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

[0ldgeezer]

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.

[sharpiemarker · Accepted solution]

@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.

[0ldgeezer]

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.

[sharpiemarker]

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@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.

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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.

[tauron12]

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.   

[Sdh001]

So well said. I completely agree with your position. Im already utilizing other sources to part with my personal stuff. I am not a business or selling for profit. I agree these changes do impact the decisions the consumer makes.

[dzldummy]

You don't think those ten cent and thirty cent extra charges are going to add up over time? I collect sales tax for the state of Florida, and if I pay my collections by a certain date, I get a discount. I would be sure that whoever is adding the tax on is paying on time and getting a discount, so they should be the ones bearing the burden of the extra cost, not me. 

[humgar]

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.

[booza47]

The internet tax law did not in any way create the issue with PayPal charging 2.9 % of the total sale which includes the sales tax paid by the buyer! It really exasperates me to read opinions that really do not serve any merit for the issue at hand. The simple fact here is we as sellers are trying to account for every penny to make sure we receive a profit by knowing all of the expenses charged by eBay and PayPal. So tell me how do you calculate the sales tax fee of 2.9 % when you never know until after the sale how much the sales is paid? Also keep in mind  presumably every state has a different percent they charge for sales tax and most do so the amount can be all over the map. When there is no sales tax on your sale does the 2.9% decrease to offset the fact there is no sales tax to be paid? Hmm I didn't think so either!

As always it's the little guy that gets ripped off by the big corporations and if we don't like it they really believe it doesn't matter since they will always have customers endlessly flocking toward them as did the automobile company's and guess what they were wrong like in 1979 when the (big 4, back than) lost 51 % of the market to the import auto industry because they believed in customer satisfaction and backed it up when you had a problem. They finally realized customer satisfaction is the key to your business longevity not your policies that you stand on simply because a corporate guru thinks its a great idea!  But to step up to your customer, listen and change on how you think to keep them coming back year after year after year.....

Take heed PayPal you are on the losing end of the spectrum if you don't listen to your customers the ones that make you all that money known as the Sellers!

[Mckev2n]

Bob sells toy for $100. PayPal rate is 2.9% for a typical scenario plus the $0.30 transaction fee. If Bob charges 0% tax through eBay... PayPal will take $3.20 from his $100 bill. If Bob adds 10% tax on his $100 through eBay, eBay keeps the $10 tax (after allowing it to digitally transcend from PayPal and back). PayPal is charging you and additional $0.29 for the $10 tax you never saw. So Bob's total fee for this example with tax automatically added by eBay and automatically given back to eBay from PayPal is now $3.49 instead of $3.20. So basically, if you don't charge tax (which is not always possible), you will be charged less by PayPal. So the people that are complaining have every right to do so. If a lawyer is reading this and wants to get rich quick... This class action lawsuit is a no-brainer and from what I've seen myself and the fact the the seller is not involved in the decision to tax in certain cases.... It is simply a money making scheme in heavy favor of PayPal and most likely eBay too for allowing PayPal to take more money when it is not necessary. A seller shouldn't have to not charge tax to not be charged extra money. Think about that for a second.