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Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

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Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

I am really curious to know if I am the only seller who has caught on to this scam by Paypal. I have examined the last few sales I have had on Ebay. Ebay has charged the buyer for Sales Tax on the sale. Then that GROSS amount which includes the Item, Shipping, SALES TAX is collected by Paypal. Then Ebay pulls the shipping cost from my Paypal Account and and Paypal takes their fee from the rest of the payment (Including the SALES TAX). So for those last few sales I noticed a differnce of .03 - .04 more in Paypal FEES dues to the sales tax collected by Ebay. Why do I have to pay additional Paypal FEEs for Ebay to collect a sales tax which is not required for them to do directly (except for CA). I am not making any profit on the sales tax. The Sales Tax is a FEE for certain states being collected by Ebay, not by the sellers.

 

I have spoken to customer service at both Ebay and Paypal. I was told it was not them it was the other. So the merry go round is spinning and nobody it taking responsibility. So, I issued a complaint on Consumer Affairs, the NY State AG, and next to the BBB.

 

The Ebay policy on Sales Tax states:

"Once ebay starts to collect sales tax in the required states, no action is required on your part, and there will be no charges or fees for eBay automatically calculating, collecting, and remitting sales tax."

 

Obviously they don't follow their own policies.

 

 
 
1 ACCEPTED SOLUTION

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Esteemed Advisor

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

@0ldgeezer 

 

I think you misinterpreted "there will be no charges or fees for eBay automatically calculating, collecting, and remitting sales tax". eBay don't charge none for the handling of remitting your sales tax but since PayPal is payment processor and charges fee on entire amount you receive, its fair game. Because moving the entire amount for you is PayPal's service. PayPal don't piecemeal their fees out like that, too complicated. Just got to add those few cents to item price. its cost of doing business.

 

Keep in mind that PayPal and ebay are separate businesses/companies, have been for about several years. and its not just PayPal, all payment processors including cc merchants are charging fees on sales tax, shipping, handling, like fo-ever. Its just that because of the internet, we's just seeing all the cons of  doing business right now.


Kudos & Solved are greatly appreciated. 🙂

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Esteemed Advisor

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

@0ldgeezer 

 

I think you misinterpreted "there will be no charges or fees for eBay automatically calculating, collecting, and remitting sales tax". eBay don't charge none for the handling of remitting your sales tax but since PayPal is payment processor and charges fee on entire amount you receive, its fair game. Because moving the entire amount for you is PayPal's service. PayPal don't piecemeal their fees out like that, too complicated. Just got to add those few cents to item price. its cost of doing business.

 

Keep in mind that PayPal and ebay are separate businesses/companies, have been for about several years. and its not just PayPal, all payment processors including cc merchants are charging fees on sales tax, shipping, handling, like fo-ever. Its just that because of the internet, we's just seeing all the cons of  doing business right now.


Kudos & Solved are greatly appreciated. 🙂

View solution in original post

Contributor

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

I have no idea who accepted your response as a solution, but it was NOT me. You obviously have no grasp about this situation. For any company to charge a FEE for a FEE is ridiculous. Like a few years back for people with credit cards, when you went over your limit because the credit company charged a membership fee during a billing cycle and then charged you a fee for going over your limit.....They don't do that any longer as a result of all the law suits and class actions. Paypal can not charge a fee for a sales tax collected by EBAY and passed on to them to make it easy for Ebay to recover that same fee and pass it on to the state it was collected for. You need to get a clue about what is happening here. I just had another sale on ebay today and the sales tax alone was $6.71 and the fee paypal got for the sales tax on my sale was $.30.... if the holidays this year are going to be the same as last, I expect in the end this cost of business will run me a few hundred dollars which will put even a bigger dent into any profit I might be able to make on Ebay.

Esteemed Advisor

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale


@0ldgeezer wrote:

I have no idea who accepted your response as a solution, but it was NOT me. You obviously have no grasp about this situation. For any company to charge a FEE for a FEE is ridiculous. Like a few years back for people with credit cards, when you went over your limit because the credit company charged a membership fee during a billing cycle and then charged you a fee for going over your limit.....They don't do that any longer as a result of all the law suits and class actions. Paypal can not charge a fee for a sales tax collected by EBAY and passed on to them to make it easy for Ebay to recover that same fee and pass it on to the state it was collected for. You need to get a clue about what is happening here. I just had another sale on ebay today and the sales tax alone was $6.71 and the fee paypal got for the sales tax on my sale was $.30.... if the holidays this year are going to be the same as last, I expect in the end this cost of business will run me a few hundred dollars which will put even a bigger dent into any profit I might be able to make on Ebay.


 

One of the PayPal mods likely marked it as Solved because my response hit the nail right on the head.

 

Well for now, its fair game until lawsuits are filed and it is taken to court and discussed. It is what it is. Don't like it, either raise prices a bit or don't sell, don't be in business. Get a nine-to-five and join the rat-race. Not a big fan of it myself, just telling you what the reality is but until a court case happens, it is what it is. 

 

Don't get it twisted. This is not a fee on a fee. This is PayPal including sales tax, SALES TAX (money that goes to the state gov that is included in the amount we receive as sellers) in the calculation of their fees. Sales tax is NOT a PAYPAL FEE. You didn't think this through, sir. PayPal includes shipping and (If any) handling that we get in calculation of their fees, and no one bats an eyelash on that (some have griped over the years because it means paying less money to PayPal and more for them (which is really what it comes down to), but not as much as sales tax as of late. But I reckon, once we get used it, unless a lawsuit ensues, its here to stay).

 

For me personally, I'd just charge a little more, not going to let this be an obstacle for me, cutting into my profits.


Kudos & Solved are greatly appreciated. 🙂
Contributor

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

The point is, the total amount including the sales tax is not ever meant to be received by the seller, this amount goes to eBay who then remits to whatever tax authority is involved. This amount should not be subject to a fee or as a calculation of a fee as it is a tax and Paypal is processing it on behalf of the tax authority, not the seller. I understand the intricacies of what is being said, however this hurts sellers and will by extension hurts eBay, as with their ever increasing and confusing fees, people are going to soon go elsewhere. They can't be faulted for Governments flexing their tax reach, however as a company that supposedly "cares" about their sellers they do a very poor job of showing it. Btw, just raising your prices to offset the difference isn't actually much of a choice either as the fee is a percentage, as is the tax. So with your price higher so is the tax and the fees to match, not to mention these extra few bucks added to the price could be the deal breaker in a sale.   

Contributor

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

For a 10% sales tax rate, we are talking about a 0.29% additional fees for Paypal to collect the sales tax and remit it to the state so we don't have to manage it in our books.

 

I think Paypal could have handled this better by being very transparent and actively warn sellers that there are implicit additional handling fees under the new internet sales tax law. The complaint is mostly about the apparent injustice (I was unpleasantly surprised and felt paypal is triple dipping as well).

 

We have to think about if it's worthwhile to start a class action that induces paypal to increase the fees by 0.5% to cover the lawyer and reimbursements, then we spend a week converting our payment systems to jump ships. If the margins we are losing are much less than the effort/costs converting our payment systems, I'd wait for a little longer and see.

Member

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

First and foremost eBay and PayPal may operate as separate companies, the fact is eBay owns PayPal. What PayPal is now doing is TRIPLE DIPPING! Everyone seems to be ridiculously OK that paying final value fees twice via eBay and PayPal. It is wrong! And top this with paying PayPal fees on tax collected by PayPal for the state that sellers never see is a SCAM. Don't tell me they are collecting our money for us...That is what we are paying them for in the first place!

Contributor

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

NOT an "accepted solution."  Just because you're fine paying an extra fee on your sales doesn't mean the rest of us are, nor does it mean that it's fair, ethical, or legal for PayPal to charge it.  We're basically being charged a usury fee on money that we NEVER see.  And this is supposed to be OK because it's easier for them to do it that way?  You're either a shill or a fool if you think this is acceptable.  Sure, PayPal is a "private" service, so if you don't like it then don't use it, right?  Except that if it wasn't for us schmoes hawking our crap on ebay, PayPal wouldn't even exist!  In any case, they're flat-out lying about their fee structure and then hiding the fact.  If I have a sale of $100 w/ free shipping, the PayPal fee should be $3.20 (2.9% + 30 cents, their advertised fee).  When you add sales tax of 6.25% (the rate on my most recent transaction), the total becomes $106.25; so the final PayPal fee would be $3.38 or essentially 3.38% of my original $100 sale.  So now my customer has to pay an extra 6.25% and I have to pay an extra 0.18%.  Even if ebay actually passes that $6.25 to the taxing jurisdiction where my customer lives (which I somehow doubt that all of it will make it into the state coffers), I'm pretty sure PayPal is just keeping the $0.18 When you extrapolate this over 3 BILLION transactions worth $600 BILLION per year, it's pretty easy to see that "taxing internet sales" is a windfall for PayPal, more precisely a BILLION dollar per year windfall!  Doesn't anyone remember Superman III or Office Space?  SHAME ON YOU PayPal for treating your customers so badly.  I can't wait for the legal smackdown and my $2 settlement check!

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

"eBay don't charge none for the handling of remitting your sales tax but since PayPal is payment processor and charges fee on entire amount you receive, its fair game. Because moving the entire amount for you is PayPal's service. PayPal don't piecemeal their fees out like that, too complicated. Just got to add those few cents to item price. its cost of doing business."

 

It wouldn't be complicated to deduct the tax amount from the total amount and then charge the PayPal fee since they figure out the way to do the exact opposite. They collecting the fee from the total amount and then deducting the tax collected by eBay (see attached image below). In that particular transaction, I overpaid 19¢  in Paypal fees. Not to mention that eBay invoices are a total mess also. Multiply these stolen cents by millions and millions of transactions and you have a HUGE amount of money stolen from eBay sellers. It's not the cost of doing business it is STEALING from their own clients and I stand by my claim. My intentions are to go to a big law firm with that.

 

Paypal stealing.jpg

 

New Community Member

Re: Fees being charged for the amount of SALES TAX Ebay is collecting for each sale

Well, what about charging sales tax on the cost to ship? This is not at all customary in my experience, and my sales tax is now approaching 10% of the item's value. I believe this is incorrect and needs to be reconciled. Problem arises when the cost of shipping is built into the item price. I think they have just chosen to solve this by charging the tax on shipping.