eBay

gwrocen · ‎11-30-2019

Does anyone know what the US and Canadian laws would be on this? Can eBay legally deposit and withdraw the tax, that eBay is required to collect, through MY PayPal account? I am really bothered by this. We do not have a nexus in the US and are not registered to collect taxes from anyone. I would like this to be spelled out very clearly.

Can anyone help on this?

Thanks.

lady.stark · ‎12-09-2019

@marnotom! wrote:
@lady.stark wrote:
Credit card issuers? Why did they never complained about how Canadian taxes are collected by GSP then? They would have done it a long time ago if that was the case.
The GSP doesn't collect taxes or duties. That's done by Pitney Bowes or an agent of PBI. When buyers pay "import charges" (note the wording used by the GSP), they're just repaying whatever PBI or its agents paid out for taxes, duty and processing charges as well as a pad for contingencies, and a li'l something for eBay. Maybe even something for PayPal. It's basically following established practice for the handling of commercial imports handled as freight, a practice that's been in place for decades.

This is playing with words. GSP is a program operated by Pitney Bowes and eBay. So, yes, the program is collecting taxes.

Another play with words... what are "import charges" if not taxes* on imported goods?

@lady.stark wrote:

No, the real reason is because eBay does not want to pay PayPal fees on those taxes.
There's something to that hypothesis, but bear in mind that if eBay were to continue with the original practice of sales tax collection, they'd have to come up with some way for the seller to bear those fees anyway, and it likely wouldn't be on a pure cost-recovery basis the way it is now.

Why do I have the feeling you are defending eBay? It's like you agree with what they are doing...

* It may also contain duty, but 99.99% of the time, a person like me will never pay duty.

marnotom! · ‎12-09-2019

@gwrocen wrote:

eBay is not collecting US state Sales Tax ON MY BEHALF.

I do not qualify for collecting US State sales taxes for any state
as set out in US Tax regulations. I do not sell over a certain dollar amount
and I do not make more than a specified number of sales into any state.

Since eBay has a nexus in the USA, eBay is collecting taxes
because eBay has to collect state taxes on eBay’s own behalf.

No quibbles with most of what you've said here. The only thing I'm not sure that you understand is that as you're using the services of a Marketplace Facilitator, a different set of rules apply. If you were selling directly off your own website, you may well be able to get away without having to collect and remit sales taxes from US buyers.

@gwrocen wrote:

So why do Canadian sellers have to pay the cost of eBay doing business in the USA?

That’s like me passing on MY expenses to YOU for my office phone line
because I am using the phone to talk to you or something like that.
I’m sure you get the idea of what I mean.

But what's happening here is something different. You're getting charged PayPal fees on the value of the entire transaction, as per the PayPal user agreement. Whatever the buyer pays is on what PayPal bases its fees to the seller. PayPal would be contravening its own agreement otherwise.

I think your beef is with PayPal, not so much eBay.

@gwrocen wrote:

More references:
Is it illegal to not charge sales tax?
There is no sales tax obligation for the retailer if it has not established nexus in a state. However, if a retailer does collect sales tax in a state in which it is not registered to do so, that constitutes an illegal activity.
https://www.salestaxinstitute.com/sales_tax_faqs/sales_tax_liability_customer_does_not_pay_use_tax

Interestingly enough, that website that you linked to offers a webinar on sales tax and its effect on sellers using Marketplace Facilitators. It's called: Sales Tax Isn't Optional - What Online Marketplace Sellers Must Do.

https://www.salestaxinstitute.com/sales-tax-education/sales-tax-isnt-optional-what-online-marketplac...

lotzofuniquegoodies · ‎12-09-2019

@marnotom!

Out of curiosity why was this not applicable/a big deal when eBay started submitting Taxes for Australia? Less money involved in the scheme of things? Or apples and oranges?

-Lotz

marnotom! · ‎12-09-2019

@lady.stark wrote:

@marnotom! wrote:
The GSP doesn't collect taxes or duties. That's done by Pitney Bowes or an agent of PBI. When buyers pay "import charges" (note the wording used by the GSP), they're just repaying whatever PBI or its agents paid out for taxes, duty and processing charges as well as a pad for contingencies, and a li'l something for eBay. Maybe even something for PayPal. It's basically following established practice for the handling of commercial imports handled as freight, a practice that's been in place for decades.
This is playing with words. GSP is a program operated by Pitney Bowes and eBay. So, yes, the program is collecting taxes.

Another play with words... what are "import charges" if not taxes* on imported goods?

Apologies, I muffed up the composition of that sentence. It should have read something to the effect that Pitney Bowes or its agents pay any taxes and duties due on a GSP-forwarded item. It's in the subsection entitled "Pitney Bowes' Role as Your Forwarding Agent":

https://pages.ebay.ca/shipping/globalshipping/buyer-tnc.html

I can see where you're coming from when you say that the GSP is collecting taxes, but since the GSP is also on record as having paid these taxes (and duty), I'd say that what it's doing is a different kettle of fish than what eBay is doing with stateside purchases subject to sales tax.

And "import charges" are made up partly of those taxes that the GSP pays as well as a lot of other charges. You can see the makeup on this page:

https://www.ebay.ca/help/buying/postage-delivery/changing-delivery-address-method/international-purc...

@lady.stark wrote:
Why do I have the feeling you are defending eBay? It's like you agree with what they are doing...

If I started explaining the causes of the Second World War, would you have the feeling that I was defending Hitler? As I stated in another post on another thread, I find it's useful to figure out the ways of your foe. It helps one deal with them more rationally.

marnotom! · ‎12-09-2019

@lotzofuniquegoodies wrote:
@marnotom!

Out of curiosity why was this not applicable/a big deal when eBay started submitting Taxes for Australia? Less money involved in the scheme of things? Or apples and oranges?

I suspect that sales to Australia make up such a small proportion of most North American sellers' sales and as a result, very few of these sellers were aware that something was going on.

reallynicestamps · ‎12-10-2019

I suspect that sales to Australia make up such a small proportion

And/or eBay is a US company and has to obey US laws, while it feels less need to pay attention to Australian laws.

Although I have not read the eBaydotAU Boards discussing the application of sales taxes (I suspect Aussie sellers are in favour and buyers are against) so I don't know how much our TPP partners feel about it.

gwrocen · ‎12-10-2019

@marnotom! wrote:
No quibbles with most of what you've said here. The only thing I'm not sure that you understand is that as you're using the services of a Marketplace Facilitator, a different set of rules apply. If you were selling directly off your own website, you may well be able to get away without having to collect and remit sales taxes from US buyers.

Who's "trying to get away" with anything? The law is the law. I am not required to collect US state taxes.

My understanding is that since I DO NOT have nexus in the USA and I do not meet or exceed the threshold for sales into any state, therefore I am not required to collect US state taxes.

It is illegal for eBay to put those taxes on my customer's PayPal invoice making it "appear" that I am collecting taxes. Then PayPal allows eBay to withdraw that tax amount from my personal private account.

eBay has nexus in the USA. Therefore eBay has to collect taxes on its own behalf.

So yes, I guess I don't know that a different set of rules apply. What are those rules? Please explain them to me.

marnotom! · ‎12-10-2019

No need for me to explain further. You can read all about it here:

https://quaderno.io/blog/us-marketplace-facilitator-sales-tax-laws-everything-you-need-to-know/

retroman_studios · ‎12-10-2019

I've been watching this discussion for some time.

While there are plenty of useful points on both sides of the discussion, ultimately, I feel the answer will never fully be found unless it were tested in court.

There are lots of fees and so called taxes that companies over the years have collected that come to mind. Remember that $2.50 ish charge that used to appear on your cellphone bill? It was an illegal charge and they even claimed it was a government levy at one point. The CRTC challenged the charge but it merely disappeared into other charges and no one ever got a dime back.

I suspect something similar with this issue. Unless someone has some extra cash, time and effort to challenge this, nothing is going to change. Even if a court declares the method of taxation illegal, it does not necessarily mean it will stop.

Just my 2 cents.

In the meantime, if you feel the need, raise your handling fee to cover the extra expense and paperwork. If buyers complain you can explain this is a direct result of US States requiring taxes be remitted.

lotzofuniquegoodies · ‎12-10-2019

@retroman_studios

More than likely a one time buyer that is not familiar is just going to be under the impression that it's a seller adding high fees willy nilly. They will not email you to ask. If they do buy they will either leave bad TSR's or Feedback when their item arrives. Then they will go on along their merry way never to be seen or heard from again.

If eBay did the right thing from the start and explain/show it as a specific state tax on their Pay screen/packing slip with the corresponding percent it would have cleared up customers confusion. With all these fees related to trying to sell any measly widget it is getting to be impossible to add corresponding handling fee and still make a dime before customers are scared away completely. We passed the point of reasonable happy medium ages ago. The only ones that can afford all these add-on charges are the very big sellers buying items at pennies with much better shipping rates that we will ever qualify for. They can sell at rock bottom prices and any return request is click away to resolve.

-Lotz

pjcdn2005 · ‎12-10-2019

Buyers did and do see the tax amount before they pay and they see what it is for. If they think that they shouldn't be paying tax, most are going to ask the seller about it and it can be explained then. To suggest that they are going to leave bad feedback because of being taxed is a stretch.

lotzofuniquegoodies · ‎12-10-2019

Two points.

Buyers leave various low TSR for a number of made up reasons.

eBay could show the math on the packing slip. That part is not rocket science.

There have been numerous reports on dot com of buyers being charged the wrong rate and the rate can change if the last 4 digits of a zip code are included. Also some items have different rates. Do we know if they are being applied correctly?

-Lotz

lady.stark · ‎12-18-2019

I agree that somewhere on the invoice, the percentage of taxes charged should appear. We don't even know if each state is charged correctly. If that is done like the GSP, we know the taxes are not accurate.

Also... adding a handling fee is quasi impossible since we don't know where the item will sell and which amount of taxes will be charged.

For some widget items not worth a lot of money, I can live with the extra pennies even if it **bleep** me off. But for the high dollar items, like my $600 dress... I refuse to pay fees that EBAY should pay! That's why I will probably stop selling my higher priced items here. At least until eBay resolve this issue.

lotzofuniquegoodies · ‎12-18-2019

@lady.stark

The other day I went to send a modified invoice and noticed that the State & percentage does show up on the customer end. As for the seller's end it's nowhere to be found. It needs to display in Hub, Packing Slips (eBay/Paypal Shipping/Shippo) and in Paypal in the identical format. Very critical info especially when an item is of higher value for all parties concerned

-Lotz

femmefan1946 · ‎12-19-2019

I've added a sales tax column to my spreadsheet.

I sell low cost goods (average about $10) and since the beginning of December the average tax has been about 65c which is a PP fee of two cents per transaction.

If my average transaction was $100 that would be 20c.

I agree that the legality is questionable and that the morality of passing over the fee is unconscionable.

And that Paypal fees are tax-deductible.

Just want to put this in perspective.

lotzofuniquegoodies · ‎12-19-2019

@femmefan1946

For me and the products I sell, average shipping per item is in the neighbourhood of 14 to 16 per order. The additional fees on taxes just something else to reduce the bottom line. Also limited to how much one can recoup with any sort of handling charge. Not at the volume yet where I can/need to claim on taxes. Personally, my biggest frustration was how the whole thing was implemented. It was like they thought we wouldn't notice and just get used to it. No skin off their back.

-Lotz

lady.stark · ‎12-19-2019

@femmefan1946 wrote:
And that Paypal fees are tax-deductible.

I guess this is one advantage to be registered with CRA. I am not, because I do not buy to resell (just sell my old stuff) and I don't earn over $30,000 per year. So I do not have to be registered. Which mean those fees are out of my pocket line.

femmefan1946 · ‎12-19-2019

@lady.stark

Be careful.

The $30K (I believe) is how much you need to gross (net?) before being REQUIRED to collect and remit sales taxes. You can register collect them before that if you want.

And any money made on purchases made for resale have to be reported as income.

I think (and I am not an accountant nor a lawyer) that there is no minimum for reporting that income (or those losses).

It's worth keeping records in any case, just so you know where you stand.

But again, these fees are being charged because of eBay's decision to use our PP invoices to collect them, and should be eBay's responsibility.

femmefan1946 · ‎12-19-2019

@gwrocen

However, if a retailer does collect sales tax in a state in which it is not registered to do so, that constitutes an illegal activity.

There often is a reason for a law.

The reason for that law is to prevent sellers from collecting "taxes" and then keeping them.

If taxes are collected by eBay and then are remitted to the state taxation authority, the action is legal.

The seller is not collecting taxes.

The question is not whether the taxes are legal or not, the question is whether eBay or the seller should be paying Paypal fees on the taxes collected and remitted by eBay.

It's my observation that all the sellers posting are of the opinion that these fees should be paid by eBay.

lady.stark · ‎12-19-2019

@femmefan1946 wrote:
@lady.stark

Be careful.
The $30K (I believe) is how much you need to gross (net?) before being REQUIRED to collect and remit sales taxes. You can register collect them before that if you want.

And any money made on purchases made for resale have to be reported as income.

Yeah, that is also my understanding. But as I wrote, I do not purchase to resell. The items I'm selling are just stuff sitting at home that I do not want anymore and are taking too much space.