eBay fees for sales tax

[capt.john]

I just realized today that I am being charged eBay fees on Sales Tax. I see no valid reason why I should be charged fees for something I have no control over. Today I sold 4 similar items (fishing line) for exactly $50 each including the penny for shipping. Price and shipping identical, yet my eBay fees were different for each item. I can only assume the difference was due to different sales tax charged to buyers.

[forward-motion]

And here we go again.......

[johnjefprks]

I am glad eBay takes care of the sales tax for me. It is one less thing for me to worry about. It takes time to set up the system to collect the tax and then distribute it to the different states, monitor it, and keep it up to date.

[fab_finds4u]

 They charge because they are collecting the payment and then they have to put the proceeds in the right pockets. I guess they feel justified in charging a fee for handling the sales tax money. Would you want to collect and remit sales tax to all the states that charge sales tax and do that for free? 

[maxine*j]

PayPal also took its fee on the sales tax.  All payment processors take their fee on the TOTAL amount charged to the buyer -- merchandise, handling, shipping, surcharges, sundry costs, sales tax.  It has been that way since the invention of the credit card.

For much detailed information discussion on this topic, click on this link, and scroll down, and then scroll through page after page, to read more on this forum alone:

https://community.ebay.com/t5/forums/searchpage/tab/message?advanced=false&allow_punctuation=false&q...

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[inhawaii]

We get one of these posts at least once a day.

Yes it's being done that way.

No it's not illegal.

Yes it's legal.

Every other payment processor does it that way.

When you bought beer and cigarettes from 7eleven it was done that way.

When you bought diapers from Target it was done that way.

Don't know what else to tell you.

You can opt out of this by simply not selling on ebay.

[powell-memorabilia]

I don’t set USPS rates to get an item to a buyer.  I don’t set the DHL rates that my supplier uses.  Yep, I do negotiate with my supplier on the pricing of items, but there is a floor below which he won’t go.  I can only pay so little for bubble wrap, boxes, tape, packing peanuts, thermal labels, etc..  

all of those items go into my prices on eBay.  And, yep, I’m charged a fee on all of them, plus my profit.  Those are the breaks.

[mybigsale]

eBay, like other processors charge a transaction processing fee that amounts to the approximate 2-3 percent like other processors to cover processing costs.

eBay goes above other vendors by adding in an approximate 10% commission on taxes and shipping. I believe eBay should only be earning a commission on what they are earning off what you are selling, keeping the processing fees separate.

eBay eliminated the separate transaction fees into a combined one (transaction fee+commission). The result being sellers pay the transaction fee plus  an extra approximately 10% commission on taxes (and shipping).  

For eBay, rising taxes and shipping costs become a profit center for eBay... of course that means rising expenses for sellers.  As a seller, you need make sure your pricing accounts for these added expenses.

[farmalljr]

The very VALID reason is because if you were paying an accountant/CPA, their prices run in the $100 per hour range, to do the paperwork and submission of the tax to each state you owe sales tax to. 

eBay does all the paperwork, all the remittance of the money owed. Paying 15% of the sales tax as a fee is reasonable. Complaining about it makes zero sense. 

[maxine*j]

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@farmalljr wrote:

...  Complaining about it makes zero sense. 

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And what continues to surprise me is the number of sellers, and their number is legion, who either never noticed or never cared that PayPal took its fee on the total sale, including sales tax, on top of its flat 30-cent fee on every transaction.

Many, if not most, sellers in Managed Payments find the total take-out is about the same, or a bit less, than it was under PayPal.   And, yet, there is now endless complaint over this component bit.

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[mybigsale]

@capt.john 

@farmalljr 

Just realize - the first approximate 3% of your fee pays eBay for the tax processing costs. A??z?n charges 2.9%. Other processors charge a similar low fee.

Unlike any other service/processor eBay make you pay a 10% commission (eBay profit after expenses) on top of the cost for tax processing.  I don't believe any other service/processor makes this commission on taxes (and shipping).

This is because eBay decided to eliminate the transaction fee by making one fee that combines transaction fee + commission. By doing it this way, eBay makes the approximate 10% profit on your item plus the extra 10% profit on taxes and shipping.

Complaining about it makes zero sense as I don't expect eBay to make any changes.  Sellers just need to realize eBay is not just making a PROFIT off your item, but making a PROFIT off of taxes and shipping (transaction portion covers their cost).  Sellers need to price accordingly. 

[farmalljr]

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@mybigsale wrote:

@capt.john 

@farmalljr 

Just realize - the first approximate 3% of your fee pays eBay for the tax processing costs. A??z?n charges 2.9%. Other processors charge a similar low fee.

Unlike any other service/processor eBay make you pay a 10% commission (eBay profit after expenses) on top of the cost for tax processing.  I don't believe any other service/processor makes this commission on taxes (and shipping).

This is because eBay decided to eliminate the transaction fee by making one fee that combines transaction fee + commission. By doing it this way, eBay makes the approximate 10% profit on your item plus the extra 10% profit on taxes and shipping.

Complaining about it makes zero sense as I don't expect eBay to make any changes.  Sellers just need to realize eBay is not just making a PROFIT off your item, but making a PROFIT off of taxes and shipping (transaction portion covers their cost).  Sellers need to price accordingly. 

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"Profit" is in the eye of the beholder. How much is eBay paying SPECIFICALLY to process all the sales tax to the states AND VAT to international sales?

Maybe at the end of the day, they do make money on the fees after the costs to process the taxes are considered. But then again, they are handling millions of transactions. It takes a team or teams of people to handle this. It's not like on accountant on staff could handle all of this on their own. 

[mybigsale]

@capt.john 

@powell-memorabilia 

The difference is when USPS rates rise, you price accordingly to recover your rising costs. This does not help your bottom line.

eBay on the other hand charges in an extra commission that you need to pay them. They are making a profit off the rising shipping costs.  Shipping cost is an expense for you - made higher because your shipping cost is a profit center for eBay.

By having one fee that just adds commission fee and transaction fee together results in eBay earning a commission on the Taxes and Shipping (no - PayPal, Amazon and other processors do not make this extra  approximate 10% on top of  the approximate 3% transaction fee on Taxes).

eBay could allow sellers to sell items for $0 and they would still make a profit from the commission they would earn on your shipping costs and tax (many states would tax the shipping costs).  A profit you would be paying.  

[winterpalace25]

One hopes it is handled instantly and automatically by some awesome software. But that software was probably a significant investment for all the platforms that must process sales tax for states and perhaps localities, according to local laws.

[powell-memorabilia]

The difference is when USPS rates rise, you price accordingly to recover your rising costs. This does not help your bottom line.

eBay on the other hand charges in an extra commission that you need to pay them. They are making a profit off the rising shipping costs.  Shipping cost is an expense for you - made higher because your shipping cost is a profit center for eBay.

By having one fee that just adds commission fee and transaction fee together results in eBay earning a commission on the Taxes and Shipping (no - PayPal, Amazon and other processors do not make this extra  approximate 10% on top of  the approximate 3% transaction fee on Taxes).

eBay could allow sellers to sell items for $0 and they would still make a profit from the commission they would earn on your shipping costs and tax (many states would tax the shipping costs).  A profit you would be paying.  

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this is no different.  Sellers can and do run the numbers, adjusting pricing accordingly.  Increase your pricing by 0.7% and call it a day.