The US "tax flow through" has started....

[ricarmic]

Looks like today was opening day for the new tax flow through (for a NY purchase).

Here's what it looks like in PAYPALand:

Purchase total$19.99 USD

Sales tax$1.77 USD

Shipping amount$0.00 USD

Handling amount$0.00 USD

Insurance amount$0.00 USD

Gross amount$21.76 USD

PayPal transaction fee-$0.93 USD

Tax collected by eBay-$1.77 USD

Net amount$19.06 USD

So the tax does show on the receipt and email as part of the transaction as we expected.

It also physically comes into the PAYPAL account as we suspected and then immediately leaves.

PAYPAL fees are deducted as we suspected.

I tried doing a download of just today so far so I can see how it looks in the downloaded view of the data but the download is still pending.

Will advise when I have more news....

[ricarmic]

The download finally became available.

The tax shows up in 4 places:

-it is in the total value in the original transaction (column H if you are downloading)

-it is in the "sales tax column" in BOTH the original transaction and tax withdrawal trans (column T if you are downloading)

-it is in its own withdrawal row as a "-" number (column H if you are downloading) of just the tax removed (but as noted above it shows the tax amount again in column T).

I'm trying to decide the best way to handle this book keeping wise, I think I have a plan.

Note also that theres a little informational "i" beside the "total" on seller hub which says that this number includes the tax ebay collected. (I'm also presuming that our sales totals also reflect the sales tax collected, but I haven't (nor don't plan to) taken the time to verify that for sure, the numbers are only sorta reliable anyway.

[teenytrinkets]

I just noticed it this morning when I recieved a payment from someone in SC, and I was soooo confused. I don't like this AT ALL.

First of all, it gives the impression to the buyer that sellers are charging tax, when it fact, it's Ebay (one transaction now - not two).

Secondly, it appears that the taxes show as a total sales amount, and now one would have to view your paypal account to see it's been deducted (like a fee).

Thirdly, what are CRA implications of all this? I don't charge taxes, because I sell low quantities and mostly household items. It looks like now I charge the taxes (not Ebay)!!!! Sure I don't keep them, but I charge them!

I really, really hate this! Sure it's relatively seamless at the end of the day, but people paying ME extra for taxes makes me very, very uncomfortable...

[teenytrinkets]

Can someone help me with the math here? I'm trying to confirm if we're stuck paying PayPal fees on the taxes we collect???

Here's my sale from today:
$45 CAD item sale price
$4.95 CAD taxes
$49.05 CAD total remitted

-$4.95 taxes reversed
-$1.72 paypal fee

Total net amount - $43.28

(I paid $1.78CAD on a $40CAD US sale two days ago. Is the fee higher on this lower valued item because of the US/CAD Exchange?).

I'm confused....

[esclyons]

so what is going to happen if you have to refund a USA buyer for a transaction? Will ebay have to cover the tax portion going back to the buyer? And will that be on a separate transaction?

[lotzofuniquegoodies]

@esclyons 

See post's 9 & 10 for partial clarification. Nowhere that I can find in the announcements is this clearly explained. And it was like major pulling teeth to get the information I did get.

https://community.ebay.ca/t5/Seller-Central/PayPal-will-not-refund-your-fees-as-of-11-01-19/m-p/4288...

-Lotz

[kawartha-ephemera]

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@esclyons wrote:

so what is going to happen if you have to refund a USA buyer for a transaction? Will ebay have to cover the tax portion going back to the buyer? And will that be on a separate transaction?

---

My guess is ebay will have to refund the tax to the customer somehow,  it would make sense for the Paypal refund transaction to look similiar to the original transaction only the funds are flowing out rather than in .... of course sellers will probably get stuck with transaction fees again. This is all complete guesswork on my part. 

Above assumes the refund took place using ebay's refund mechanism ... off ebay refunds are going to be permanently frowned upon by all concerned imo

[pjcdn2005]

I'm confused as well. The impression I got was that we would be charged Paypal fees (but not ebay fees) on the tax and both you and ricarmic paid fees on the tax. But what is confusing me is that we were paying 3.7% on sales to US buyers and 2.9% on sales to Canadian buyers. As you can see from your earlier $40 sale you paid 3.7% plus .30 and on today's sale, you paid 2.9% plus .30.

It looks like the tax paid was $4.05, not 4.95,

49.05 (including tax) x 2.9% = 1.42  + .30 transaction fee = $1.72

On the transaction that @ricarmic  posted...

$21.76 (including tax) x 2.9% = .63 +.30 = .93

I was thinking earlier that it was  a bit of rip off that we would be paying 3.7% fee on tax when Americans only paid 2.9% but If Paypal has changed our US rate back to 2.9% that's a good thing.

[pjcdn2005]

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@kawartha-ephemera wrote:

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@esclyons wrote:

so what is going to happen if you have to refund a USA buyer for a transaction? Will ebay have to cover the tax portion going back to the buyer? And will that be on a separate transaction?

---

My guess is ebay will have to refund the tax to the customer somehow,  it would make sense for the Paypal refund transaction to look similiar to the original transaction only the funds are flowing out rather than in .... of course sellers will probably get stuck with transaction fees again. This is all complete guesswork on my part. 

Above assumes the refund took place using ebay's refund mechanism ... off ebay refunds are going to be permanently frowned upon by all concerned imo

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There are no fees on refunds.   Canadians still get their Paypal fees reversed  when there is a refund so hopefully we should get the tax portion of the fee refunded as well.

[silverpinups]

"I'm trying to decide the best way to handle this book keeping wise, I think I have a plan".

Wait until the end of the month is completed then view your PayPal Monthly Financial Statement and Monthly Sales Statement for November to see if they add a sales tax section.

[ypdc_dennis]

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@pjcdn2005 wrote:

... that we would be paying 3.7% fee on tax when Americans only paid 2.9% but If Paypal has changed our US rate back to 2.9% that's a good thing.

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Or the programmers made a mistake while setting this up and went back to using the original percentage for US sales -- time will tell -- let us not complain to paypal about this fee change...

-..-

[ricarmic]

The problem book keeping wise is that the money, if only temporarily, shows up in our "bank" account as in the PAYPAL account.

In the case of Canadian taxes, we collect the taxes and "hold" them in our bank account until tax remission time when we give it to the government.

Accountingly in theory the same thing happens here, except the money is only in our account for a nano second. 

I generate my own receipts for my customers.

If I want to make my receipt match what the PAYPAL receipt shows, then I'll have to put the taxes into the same holding account and move them out again. This is somewhat easily done because the totals by month will be summable from the PAYPAL downloads. 

But because my application was built (by me) back in 1994 I did not ever expect I'd be collecting USA taxes so if I'm to generate a US customer receipt showing their taxes I've got to go back in and fix the application to recognize non-Canadian taxes "collected".

Fixing my app to recognize this is going to be a lot of work, so my current plan is to send the PAYPAL receipt to the USA customers instead of mine (which I already do for a number of countries other than the US) and show my receipt/books as though I've only received the non-tax amount, like it was before. The record keeping will balance because summing the money in (column H) will negate out the tax collected because as I mentioned in my PAYPAL stuff , there is a negative entry for the tax in the amount column (H) in a 2nd row. 

[teenytrinkets]

Thanks - yes this was a typo - the tax was $4.05, not $4.95.

Thank you for making sense of this mumbo jumbo! I'm not complaining that I got charged 2.9% instead of 3.7%, but I too think it was an error and PayPal typically retroactively fixes all of their past boo-boos eventually.

I'm still p!ssed that we're going to start paying fees on taxes. Its not a lot, but it's the same scheme that was used in Superman III and Office Space!!! They will be MAKING money from this change!!!

[kawartha-ephemera]

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@pjcdn2005 wrote:

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@kawartha-ephemera wrote:

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@esclyons wrote:

so what is going to happen if you have to refund a USA buyer for a transaction? Will ebay have to cover the tax portion going back to the buyer? And will that be on a separate transaction?

---

My guess is ebay will have to refund the tax to the customer somehow,  it would make sense for the Paypal refund transaction to look similiar to the original transaction only the funds are flowing out rather than in .... of course sellers will probably get stuck with transaction fees again. This is all complete guesswork on my part. 

Above assumes the refund took place using ebay's refund mechanism ... off ebay refunds are going to be permanently frowned upon by all concerned imo

---

There are no fees on refunds.   Canadians still get their Paypal fees reversed  when there is a refund so hopefully we should get the tax portion of the fee refunded as well.

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True for us Canadians, Paypal is giving us preferential treatment on this for the time being.  Have they stopped returning fees on refunds in the U.S. yet?

[hlmacdon]

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@pjcdn2005 wrote:

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There are no fees on refunds.   Canadians still get their Paypal fees reversed  when there is a refund so hopefully we should get the tax portion of the fee refunded as well.

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Expect that to change. On their earnings call they mentioned they have rolled out this cash grab into three countries and will be expanding it as well as introducing other fees to raise margins, in whatever form that may end up being. Crooks the bloody lot of them.

[pjcdn2005]

Someone else posted about this today and they were charged 3.7% so the ‘mistake’ was short lived. ☹️

[lotzofuniquegoodies]

Very strange how it was noted in this discussions that these changes were supposed to ONLY apply to Paypal dot com customers. We were supposed to have a reprieve until it was officially announced. Confusion overload!!!

-Lotz

[teenytrinkets]

Yeah, and they probably already have a team together working on getting their 1% back from everyone that caught a break yesterday... sigh....

[ypdc_dennis]

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@hlmacdon wrote:

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.... their earnings call they mentioned they have rolled out this cash grab into three countries and will be expanding it as well as introducing other fees to raise margins, in whatever form that may end up being. Crooks the bloody lot of them.

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Pandering to shareholder greed...

Planning to act just like a bank.

Starting to make managed payments look more attractive...

[hlmacdon]

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@ypdc_dennis wrote:

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Pandering to shareholder greed...

Planning to act just like a bank.

Starting to make managed payments look more attractive...

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Same potential issue since it's spelled out in their terms and conditions. The annoying thing with the paypal change is they are going to taking a chunk of those extra fees to dole out as over and above marketing funds to named retail accounts who are exempt from these changes. Scummy behavior. They only care to be competitive when they are trying to grab share in the mass retail segment. They can take their small business loans and shove them somewhere.