Brokerage fees versus customs, duties, and taxes (shipping to U.S. from Canada)

[23quixotic23]

Hi all.  I sold an item to a U.S. buyer for $1,400 Canadian, but this was when Canada Post was just going on strike.  So I told the buyer 24 hours in advance that I'd likely have to ship via Purolator.   I didn't hear anything back, so I went ahead and shipped Purolator Ground with signature required and full insurance.  

When the item arrived, the buyer refused to pay brokerage fees (to UPS, apparently).  Does the item automatically get sent back to me?  

I also told the buyer (after he wrote to tell me about the refusal) that I would pay for brokerage fees.  However, I don't want to pay for customs, duties, taxes that he would have to pay anyway via Canada Post.  Is there some general rule-of-thumb for the fraction of brokerage fees that go to UPS versus the amount that goes to Uncle Sam?  (the item was a used camera made in Canada, if that makes any difference).

Thanks in advance.

Evan

[hlmacdon]

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@23quixotic23 wrote:

I also told the buyer (after he wrote to tell me about the refusal) that I would pay for brokerage fees.  However, I don't want to pay for customs, duties, taxes that he would have to pay anyway via Canada Post.  Is there some general rule-of-thumb for the fraction of brokerage fees that go to UPS versus the amount that goes to Uncle Sam?  (the item was a used camera made in Canada, if that makes any difference).

Thanks in advance.

Evan

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Duty if applicable (depending on the respective HS code and country of origin). Carrier brokerage (read: handling) charges are variable depending on the carrier and service level. $800 USD is their de minimis level, anything over that the above applies. First is easy enough to calculate, the second you would have to confirm with the carrier. It's something you would want to ideally state in your listing as many buyers in the US are largely unaware of their de minimis levels as they are typically used to buying things from China where about 1 in 100 packages are valued correctly.

[pjcdn2005]

I don't think that customs charges state tax because it isn't a federal tax. I could be wrong but that's my impression on how it works..Canada customs here doesn't charges for gst/hst but not pst as that is strictly provincial so I am guessing that the situation would be similar there.

[lotzofuniquegoodies]

If it does come back to you via Purolator, you would have to pay for customs clearance and duty before it would be released to you. With your documents for original shipping and return you would need to do a claim back for any duties/taxes with the Government of Canada as Canadian goods returning. It's a similar procedure for a repair return. If applicable, the only duties and taxes would be the billable repair costs. Not the original value.

-CM

[hlmacdon]

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@pjcdn2005 wrote:

I don't think that customs charges state tax because it isn't a federal tax. I could be wrong but that's my impression on how it works..Canada customs here doesn't charges for gst/hst but not pst as that is strictly provincial so I am guessing that the situation would be similar there.

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Correct, I've updated that.

[pjcdn2005]

UPS should have a form showing the break down for things like duty, tax, brokerage etc.  There is also another fee that they charge but I can't think what it is called but it is a fee for them paying the duty for the buyer ahead of time. (collection fee?) You could probably get them to scan the form and send it to you.

If the buyer doesn't pay the charges owed, the package should get sent back to you but I believe that they will charge you for the return shipping too.  However, you should check with UPS on that  as one time when I shipped with a courier to the US, I had to mark whether or not I wanted the item returned to me if it was refused.  I don't know if UPS has a default choice of that for that.

[lotzofuniquegoodies]

The default is Return. Optional is Destroy. That detail is also included in additional information with the Shippo Customs Invoice. Surprise!!!...When an item automagically returned when a customer is either not home, refused or has wrong address and that box doesn't get correctly checked. (Especially on low value items.)

-CM

[23quixotic23]

Thanks everybody.  I'll have to wait until Monday, since Purolator is closed today (the buyer may have just said UPS as a generic tag for courier, for all I know).   But I also see that since yesterday, when tracking indicated that "Receiver and/or funds not available on delivery attempt", it has now gone to "shipment in transit" again.  So maybe it is already heading back to me.  

(I think this camera is cursed.  The first sale fell through when ebay advised me not to ship it, due to a "communication partner warning" and a supposedly "fraudulent" email on the part of the buyer.)

[lotzofuniquegoodies]

Purolator Canada to USA

https://www.purolator.com/en/resources-and-support/resources/import-and-export-centre/customs-docume...

Actual customs charges are unfortunately very well hidden with Purolator for some reason.

Only way to confirm charges is by calling. Good luck with process!!

-CM

[23quixotic23]

So, yesterday Purolator called me to ask what I wanted to do with the package.  Of course, I'm getting them to send it back to me.  When it arrives safely, I'll return the "buyer's" funds, minus whatever shipping it cost to send it back to me, given that that is what the auction stipulated.  

What I'm wondering though, is if I should also charge the buyer for the brokerage fees? (about $65 CDN).  I did offer to pay them initially, but the buyer remained silent, and then proceeded to refuse the parcel.  I suppose I could rationalize it, based on the extra hassle of listing the camera on another auction.  

[momcqueen]

This is a very interesting and tricky dilemma. I would want to see you gain the best advice and the advice you've been given is certainly good, but let's ask ebay exactly what they suggest you do. 

@happy_pigeon and tyler@ebay

This seller is in a tricky spot with an American customer who has refused to pay their duty owing on a high-priced item via courier and now we believe the item is being returned with funds owing for that journey back and also possibly some manner of brokerage fees. What refund is the seller obligated to send the buyer in this case? None, full or partial? And, if a partial, minus which amount(s)? There are variables that make it not par-for-the-course. Plus it was an item of some value. Thanks.

[makitkatwalsk-0 · Accepted solution]

I have had this happen to me quite a few times too.  If the buyer refuses to pay for customs, they abandon their money back guarantee. When I talked to eBay on the phone, they said it is up to the buyer/seller to then work out how much if any gets refunded.   There is no guideline or rule for the process.  Generally as the seller you will want to recover your costs.

Be aware though that you need to get your final value fees back from eBay.   If you do a partial refund, you won't get to cancel the transaction and get your fees back.  In this case, you have to phone into CS and request them to refund your seller fees for the item.

I issue the partial refund directly through PayPal.

Best wishes.

[momcqueen]

I strongly suspect you are correct since I had a similar experience early in my selling days but it's such a lot of money at stake here that I'd feel better for the seller in question if we had ebay confirm it. 

[tyler@ebay]

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@momcqueen wrote:

This is a very interesting and tricky dilemma. I would want to see you gain the best advice and the advice you've been given is certainly good, but let's ask ebay exactly what they suggest you do. 

@happy_pigeon and tyler@ebay

This seller is in a tricky spot with an American customer who has refused to pay their duty owing on a high-priced item via courier and now we believe the item is being returned with funds owing for that journey back and also possibly some manner of brokerage fees. What refund is the seller obligated to send the buyer in this case? None, full or partial? And, if a partial, minus which amount(s)? There are variables that make it not par-for-the-course. Plus it was an item of some value. Thanks.

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Thanks for the tag @momcqueen! Specific to your questions, a buyer's coverage with eBay Money Back Guaranteed is void if they refuse the package or fail to pick it up after an attempt of delivery has been made.

Hi @23quixotic23. Customs/Brokerage fees being due are always the responsibility of the buyer and not picking an item up is considered their abandonment of the package*.

That being said, we'd encourage you to work a suitable refund out for the buyer when you receive the item back, as you'd have both the item and the money at that point. It sounds perfectly reasonable to refund the buyer's purchase price of the item less shipping costs and fees.

Also - @makitkatwalsk-0 gave you some great info on recouping your fees. If you do issue a less-than-full refund directly through PayPal** please contact CS and request a partial Final Value Fee credit.  

*Notable exception is if we have evidence/proof that a seller intentionally misrepresented the price on the customs form to cause more custom due. Example: widget sold for $25 and seller indicates that it sold for $3600. 

**Remember to refund through the transaction on PayPal - as that's the only information a CS teammate will have access to when verifying if a refund was actually issued. 

[23quixotic23]

Thanks everyone.  I had totally forgotten about the seller's fees.  So, after I do the partial refund, I'll cancel the sale and contact Customer Service to see about cancelling the seller's fees.

Evan

[23quixotic23]

Well, I contacted Customer Service a few weeks ago, and they agreed that I wouldn't be billed. But hey, guess what happened? They billed me anyway. Guess I'll give them another shout, and then update this thread again.

Hopefully, the payment/refund transactions with the so-called buyer is enough evidence for ebay.