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I see that a number of community members have expressed concern about Paypal charging its fee on sales tax for purchases paid using Paypal. I sell on eBay and recently noticed that I'm paying a fee for sales tax charged to my buyers but not collected by me. I wonder whether this is legal. For me, this amount is trivial, but for much larger sales and over a long period of time, the amount would be considerable. I don't know how to raise this issue with Paypal and wonder whether anyone in this community has and, if so, what Paypal's response was. This is certainly a gray area, since Paypal does seem to collect the tax.
Its not illegal. All payment/card processing do this even before the internet. PayPal never in its history ever parsed out sales taxes, shipping, and item price to based their fees on. The internet sales tax thing is new so people are not used to it and it applies the same way as with brick and mortar sales.
PayPal does not 'collect the tax' but the marketplace you sell at does for your convenience. Its just that sales tax is included in the entire amount received from your buyer and that is the amount PayPal based their fees on.