excluded the rebates states give on the costs of sales tax collection.

eBay thinks you all are stupid. They get away with it because the crowd goes along with it.

[kds99]

Is your assumption that eBay under penalty of law has to correctly submit sales taxes to only 50 discrete States? If so, that represents an error of 3300 percent, as 1700 taxing authorities comprise the sales tax system as we know it, each one with a prescribed tax rate, (as well as exclusions) that change all too often.  I can't claim that costs as much as you estimate they collect, but it's not nothing.

[espresso_warehouse]

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@kds99 wrote:

Is your assumption that eBay under penalty of law has to correctly submit sales taxes to only 50 discrete States? If so, that represents an error of 3300 percent, as 1700 taxing authorities comprise the sales tax system as we know it, each one with a prescribed tax rate, (as well as exclusions) that change all too often.  I can't claim that costs as much as you estimate they collect, but it's not nothing.

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The only mention of states was in terms of state rebates which were not included in the calculation.

If you have information on remit costs that would be interesting to see.

[kh-leslie]

Hi everyone,

This thread is getting a bit heated and off-topic. Please remember that, while it is fine to disagree with others, discussion should always remain courteous and respectful. Please bring the discussion back to subject established in the original post.

Thank you for your cooperation.

[sub-woofer]

Ebay isnt providing anyone a service to collect taxes. This new tax law is required and ebay has to do it anyway. Collecting taxes is what they are required to do. So please dont make it like they are doing us a favor.

Now as for charging people a fee on top of a tax... thast just wrong..  Sellers dont sell a tax. that tax is not part of what we sell and shouldnt be part of a fee. But hey if you want to pay a fee on the tax then im sure walmart and every one else will love to start charging you a 13 % fee on the state sales tax .. I hope you realize that this is over 20 percent in money that you nor the buyer will ever see or benefit...  Happy with that? I didnt think so.

[downunder-61]

What it all boils down to is whether sellers are happy with that? or not, a decision can be made and is totally in the seller's control.

If a sellers business model can not support a 0.77c fvf on the sales tax component of a $100.00 sale then they do need to look at:

1. Revisiting their business model

2. Researching better sales venues

3. Slighly raising prices

This is eBays playground, and I doubt you will find a seller that will be jumping up and down yelling YAY - fvf on sales tax.............. but it is what it is and we want to benefit from the huge exposure eBay gives us in comparison to other market places, we deal.......

[laststopgeneralstore]

As with any other payment processor, they charge their fee on the entire sales amount. As stated in the terms & conditions that you read over & accepted. American Express, Visa, Mastercard, Capitol One etc.... All charge their "merchant fee" on the total sales, which includes the tax. This is how it works. If you had a brick & mortar store & accepted credit & debit card payments then you would be paying this exact same fee.

[mandisattictoyz]

Read the other 28,642 post about this this week alone.  It’s a fact that every selling platform charges their service fees on the ENTIRE TRANSACTION.   You still have to pay visa or Mastercard fees as a payment provider on the taxes you pay at the grocery store so why would it change for eBay?  I don’t understand what is so hard for millions of people to understand.  I’d rather actually these millions of people that don’t understand to just not sell because in the end they make all of us look bad and hurt the entirety of online selling.

[lupimania]

Actually they are now required by law to collect it so they are not doing it for free but under IRS requirements.  that being said commission is based off of sale.  Charging a commission on the tax when the seller receives no profit from tax is quite a **bleep** move and isn't thinking of the sellers best interests.  I have no issue paying my fair share of fees off of the sales i make but charging me 15% to collect the taxes is wrong and ebay is taking advantage of sellers as they really can't stop it.   I am not asking ebay to collect the taxes nor am i asking them to do it for free.  I sell tens of thousands of dollars a year and they make money from my actual sales so they don't need to monetize my tax collection especially since they are required by law.