eBay Fees on Buyer-Paid Sales Tax

[Santo10Fan]

On a recent ebay sale, I paid a fee of $23.22 that was solely calculated from the $188 sales tax my buyer paid to his home state. I will concede eBay justifying the standard processing fee of 2.9% ($5.45) on the funds transaction.

So should we view the remaining $17.77 as a convenience fee for handling the taxes, or a cash grab? I just don't see how tax remittance could be discrete from overall operating costs, but what do I know.

[swarmee]

Originally Posted by Santo10Fan

On a recent ebay sale, I paid a fee of $23.22 that was solely calculated from the $188 sales tax my buyer paid to his home state. I will concede eBay justifying the standard processing fee of 2.9% ($5.45) on the funds transaction.

So should we view the remaining $17.77 as a convenience fee for handling the taxes, or a cash grab? I just don't see how tax remittance could be discrete from overall operating costs, but what do I know.

If this is accurate, that's the kind of stuff that would make for a lucrative class action lawsuit, right?

[D. Bergin]

They definitely do take a final value fee on the sales tax collection. Also they’ve started collecting VAT taxes for a lot of countries and charging full final value fees on those, which traditionally is much higher then our sales taxes. They’ve been doing it ever since they took over payment processing from Paypal. I’m pretty sure they started collecting from states and countries they didn’t even have to, once they figured out they were making money hand over fist collecting taxes from their sellers.

[D. Bergin]

It’s a fee hike, without them having to admit it’s a fee hike.

[swarmee]

Originally Posted by D. Bergin

I’m pretty sure they started collecting from states and countries they didn’t even have to, once they figured out they were making money hand over fist collecting taxes from their sellers.

There are some other companies that seem to be doing this as well, making the assumption that all states with sales tax will at some point pass legislation mandating the collection and remittance of the use tax under Wayfair. I think Florida was one of the last few holdouts, but are going to begin requiring it July 1.
If the company is collecting *and* remitting the actual tax back to the state (even when it's not technically required), I don't think they're technically doing anything illegal. If they are collecting "tax" and not remitting it back to the state, then report them to the state in question. That would be a clear cut case of tax fraud, I believe.

[D. Bergin]

Originally Posted by swarmee

There are some other companies that seem to be doing this as well, making the assumption that all states with sales tax will at some point pass legislation mandating the collection and remittance of the use tax under Wayfair. I think Florida was one of the last few holdouts, but are going to begin requiring it July 1.
If the company is collecting *and* remitting the actual tax back to the state (even when it's not technically required), I don't think they're technically doing anything illegal. If they are collecting "tax" and not remitting it back to the state, then report them to the state in question. That would be a clear cut case of tax fraud, I believe.

Yeah, I'm sure they're remitting the appropriate amount back to the states/countries when they collect. What should stick in everybody's craw is they're also collecting a 12.55% to 15% vig from the seller, on the sales and VAT taxes they collect. That's a bit more then a 2 to 3% merchant processing fee, which should be enough to cover their "accounting".

They went from lobbying against individual states sales tax collection as being onerous on business's and detrimental to inter-state commerce, to embracing and even advancing it as a way to increase revenue and claiming they aren't hiking your fees in the process.

That doesn't even account for their "final value" money grab on the shipping costs also.

[Jobu]

Collecting fees on the tax doesn't really end up hurting the seller that much though.

Ebay also figures out the appropriate taxes for us, collects them, and remits them on the seller's behalf for every jurisdiction. Certainly it is worth it to everyone who sells on Ebay to pay an additional dollar to not have to do that ourselves, no? In addition to the fact that we shouldn't expect Ebay to do that for free, as the new agent responsible for the money (including the tax portion) in the transaction, Ebay should be able to charge a % on that as I don't know of any organization which will process money for you, and take risk associated with sales guarantees, and just exempt a portion of it and do that bit for free. All of the above is certainly worth a dollar, isn't it?

An example of the new system vs. the pre-tax system from a recent sale:

Sale price: $985
Price + tax: $1,044.10
12.35% of price + Tax: $128.95
Fixed final value fee: $0.30
Total fee: $129.25
Total payment to me: $855.75

Under the pre-tax, pre-managed payments system, I would have paid 10% of the $985 to Ebay ($98.5) + 3% of the $985 to Paypal ($29.55) = $128.05 in total fees. So the new system, where Ebay handles all of the tax stuff for me, costs me an extra $129.25-$128.05 = $1.20.

[HexsHeroes]

I recently sold an item on eBay and noted in terms (before listing) how the Final selling fee was calculated. Not a fan of how done but do not think unreasonable to conclude that buyers might take inclusion of state sales tax and shipping cost, along with winning bid, into determination of fair value of item. In that case, not unreasonable for eBay to use that logic of fair value to base final selling fee on. Again, I am not a fan of that logic, but accepted it before listing my item.

When I bid in major auctions, I determine my absolute max cost (max fair value) for item, and back out estimated costs for shipping & insurance, state sales tax, and commission to arrive at my max ceiling bid amount. eBay final fee calculation not far removed; except the base final sale fee (commission) after inclusion of all sales costs. Just hope auction houses do not change on amount (before or after sales taxes and shipping/insurance) they base commission on. A change to the later might reduce amount to consignors based on my logic of how I calculate fair value.

[BobC]

Y

Originally Posted by Jobu

Collecting fees on the tax doesn't really end up hurting the seller that much though.

Ebay also figures out the appropriate taxes for us, collects them, and remits them on the seller's behalf for every jurisdiction. Certainly it is worth it to everyone who sells on Ebay to pay an additional dollar to not have to do that ourselves, no? In addition to the fact that we shouldn't expect Ebay to do that for free, as the new agent responsible for the money (including the tax portion) in the transaction, Ebay should be able to charge a % on that as I don't know of any organization which will process money for you, and take risk associated with sales guarantees, and just exempt a portion of it and do that bit for free. All of the above is certainly worth a dollar, isn't it?

An example of the new system vs. the pre-tax system from a recent sale:

Sale price: $985
Price + tax: $1,044.10
12.35% of price + Tax: $128.95
Fixed final value fee: $0.30
Total fee: $129.25
Total payment to me: $855.75

Under the pre-tax, pre-managed payments system, I would have paid 10% of the $985 to Ebay ($98.5) + 3% of the $985 to Paypal ($29.55) = $128.05 in total fees. So the new system, where Ebay handles all of the tax stuff for me, costs me an extra $129.25-$128.05 = $1.20.

I don't sell anything on Ebay so I may not know all the nuances, but not sure your logic is entirely accurate. First off, Ebay buyers living in states with a sales tax know the sales tax will get tacked on to their winning bid, just like when bidding on AH auctions they know they'll have to add the buyer's premium to their top bid if they end up winning. So you have to assume that most bidders are going to factor in that sales tax or buyer's premium into what they are willing to bid. So in the case of your example where the top bid was $985, you wouldn't be wrong to assume the buyer would have actually paid $1,044.10 for it as a top bid if they knew no sales tax was being charged. So under the old pre-tax system in your example, the combined 13% Ebay and Paypal fees would have cost you $135.73, which is even higher than the $129.25 figure you came up with in your example. However, that total fee comes off the higher sales price of $1,044.10 so that you now end up with net proceeds of $909.37, which is significantly higher than the $855.75 you netted in your example, for a total difference of $53.62 more it costs the seller, not $1.20.

Secondly, these new sales tax rules really only apply to Ebay sellers whose sales are to buyers not in the same state(s) they are in. So technically, even under the old rules, anyone selling something on Ebay going to a buyer in the same state they are in (assuming that state has a sales tax) should have been charging and remitting sales tax on all those in-state Ebay sales from day one. These new rules are simply to extend that obligation of sellers to now collect and remit sales tax in those states they are not physically in, and per the Supreme Court ruling it is now based on a seller's sales amount and volume. And that threshhold is not that small for a seller to become responsible for collecting and remitting sales tax to a state they don't reside in. Per the Supreme Court a seller crosses that threshhold once they've reached an annual total of $100,000 in sales or 200 transactions in a particular state. And remember, those threshholds aren't just the annual amounts for the seller. A seller on Ebay can easily surpass these numbers in total, but not necessarily for any one particular state, and therefore under the law would not be required to collect and remit sales tax on Ebay sales to any state (except potentially for the state the seller actually resides in).

So yes, there are going to be some large Ebay sellers that are going to cross those sales tax threshholds, but I'd be willing to bet the vast majority of Ebay sellers never come close, and therefore wouldn't be required to do any of this (again, except maybe for their resident state). Also, Ebay chose to take on this sales tax responsibility by choice, not by any specific legal requirement I'm aware of. These sales tax laws are for the actual product sellers. Ebay doesn't physically sell anything, they simply provide an online platform for those that do. But the states are also willing participants in all this by allowing Ebay to act as an agent for all these sellers. Remember, most all of these sellers aren't actually required to collect and remit sales tax, and you know that virtually none of the buyers of those Ebay items on which no sales tax was charged are going to volutarily remit the use tax they should then be paying to the states they live in. So the states obviously view this as a huge win as they get sales tax revenue they normally wouldn't collect, and don't really have the time or resources to go after otherwise.

But who actually pays for all this? Let's look at your example in another way. The added cost to a seller from Ebay collecting sales tax, based on your example and using my additional assumptions, came out to be $53.62 on a proposed sale of $1,044.10. Well if that is the only sale that seller has to an out of state buyer, they clearly aren't legally liable to collect and remit sales tax on that sale. But what if we bump up the out of state sales to sellers in that same state from $1,044.10 to $99,999.99, just under the sales tax threshhold (and assume still under 200 transactions for the seller)? Assuming the Ebay fee percentages remain the same as in your example, you are now talking about a potential additional cost to the seller of around $5,000.00. Not such a small amount anymore. I'm not saying this is right or wrong, or that it is 100% accurate, just that based on how most things are being done by buyers and sellers on Ebay that this presents a more accurate view of the additional cost to the average sellers on Ebay. And in the end, Ebay appears to end up with more revenue in their pocket from doing this.

I assume that for a seller there is no choice in deciding if you wanted Ebay to collect sales taxes for you or not. As stated before, I don't sell on Ebay, so don't know for certain. So I wonder what happens to those sellers who previously did collect and remit their own sales tax? Don't believe Ebay lets the states know on whose behalf they are remitting sales taxes, so what happens if some state also comes calling on some seller because their sales tax returns and payments suddenly changed drastically because of Ebay involvement? Is Ebay going to reimburse them for the time and hassle in dealing with that state? Or what about a seller that doesn't sell everything on Ebay alone, they now have to keep records of Ebay sales by state anyway to go along with non-Ebay sales to see if they hit the sales tax threshholds somewhere and now have to collect sales taxes for non-Ebay sales in those certain states as well. So the thinking that Ebay taking over the responsibility for sales taxes is doing all sellers a great service they should be more than happy to pay for, at a very nominal cost, isn't necessarily that true. The vast majority of Ebay sellers aren't even subject to these non-resident state sales taxes. And for the much larger Ebay sellers that would be subect to them, they are most likely big and responsible enough to take care of their sales taxes themselves. And in some cases for these large sellers, Ebay taking over part of their sales tax collection and reporting requirements can actually end up creating more work and hassles for them, not less.

And as to why Ebay would voluntarily take on this sales tax collection and reporting requirement, there can be many possible reasons. For one, if the large sellers on Ebay get caught up in now having to collect and remit sales taxes, whereas the average seller doesn't, that suddenly puts the large sellers at a disadvantage as things they sell will cost their Ebay buyers more due to the sales tax. So a large seller could end up dropping Ebay, partially or entirely, and moving to other platforms, or doing their own online platform, all so the disadvantage isn't so evident. So by Ebay making sales taxes the same for all sellers, it can help to keep their larger sellers happy and less likely to sell elsewhere than on Ebay. For another reason, Ebay may have looked ahead and realized that with all these forthcoming sales tax law changes, and because of the huge number of sellers and overall amount of sales on their platform, that they would eventually get approached by multiple states to start providing them with more and more info about all their sellers and their respective Ebay sales. Can easily imagine Ebay thinking proactively and deciding that if they would eventually have to do all this extra work and reporting anyway, why not figure out a way to get paid for it? And yet another reason for possibly doing it is to potentially create another profitable service they can provide. Not only does it solve the possible issue of Ebay trying to get large sellers to pay them for providing info to states they'd end up probably having to do anyway, but by adding in the collection and remittance function of sales taxes they can not just try to break even on the additional reporting costs, but turn sales taxes into a potential profit center and end up charging all sellers for it. Going back to the original example, the earlier poster came up with an additional $1.20 of Ebay fees on a sale (plus sales tax) totaling $1,044.10 under the new sales tax/fee system versus the old system, which is roughly about 0.1% more it ends up costing the seller in fees. Don't remember exactly from where, but seem to recollect hearing or reading somewhere that total annual Ebay sales for just sports cards and memorabilia and such in a recent year was around $340M. So 0.1% of that would come to around $340K, which in itself isn't that much, but that is for just one small part of Ebay. So I'm guessing that Ebay is easily getting millions of dollars a year in addditional fees from this new system to cover the cost to handle the sales tax work, which frankly, after the initial setup in the 45 states that do charge sales taxes, is programmed into their automated system and likely not very difficult and time consuming at all. After recouping their initial costs to do sales taxes, can easily see Ebay profiting from it every month thereafter. And that leads to even another potential reason for Ebay wanting to do this. Monies collected for sales tax by Ebay are held until due to the individual states. So while in their hands, Ebay is free to invest this money, and make more off of it. Granted, interest rates being paid on short term investments nowadays are next to nothing, but most knowledgeable people feel confident that interest rates will be rising at some point in the future due to a lot of factors, and if/when they do, this would be found money to Ebay.

So the thinking that Ebay isn't getting much of anything out of this may not be entirely accurate.

[Exhibitman]

Those who think eBay is engaged in some scheme of collecting taxes and then not turning the money into the states, that is not a serious discussion. eBay is a public company with audited financials. Where exactly on its financials would it hide millions in sales taxes collected each reporting period but not remitted? Also, that sort of crap would require a grand conspiracy among the C-suite people, the accounting staff, and the outside auditors. eBay may be remitting unnecessarily but it is undoubtedly remitting. In that vein, I have no complaint with paying eBay to handle the sales taxes for me because tracking all of the interstate sales taxes, including keeping up with the laws for every jurisdiction, is an unbelievable pain in the ass. Even if you owe nothing, once you are registered in a jurisdiction and issued a resale # you must do the return every reporting period, even if you have nothing to report. I have clients who have to do that for their businesses and it is a Herculean effort every quarter. I will gladly pay a small fee to avoid it. It even simplifies my sales tax remittance for Cali; instead of my collecting and remitting CA sales tax I just post all of the eBay sales in one spot on the return and done. No district tracing, no county tracing, no tracking the funds, just done. The few quarters I've done it so far it has cut substantial time from my sales tax work, at my hourly rate it is definitely more time saved than the amount eBay has taken from me for the fee.

[Gusturd]

Ebay likely is reporting all the sales tax remitted, but that doesn't change the fact that they are collecting who knows how many dollars worth of unnecessary sales tax and collecting a nice fee for themselves off it. I'm not even referring to the sales thresholds previously mentioned. I'm talking about the people like my wife that sell 10-20 items a year to clean out the garage/closets. These types of transactions don't require the collection of sales tax. How many of these sales are made on ebay each year?

[BobC]

Originally Posted by Gusturd

Ebay likely is reporting all the sales tax remitted, but that doesn't change the fact that they are collecting who knows how many dollars worth of unnecessary sales tax and collecting a nice fee for themselves off it. I'm not even referring to the sales thresholds previously mentioned. I'm talking about the people like my wife that sell 10-20 items a year to clean out the garage/closets. These types of transactions don't require the collection of sales tax. How many of these sales are made on ebay each year?

First off, your statement that sales like your wife's aren't subject to the collection of sales tax may be inaccurate. It depends on what state the seller is in, and if that state has a sales tax. And then it further depends on if any of those 10-20 sales were to a buyer(s) that lives in the same state as the seller, because if so, that state may require the seller to collect sales tax on any same state sales since the seller is physically present in the state in which the item is shipped to.

However, I would still suspect a lot more sales that really don't require the collection of sales tax by the seller occur on Ebay than people might think or ever realize. Would not be surprised if far more than half of all Ebay sales are technically NOT legally subject to sales tax collection by the actual seller, and would not be shocked if it turned out only about 20%-30% (or maybe even less) of all Ebay sales would actually be subject to sales tax collection by the true seller.

What I wonder is how did Ebay get all sellers to agree to let them do this sales tax collection on seller's behalves in the first place. Remember, Ebay doesn't actually sell anything. Did they have a special update in their Ebay rules/contract for sellers where they effectively had all sellers sign off and agree to grant Ebay the exclusive right to act as their agent for sales tax collection? This was a very well thought out idea and plan by Ebay that does also benefit them. As some posters to this thread mentioned, they are not upset to pay a little something to Ebay to take care of the sales tax for them, so they don't really tick off all their sellers. And like another earlier poster mentioned, a lot of sellers likely feel the additional cost is very nominal. But as I tried pointing out in an earlier post, if you feel that buyers do take sales tax into consideration when making Ebay purchases now that effect the final bid/price they're willing to pay, the actual cost to sellers is likely much higher than they imagined. They just don't realize it, which is their loss and Ebay's gain.

[FrankWakefield]

I think that eBay shouldn't charge a fee on the taxes and pull that fee out of the seller's proceeds.

AND I think that eBay shouldn't calculate taxes on the shipping and handling portions of the money collected.

[buymycards]

I only know about Wisconsin taxes. Here in Wisconsin, all shipping, handling, and transportation fees are subject to sales tax.

We can blame the sellers who were charging $1 for the item plus $25 shipping in order to avoid paying the taxes.

[BobC]

Originally Posted by buymycards

I only know about Wisconsin taxes. Here in Wisconsin, all shipping, handling, and transportation fees are subject to sales tax.

We can blame the sellers who were charging $1 for the item plus $25 shipping in order to avoid paying the taxes.

Hey Rick,

They may not have necessarily only been trying to avoid taxes by doing that. I think they were possibly interested in getting buyers to win cheap items, and forget to pay attention to the excessive shipping charges so they could end up making more money that way as well.

[jbsports33]

Most transactions for all the states are taxed on eBay now, something we need to adjust to if we sell on eBay or maybe just don't - It kills me I need to charge extra fees to consignors for this change. The one good thing is eBay collects and tracks it all - started doing more flea markets now! Can pay more back to people I sell for, I balance it out now with shows and other ways to sell - not just eBay.

Jimmy

[Gusturd]

Originally Posted by BobC

First off, your statement that sales like your wife's aren't subject to the collection of sales tax may be inaccurate. It depends on what state the seller is in, and if that state has a sales tax. And then it further depends on if any of those 10-20 sales were to a buyer(s) that lives in the same state as the seller, because if so, that state may require the seller to collect sales tax on any same state sales since the seller is physically present in the state in which the item is shipped to.

LOL You're going to have to convince me with a precedent of a garage sale getting busted for not collecting and reporting sales tax. Or even a garage sale that collected sales tax. That would be good enough. Otherwise, in every practical sense, it's not really required.

[BobC]

Originally Posted by Gusturd

LOL You're going to have to convince me with a precedent of a garage sale getting busted for not collecting and reporting sales tax. Or even a garage sale that collected sales tax. That would be good enough. Otherwise, in every practical sense, it's not really required.

I didn't say it is always true, and it additionally depends on the state you're in and their specific rules. Also, you were originally talking about sales made on Ebay, a very well-known online marketplace, now you're talking about garage sales, which is distinctly and entirely different. Some states do have rules regarding occasional or casual sales where the party selling does not normally sell things as part of their business, and in such cases those sales may be exempt from sales tax in those particular states. And in that case, a garage sale by an individual would likely meet the casual/occasional sales exemption. And you're right, most states don't have the personnel to go out and track down sales taxes from things like garage sales, so they end up putting such laws in to exempt them from sales tax so they never have to waste the time. But you mentioned someone selling 10-20 items a year maybe, and doing so on Ebay, which is an online marketplace. That is not the same as a garage sale type of casual sales activity. And even though the number of sales you mentioned aren't that many, I don't believe states that allow such a sales tax exemption for casual/occasional sales actually have defined what qualifies as such using a specific number of sales or dollar amount.

Plus, don't forget that it is online sales that triggered this whole sales tax thing coming from the Supreme Court's ruling in the S Dakota vs. Wayfair case back in 2018. So the authorities are saying online sales platforms are most definitely generating business sales, especially since records of the transactions and the parties involved, as well as dollar amounts of all sales, are maintained by the party providing the online platform and can be accessed if need be by tax authorities. That info and data would likely never be kept by someone doing a garage sale. So your question/point is a possible grey area and may or may not be arguable, depending on what specific state you are in.

[Gusturd]

Originally Posted by BobC

I didn't say it is always true, and it additionally depends on the state you're in and their specific rules. Also, you were originally talking about sales made on Ebay, a very well-known online marketplace, now you're talking about garage sales, which is distinctly and entirely different. Some states do have rules regarding occasional or casual sales where the party selling does not normally sell things as part of their business, and in such cases those sales may be exempt from sales tax in those particular states. And in that case, a garage sale by an individual would likely meet the casual/occasional sales exemption. And you're right, most states don't have the personnel to go out and track down sales taxes from things like garage sales, so they end up putting such laws in to exempt them from sales tax so they never have to waste the time. But you mentioned someone selling 10-20 items a year maybe, and doing so on Ebay, which is an online marketplace. That is not the same as a garage sale type of casual sales activity. And even though the number of sales you mentioned aren't that many, I don't believe states that allow such a sales tax exemption for casual/occasional sales actually have defined what qualifies as such using a specific number of sales or dollar amount.

Plus, don't forget that it is online sales that triggered this whole sales tax thing coming from the Supreme Court's ruling in the S Dakota vs. Wayfair case back in 2018. So the authorities are saying online sales platforms are most definitely generating business sales, especially since records of the transactions and the parties involved, as well as dollar amounts of all sales, are maintained by the party providing the online platform and can be accessed if need be by tax authorities. That info and data would likely never be kept by someone doing a garage sale. So your question/point is a possible grey area and may or may not be arguable, depending on what specific state you are in.

Well the whole thing is very convoluted. On the one hand, your saying sales tax shouldn't be triggered unless you exceed $100K and 200 transactions (I realize it may vary by state) and on the other your saying every sale made online is a business sale and should have tax collected. If the government really wanted to boost tax revenue for this country, they'd simplify or at least clarify the rules so people knew what they were supposed to do. The whole thing is one big gray area that simply compels people to pay tax 100% of the time, whether it's really required or not. Maybe that's intentional.

[BobC]

Originally Posted by Gusturd

Well the whole thing is very convoluted. On the one hand, your saying sales tax shouldn't be triggered unless you exceed $100K and 200 transactions (I realize it may vary by state) and on the other your saying every sale made online is a business sale and should have tax collected. If the government really wanted to boost tax revenue for this country, they'd simplify or at least clarify the rules so people knew what they were supposed to do. The whole thing is one big gray area that simply compels people to pay tax 100% of the time, whether it's really required or not. Maybe that's intentional.

You don't really understand this at all, do you? It all starts with the Supreme Court saying decades ago that a seller wasn't liable to collect and remit sales tax to a state in which they had sold/shipped something to the buyer, unless that seller had a physical presence in that same state. That means they have a building, inventory, employees, something in that same state as where they just made the sale to. The recent Supreme Court ruling from 2018, setting the $100K or 200 transactions thresholds, only has to do with a seller that does NOT have a physical presence in a particular state. It now makes a seller who surpasses those sales threshholds in a state they do not have a physical presence in liable for now having to collect and remit sales tax in that state, the same as if they had a physical presence in it. A seller is still always liable to collect and remit sales tax in states they have a physical presence in. So in your example, the 10-20 items per year your wife may sell on Ebay, if she sells something to a person that lives in the same state she lives in, your wife is physically present in that state and technically should be collecting sales tax on those same state sales if those sales are deemed as being retail business sales and the items she is selling are subject to sales taxes for that state. The sales she makes to people who live in a different state than where she physically lives are counted in determining if she meets the $100K/200 transaction threshhold for any of those other, non-resident, states then. She would only be liable to start collecting sales taxes for those other non-resident states that her sales volume/quantity hits either of the threshholds then. That is not a grey area, you are always going to be liable to collect sales taxes on taxable business/retail sales in the state in which you live and have a physical presence in, if that state has a sales tax. The grey area I was referring to had to do with whether or not 10-20 sales per year could be argued as being exempt from sales tax as casual/occasional sales, depending on the state you are in and if they even allow such an exemption, and what their specific rules and definition of casual/occasional sales are.

I was then saying that in light of the courts in now looking at online sales more rigorously in regards to taxes and all, the courts and tax authorities may view parties selling items online with someone like Ebay as a true business as opposed to having a garage sale. And by the way, are you familiar with Ebay's current reporting requirement to tell the IRS how much your wife may have sold on Ebay each year? It is currently set at $20K AND 200 or more transactions. So I'm assuming your wife doesn't currently get a 1099 for her 10-20 sales a year. But guess what, starting in 2022 the IRS reporting threshhold for sending them a 1099 to show how much your wife had in Ebay sales for the year is being lowered to just $600, with no minimum number of transactions. So it is possible you may have to start reporting her "business" on your income tax returns if she hits $600 in sales for a year. And if the IRS is going to consider that level of activity as a retail business, what do you think a state sales tax authority is going to do? Now do you see the difference between a garage sale and selling on Ebay?

I need to start charging you people for all the free advice tax advice I keep giving on here, especially when I get questioned like I don't know what I'm talking about and have to explain even further to get some to understand.

[Gusturd]

I think it's you who can't understand what I'm saying because nowhere in your bloviated wall of words did you contradict anything I said. If you did, please identify. I can't find it.

Despite eBay being a worldwide marketplace, you seem to be hung up on the belief, that all of my wife's 10-20 sales are to residents of our own state. You do know how ebay works right? In reality maybe one was? Possibly two. Maybe none. Wouldn't that mean, using your explanation, that eBay unnecessarily collected sales tax on the rest? And charged a fee on top of it?

That's the only point I'm trying to make. If that is wrong, please say so.

[Santo10Fan]

Originally Posted by Santo10Fan

I will concede eBay justifying the standard processing fee of 2.9% ($5.45) on the funds transaction.

I consulted with a friend of mine who codes software. His theory is that when eBay folded the processing fee within a single closing value fee, that the breakdown I described may have simply been overlooked-or deemed simpler for the coders to ignore. We concluded that the coders likely were instructed to ensure all processing fees were collected on gross sales tax. I've had some experience at my current job where there is certainly a disconnect, if not outright miscommunication with IT and my dept. I've also noticed different totals appearing on iOS notifications from the eBay app after sales, which strengthens the argument the software is out of order-possibly from being hastily implemented.

I have no doubt eBay fully remits what it collects on my behalf. Logically, the Wayfair decision of collecting based on the buyer's physical location was the only way to settle the matter. Otherwise, all eCommerce would flock to incorporate in the states that collect the lowest, or zero, sales tax.

A greater debate on the merit or lack of merit of sales tax was not my intention with this thread. My motivation is to bring awareness to the fact gross tax amounts are included in the FV fee. I have a resale certificate and you can actually leverage that under this fee structure by reminding the seller they will pay less in fees with me than a buyer paying sales tax-and to consider splitting that savings 50/50.

[Tabe]

Originally Posted by Santo10Fan

I consulted with a friend of mine who codes software. His theory is that when eBay folded the processing fee within a single closing value fee, that the breakdown I described may have simply been overlooked-or deemed simpler for the coders to ignore. We concluded that the coders likely were instructed to ensure all processing fees were collected on gross sales tax. I've had some experience at my current job where there is certainly a disconnect, if not outright miscommunication with IT and my dept. I've also noticed different totals appearing on iOS notifications from the eBay app after sales, which strengthens the argument the software is out of order-possibly from being hastily implemented.

I've got over a decade of experience working in software development. Yes, oversights happen all the time. I *guarantee* there was no oversight or disconnect here. Ebay implemented this exactly the way they intended.

[ALR-bishop]

Gosh. After reading Bob’s post do I owe him for advice ? Is that taxable too ?

[BobC]

Originally Posted by Gusturd

I think it's you who can't understand what I'm saying because nowhere in your bloviated wall of words did you contradict anything I said. If you did, please identify. I can't find it.

Despite eBay being a worldwide marketplace, you seem to be hung up on the belief, that all of my wife's 10-20 sales are to residents of our own state. You do know how ebay works right? In reality maybe one was? Possibly two. Maybe none. Wouldn't that mean, using your explanation, that eBay unnecessarily collected sales tax on the rest? And charged a fee on top of it?

That's the only point I'm trying to make. If that is wrong, please say so.

You originally said/asked:

"I'm talking about the people like my wife that sell 10-20 items a year to clean out the garage/closets. These types of transactions don't require the collection of sales tax."

You specifically said those types of transaction don't require the collection of sales tax......period!!! My "bloviated" responses were trying to get you to understand you are wrong and that even some transactions like your wife's can be subject to sales tax. So the first thing I ever posted in response to you was to say you weren't right with what you stated and to contradict you, go back and read the very first line I wrote in Post @12. Forgive me for trying to be nice in the way I contradicted you. But as you so clearly stated in your last post, shown above, "nowhere in your bloviated wall of words did you contradict anything I said." So your accusation is 100% wrong, yet you didn't even realize it!!!!!

And then your response back to me was:

"LOL You're going to have to convince me with a precedent of a garage sale getting busted for not collecting and reporting sales tax. Or even a garage sale that collected sales tax. That would be good enough. Otherwise, in every practical sense, it's not really required."

So now you're laughing off what I said, AND asking me to prove it to you. But now you're talking about strictly garage sales and ignoring the fact this was all about Ebay and Ebay sales to begin with. So I took you at your word and went to the trouble of trying to explain in more detail how sales taxes work and how your wife's transactions if selling on Ebay could be construed as subject to sales tax. But again, that still isn't satisfactory enough for you and you come back and say:

"Well the whole thing is very convoluted. On the one hand, your saying sales tax shouldn't be triggered unless you exceed $100K and 200 transactions (I realize it may vary by state) and on the other your saying every sale made online is a business sale and should have tax collected. If the government really wanted to boost tax revenue for this country, they'd simplify or at least clarify the rules so people knew what they were supposed to do. The whole thing is one big gray area that simply compels people to pay tax 100% of the time, whether it's really required or not. Maybe that's intentional."

Based on what you just said in that post, you don't clearly seem to understand how sales tax works, or what the recent Supreme Court case was really about, or the differences in sales to states where a seller has a physical presence or not. Yes, sales taxes are not easy, and can be very confusing. So I made the mistake of again trying to be nice and use more "bloviated" words to further explain why you were wrong and how some of your wife's transactions on Ebay could be deemed taxable sales subject to the collection of sales taxes. And I wasn't just doing that for you, I was really doing it more for everyone else on here that read your post and would otherwise take what you had said about your wife's sales not being subject to sales tax collection to automatically be true!

I never said 100% of your wife's sales were all to sellers in the state she lives in. And yes, even if the in-state sales she makes are subject to sales tax, the sales to out of state sellers would likely not be subject to sales tax in other states because she doesn't reach the threshold for the required number of transactions in those other states. So in that instance, yes, Ebay didn't really need to collect sales tax on your wife's behalf for the out of state sales. I agree with that 100%, and in the 2nd paragraph of Post #12 I even guesstimated what percentage of total Ebay sales may not actually be subject to sales tax collection, in response to your question.

I wasn't disagreeing with that point about Ebay collecting fees on sales taxes they didn't really have to collect at all. I was disagreeing with your statement that all your wife's sales transactions if done via Ebay were simply not subject to sales tax collection at all!!! Go back and read the very first line I wrote in Post #12, where I did exactly what you are now saying I did not do!!!!!

And before coming back with some lame ass response stating that isn't what you were saying or that I don't understand what you meant......you said, "These types of transactions DON'T require the collection of sales tax" (emphasis added). Not that they normally don't, or generally don't, or in any way, shape or form ever implied that there might be any exception to what you said, you just stated they don't require the collection of sales tax, period!!!

Aaaarrrgggghhh!

[Gusturd]

Holy Cow Bob...You're going to give yourself a stroke. Take a Xanax. Nobody is questioning your knowledge of tax regulations, just your reading comprehension. All you had to say is quoted below. Probably could've said just the last 5 words in fact. Would've saved yourself a lot of effort and stress.

Now that you realize we're saying the same thing, have a good night.

Originally Posted by BobC

I never said 100% of your wife's sales were all to sellers in the state she lives in. And yes, even if the in-state sales she makes are subject to sales tax, the sales to out of state sellers would likely not be subject to sales tax in other states because she doesn't reach the threshold for the required number of transactions in those other states. So in that instance, yes, Ebay didn't really need to collect sales tax on your wife's behalf for the out of state sales. I agree with that 100%,