Supreme Court overturns Quill, subjects all internet transactions to sales tax

[savedfrommyspokes]

Originally Posted by BobC

The trick here is that Ebay USED to own Paypal. As the owner of the company that was handling the collection and payments, it meant that Ebay was effectively handling all the payments and collections. Splitting Paypal off meant it was now being handled by a completely separate company so Ebay no longer had direct control in the handling of payments and receipts. The same disconnect will occur with this new Dutch company. They are not owned or controlled by Ebay, so once again, Ebay is effectively not collecting receipts or remitting payments. I believe from the article you read that the control they are referring to is in what functions and uses the new Dutch firm will set up specifically for Ebay and their users. As the article noted, even though Ebay is a big percentage of Paypal's business, it is still only 13% as of late. So the things Ebay may have wanted Paypal to do may not make sense to Paypal, and thus they may have turned them down. Don't know that for certain but, that could likely be another reason Ebay ended up looking elsewhere for online payment support from someone willing to tailor the software to what Ebay wants but, still not have Ebay directly own it so they could be considered as directly directly collecting and paying receipts and remittances.

Like I said earlier when someone else tried to suggest that Ebay was like an auction house. I pointed out all the differences and why the auction house was responsible for having to charge, collect and remit sales taxes. Ebay is looking to not have any of the same responsibilities as an auction house so they can not be held accountable, responsible or liable for collecting and remitting sales taxes. They just want to be the platform used by others to buy/sell online.

My belief is that the reason ebay sold off paypal several years back had little to do with today's sales tax situation. It likely had more to do with ebay capitalizing on their "investment" in paypal.

Even today, paypal is not required to complete sales on ebay and payments (via CC) can be processed directly through eBay's software. I know, I have done it twice now in the past few months.

Based on the article, ebay is looking to become more involved (translates to making more money) on processing payments, as this will generate additional income for them(that PP is currently receiving). In other words, ebay is no longer using PP and switching to this new payments processing company because they will get more of a cut of each payment than they were from PP.

Likely, the changing of payment processors by ebay has nothing to do with this evolving sales tax situation.

[Lorewalker]

Originally Posted by savedfrommyspokes

Based on the article, ebay is looking to become more involved (translates to making more money) on processing payments, as this will generate additional income for them(that PP is currently receiving). In other words, ebay is no longer using PP and switching to this new payments processing company because they will get more of a cut of each payment than they were from PP.

I think the main reason ebay is going back to processing payments in house is in an effort to prevent buyers and sellers from having one another's email addresses. They are losing a good deal of revenue for sales being conducted outside of the website.

[BobC]

Originally Posted by Lorewalker

I think the main reason ebay is going back to processing payments in house is in an effort to prevent buyers and sellers from having one another's email addresses. They are losing a good deal of revenue for sales being conducted outside of the website.

Which is also another big reason Ebay has been fighting this sales tax compliance issue. Because they are so well known and big, the states will focus on sites like Ebay, and therefore on those sellers that use Ebay as a marketplace. In an effort to not have to keep all the records and charge customers for sales tax (which will likely reduce what people will be willing to pay for their items to begin with, much like buyer's premiums affect bids at an auction house), sellers will likely start looking even harder for other venues and ways to get around dealing with sellers through Ebay, which in turn reduces business for Ebay.

[BobC]

Originally Posted by savedfrommyspokes

My belief is that the reason ebay sold off paypal several years back had little to do with today's sales tax situation. It likely had more to do with ebay capitalizing on their "investment" in paypal.

Even today, paypal is not required to complete sales on ebay and payments (via CC) can be processed directly through eBay's software. I know, I have done it twice now in the past few months.

Based on the article, ebay is looking to become more involved (translates to making more money) on processing payments, as this will generate additional income for them(that PP is currently receiving). In other words, ebay is no longer using PP and switching to this new payments processing company because they will get more of a cut of each payment than they were from PP.

Likely, the changing of payment processors by ebay has nothing to do with this evolving sales tax situation.

I never stated the sales tax situation was the sole reason they sold Paypal, but i still think it may have been one of the original reasons and a contributing factor. Think about it, if the main reason they are dumping Paypal now is because they can get a bigger slice of the fee for handling the transactions and/or to also control the information between buyers and sellers more than ever so they can't easily get in touch with each other, why didn't they just keep Paypal in the first place? They could have made whatever changes they wanted to the Paypal software, and since they owned it, they would get 100% of the revenue from handling the transactions. And you may also be correct in that another reason or contributing factor for the selling off of Paypal was to take advantage of their investment and cash out when they thought it was to their advantage. Seeing as how Paypal has continued to grow though, and how nominal Ebay's percentage of Paypal's business has shrunk to, if maximizing their investment return was the main original reason for selling Paypal in the first place, they're likely kicking themselves about it now with the way Paypal has continued to grow. It is up over 50% in the last year alone.

I'm sure there are other good reasons as well but, still believe Ebay disassociating themselves from the direct ownership of the payment handling/processing company was also being thought about in terms of how to keep them from appearing to be more directly responsible for sales and collections and possibly make them liable for tax and other reporting purposes. Sales tax and other tax compliance/responsibility issues is probably one of the reasons, not necessarily the sole or main reason, that Ebay divested themselves of Paypal several years back. I am aware that Paypal is not the sole payment option and that Ebay can process credit card payments and such but, with Payal being the main payment processor on Ebay, and Ebay not directly owning them, it helps in the appearance and fact that Ebay does not have complete control of the payments processing function, which helps them defend themselves should some taxing authority try to make a claim that they are directly responsible for all collections and payment processing themselves.

I agree with you that the fact that they are looking to now change payment processors for a bigger piece of the fee has got nothing to do with the sales tax issue. I was referring back to when they originally divested themselves of the ownership of Paypal. And now that Paypal is a separate company, they don't have to do what Ebay necessarily wants nor pay them what they think they deserve for their part of the business. Even with the known fact in the marketplace that Ebay is replacing Paypal in the near future, Paypal is still doing great on the stock market. So much for them needing Ebay!