PAYPAL IS CHARGING SELLER FEES ON STATE TAX COLLECTED FOR EBAY!

[gwrocen]

Would like to know why we have to pay a seller fee to PayPal for money

that is not part of OUR sales transaction?

Anyone else notice this?

PayPal charged the commission on the tax

collected by eBay for the state of Nebraska and added it into my total fee.

Commission is 3.7 % plus 30 cents.

          Purchase                                      $19.99

Shipping                                                  $9.50

Tax                                                            $2.06

Purchase total                                    $31.55

Fee                                        -negative $1.47

Tax collected by eBay    -negative $2.06

Total                                                         $28.02

I guess this means a call to PayPal to find out what is going on.

[pjcdn2005]

There were emails sent out about this though they weren’t 100 % clear on how it would work.  There are also other threads about it. Here is the most recent one.

https://community.ebay.ca/t5/Seller-Central/The-US-quot-tax-flow-through-quot-has-started/m-p/429397...

[teenytrinkets]

Yep - I've already dubbed it the Superman III / Office Space scam.  They're making money from this!!!!

Go ahead and raise our fees if you want more money from us, but to charge us fees on taxes that we do not collect/remit, is fundamentally wrong!!!  I am not even sure how this is legal...

[gwrocen]

I just got off the phone with PayPal and was told that they cannot do anything

about the fact that eBay is illegally forcing us to "collect a sales tax" for the State of Nebraska

as illustrated in my original post. 

PayPal is enabling eBay to illegally put a Nebraska sales tax on my PayPal account - a tax which I am not entitled to collect.  I have absolutely no authority to "collect" that tax. 

What eBay is doing is totally illegal - forcing me to "collect a sales tax" even though that sales tax is subtracted from the final total which I receive.

The representative I spoke with was like a broken record saying to talk to eBay because they are the ones collecting the tax.  When I asked why it was on my PayPal statement if it was eBay collecting the tax she just kept repeating, "Get in touch with eBay".   So it appears that eBay and PayPal are colluding and have found a way to collect more fees from us sellers by having PayPal charge the seller's fee on the sales tax - a tax that was illegally added to our statement making it look like we are collecting it. 

By the way, I was told that the PayPal transaction fee is really 2.9% plus 30 cents plus a 0.8% cross border fee which equals the total 3.7 % + 30 cents fee.

tyler@ebay 

[hlmacdon]

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@gwrocen wrote:

So it appears that eBay and PayPal are colluding and have found a way to collect more fees from us sellers

It was a joint decision between the two to offload the payment fees to the seller and reduce customer service enquiries since some customers were confused by the separate charges under the prior system. Ultimately the responsibility of customer enquiries for a marketplace tax are eBay's problem. These shouldn't be hitting our financial statements on paypal as they have nothing to do with the seller. This has been poorly implemented.

[marnotom!]

This isn't going to be a popular observation, but if you purchase something from a brick and mortar retailer and use a credit card for your purchase, the retailer has to pay credit card merchant fees on the entire sale including taxes. eBay sellers who charge (or collect and remit) Canadian sales taxes and accept direct credit card payments or PayPal have had to pay merchant fees or PayPal fees on those taxes for decades.

I don't think there's any way PayPal--as a credit card intermediary service--can give sellers any sort of fee break on sales taxes without VISA, MC and Discover being on board as well.

[hlmacdon]

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@marnotom! wrote:
I don't think there's any way PayPal--as a credit card intermediary service--can give sellers any sort of fee break on sales taxes without VISA, MC and Discover being on board as well.

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They can and they were. The transaction was completely off our books before and handled between ebay and paypal. The only reason it changed is ebay got tired of having their customer service lines tied up with customers asking why there were two charges. Their onus, their problem.

[lady.stark]

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@marnotom! wrote:
This isn't going to be a popular observation, but if you purchase something from a brick and mortar retailer and use a credit card for your purchase, the retailer has to pay credit card merchant fees on the entire sale including taxes. eBay sellers who charge (or collect and remit) Canadian sales taxes and accept direct credit card payments or PayPal have had to pay merchant fees or PayPal fees on those taxes for decades.

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It is not really the same thing, because we do not see the colour of those taxes. They are NOT part of the money we receive in our PayPal account. So fees on these taxes should not be charged to us as we don't even see that money!

[pjcdn2005]

eBay is not illegally collecting the money. As a Marketplace facilitator they are now required to tax buyers in certain states regardless of where the seller is located.  

I agree that we shouldn't have to pay fees on a tax that is not ever in our hands.

[teenytrinkets]

Sure, the retailer pays merchant fees to the credit card company on the purchase price + tax. BUT.... it's NOT the same. That retailer collects and remits the sales tax. They HAVE to. So therefore they HAVE to pay fees for the taxes, too.

Ebay is FORCING us to collect the tax into our accounts that we do not collect/ remit. PayPal should be forgoing fees on that amount, or billing Ebay for those fees.

How is this even legal? Sellers need to revolt. There needs to be some bad press about this!!! It's only pennies, but it's the principle!!!

[gwrocen]

The point I am trying to make is that I am not authorized to collect a sales tax for Nebraska (as in my example in my original post) or for any other US state so why has eBay decided to make me the "agent" who is required to collect that tax? 

And then eBay has PayPal "claw that tax back"  all the while using MY ACCOUNT.

eBay has no legal right to use my personal PayPal account.  I have NOT given them permission to do so.   And as far as I am concerned, PayPal has no right to tamper with my account either. 

In our "terms of use with PayPal" does it say anywhere that PayPal and eBay can freely come in and just 'use our accounts' depositing and withdrawing money (other than the "seller's fees") ?

If PayPal were my 'bank account' would eBay have the right to go in and use my account any time they feel like it? 

What if some state goes after me and charges me with "illegally collecting a sales tax" which I am not remitting?

I think eBay has put all sellers in a very compromising illegal position.

[reallynicestamps]

You are not the agent

You are not collecting anything.

EBay chose to use this method as being simple for the buyer.

We agree that paying Paypal fees on money we never touch is a Bad Thing.

The rest is just your own misunderstanding of the situation.

[marnotom!]

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@pjcdn2005 wrote:

eBay is not illegally collecting the money. As a Marketplace facilitator they are now required to tax buyers in certain states regardless of where the seller is located. 

---

This point cannot be stressed enough.

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@pjcdn2005 wrote:

I agree that we shouldn't have to pay fees on a tax that is not ever in our hands.

---

What's lacking from the PayPal user agreement is a definition of "transaction amount". 

https://www.paypal.com/ca/business/fees

Sellers are charged a percentage of a sale's "transaction amount".  One could read that as not the same as being charged a percentage of what the seller receives in the sale but, rather, what the buyer pays.

I'm just really thinking out loud here, trying to think of the rationale for this.  Also consider that what sellers see on the transaction details page is really just eBay's bookkeeping.  It may well be that sellers do see those taxes for, say, a nanosecond, before they're kicked over to eBay's coffers, but the payment summary doesn't reflect that.

[gwrocen]

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@reallynicestamps wrote:

You are not the agent

You are not collecting anything.

EBay chose to use this method as being simple for the buyer.

We agree that paying Paypal fees on money we never touch is a Bad Thing.

The rest is just your own misunderstanding of the situation.

---

Hello,

I may not be the "actual agent" and I may not be "actually" collecting the tax,

but why is it going through MY PERSONAL ACCOUNT?

eBay may choose all they want but

I did not "choose" to have eBay use my account.

How can they waltz in and start using MY PayPal account?

So now we will have to allow third parties to come in and help themselves to our personal accounts.  How is that even legal?  What happened to "privacy and terms and conditions".

In the future, who else will PayPal allow to "flow through" my account?

I am not misunderstanding the situation. 

eBay is USING MY PERSONAL PayPal ACCOUNT as if it is theirs

and they expect me to pay their fees on money they are collecting. 

Why doesn't eBay or the state they are collecting for pay the fees?

My account is my account for ME to use.  It is not there for eBay to use.

I am not authorized by any state to have their state tax going through

my personal account.   I am not authorized to have any buyer

pay me or my personal account a state tax even if it is just to "flow through". 

And I do not like having to explain to my US buyers why their state tax is being added on

to their invoice for a purchase they are making from a Canadian. 

[teenytrinkets]

I could not have said it better!

This is all complete BS and I don't understand how this is even allowed!!!

[cottagewoman]

I feel as well that eBay is shirking their responsibilities regarding the collection of taxes - they are doing so based on the marketplace facilitator clauses in the new state tax legislation passed by many different states recently.
I do understand that there is probably a certain degree of ambiguity or complexity in the various state laws - however this type of blanket approach to push the sales tax portion through each sellers' account seems to be an incorrect application.
Here are two key points from the recent California law:
'Beginning October 1, 2019, a new California law generally provides that a marketplace facilitator is responsible for collecting and paying the tax on retail sales made through their marketplace for delivery to California customers.'

And this statement is most interesting:
'If you are a marketplace seller, beginning October 1, 2019, you will no longer be considered the retailer of your sales of tangible merchandise facilitated through a marketplace, as defined by statute, provided the marketplace facilitator is registered or required to be registered for a seller's permit or Certificate of Registration – Use Tax.'

So in essence in the eyes of the state of California we are not the seller, eBay is. That then leads to the conclusion that we are not responsible to collect the taxes levied by California. However, as the OP stated quite correctly, our own financial service (PayPal) which is separate from eBay is collecting and remitting the tax BACK to eBay, the facilitator. The previous implementation was correct where no tax collected moved through any sellers' account. That is eBay's responsibility as the facilitator - as per the first quote given.

[reallynicestamps]

FWIW-- This question was added to Tyler@eBay's weekly discussion, although eBay and Paypal are different companies.

The thread is open now (9.57am Pacific) because Tyler had a furnace problem yesterday.

[cottagewoman]

I do get the point that it was probably confusing when buyers saw two different transactions when tax was applied, but this new move is actually outside the scope of one state's law. That's eBay's problem to deal with the customer as the facilitator who charges us to use their platform, not ours.

[cottagewoman]

Actually as per California State law in particular, eBay is shirking the law:

'...generally provides that a marketplace facilitator is responsible for collecting and paying the tax on retail sales made through their marketplace...'

In the new implementation sellers are collecting the sales tax on the transaction, then returning it back to eBay for remittance. They are only doing 1/2 the job now, which is outside the language of the law.

[lady.stark]

tyler@ebayIn today's chat, you wrote:

"Hi @gwrocen - we pull sales tax from your PayPal account, in short, because you agreed to it in our User Agreement (specifically section 5, paragraph 4). "

I'm sorry, but the way I understand it, in the user agreement, the sales taxes are the taxes charged to us by eBay on our seller fees. They are not the sales taxes collected by eBay for some US states. We never agreed to see those taxes going through our PayPal account as we are not the party responsable to collect those taxes...