ebay charging tax on taxes; is this legal?

[mdinyeg]

There has been a lot of discussion about the underhanded way in which ebay began charging FVFs on taxes it collects and remits to state/provincial/federal authorities on behalf of sellers. But I haven't seen anyone comment on the fact that ebay then charges tax on the tax.

As a service, ebay must charge its sellers sales tax, in my case 5% GST paid to the Canadian federal government. As a rule, companies are not supposed to tax taxes, but ebay is doing exactly that.

For example, in a sale crossborder to California:

$100 purchase

$30 shipping

= $130

x 4.36% state internet tax = $5.67

Total purchase: $135.67

ebay's fees are 12.9% + .4% for international transactions + $.30 transaction fee; on $135.67 that = $18.34

ebay then charges me 5% GST on $18.34, which means it is charging me 5% GST on 13.3% of the 4.36% California state tax, in this case $.04.

If there is an accountant out there who can weigh in on this, I would like to know if this is legal. And does it profit ebay or only the government that collects the GST?

Also, I noticed on a recent transaction that ebay charged me $1.48 GST when it should have been $1.47. Since GST is an input/ouput tax, this seems only to benefit the government that is actually then receiving more than 5%, but is it possible ebay is collecting those extra pennies and pocketing them? (On billions of transactions per day, a penny here and there adds up to hundreds of thousands in additional profits.)

[reallynicestamps]

With respect to PST no one mentioned eBay is being reimbursed by the provincial govt to collect provincial taxes in the first place.

Ontario no longer pays shopkeepers to collect and remit taxes, and hasn't for over 15 years.

[recped]

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@reallynicestamps wrote:

With respect to PST no one mentioned eBay is being reimbursed by the provincial govt to collect provincial taxes in the first place.

Ontario no longer pays shopkeepers to collect and remit taxes, and hasn't for over 15 years.

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Ontario has no PST so no compensation! Back when Ontario had PST the compensation was modest and capped so even if it existed it would only be a few hundred Dollars a year.

While it certainly feels like longer the switch to HST only happend in July 2010.

[brettjet38]

Zombie Thread from 04-22-2022

[intimewithmusic]

BC sales tax used to fluctuate between 5, 6 & 7%.  A few decades back we changed to HST. It didn't go down well with tax payers and was revoked by referendum. Ever since it's been stuck on 7%. 

During my decades as a retailer I would receive .03% commission for collecting PST up to a limit which is now set at $198 per reporting period. Most of us smaller retailers reported quarterly. 

@reallynicestamps    It sounds like your saying in Ontario there's no commision for collecting HST which is a real shame. 

[kh-phdan]

Hello Everyone,

Due to the age of the thread, it has been closed to further replies. Please feel free to start a new thread if you wish to continue discussing this topic.

Thanks for your understanding!