Options
Should a seller have to pay electronic collection fees for taxes?
amwldcoin
Posts: 11,269 ✭✭✭✭✭
After realizing ebay is going to charge their full FVF fees on the collection of sales tax. I thought it would be interesting to see how others here think. @SanctionII since you are the only lawyer I know here....is there a legal contest to this? I personally am going to vote #2 as soon as I post this because I think it is a crock a you know what we have to pay to collect taxes many loath!
Should a seller have to pay electronic collection fees for taxes?
This is a private poll: no-one will see what you voted for.
3
Comments
It's ridiculous that a company gets paid for something that has zero human involvement. It's like the fee to cancel a check. 30 years ago it required human attention and work. Now nobody at the bank knows it happened except a computer.
Great transactions with oih82w8, JasonGaming, Moose1913.
It's about money. They will push fees up and up until their customers finally start saying "no more".
This survey is flawed. The government isn't the one taking the transaction fee. The transaction fee comes from the payment processing firm.
The simple question is why VISA or PayPal should view taxes, shipping and handling, and the cost of goods as being somehow different. They simply process a dollar amount and assess the fee based on that.
I disagree! Why should we have to pay fees and the government doesn't? While I don't agree with how easy the payment processors generate a profit...the Government shouldn't be exempt!
PS! Glad to have you on board! I'm sure you will liven up this poll!
The government isn't mandating it....or the method of payment.
No, nobody should have to pay for anything.
No. What should I pay a fee for money that I will never see!
Young Numismatist/collector
75 Positive BST transactions buying and selling with 45 members and counting!
instagram.com/klnumismatics
Suppose your sales are $50k/yr. through your eBay store. Suppose further, that that entire amount was subject to a 6% sales tax...
$50,000 sales x .06 sales tax = $3,000 tax collected by eBay
$3,000 tax collected x .06 FVF = $180 over and above tax collected that you never see, paid to eBay for processing payments
Note that more than half the states do not tax coin purchases, so that $180 is almost certainly too high. Now, would you prefer...
A- to keep that (up to) $180 and handle the reporting and payment of the sales taxes you collected yourself.
or
B- be happy eBay's doing it and isn't charging you more for the trouble they're saving you.
Nobody likes paying fees/taxes, but be careful what you wish for.
If its reasonable than I don't have a problem. I sure as heck don't want to have to keep up with the taxes in each State.
No fair putting a poll inside the poll thread. Now I don't know which one to answer.
I just don't think it's fair that I'm forced to use eBay. If only I could just opt out.
Time to start another poll?
Perhaps we should have a poll on polls.
I'm still trying to figure out why this is the government's fault.
I can't stand filling out my annual form in my own state. If I had to apply for a sales tax certificate in 50 states and then file annually or quarterly in all 50 states, then I would lose my mind.
Aren't transaction fees considered a business expense and deductible? Or somehow count against your cost basis for collectors?
Yes, they should be deductible.
They don't count as income. That doesn't mean you don't have to pay them or they get refunded to you somehow, though.
I don’t plan on defending eBay. I don’t use or like their service. That being said -
Whether eBay went out and bought tax compliance software or built it in house, they spent many millions of dollars for that functionality. I don’t blames them for recouping that expense.
As someone mentioned above, just imagine you had to do it yourself and remit sales tax to states and cities.
Not being a lawyer, thank goodness, is it truly legal to charge a fee on a tax mandated by the feds? Wouldn't that be like the tax mandate by the feds, more of a tax on taxes? Just curious.
Jim
When a man who is honestly mistaken hears the truth, he will either quit being mistaken or cease to be honest....Abraham Lincoln
Patriotism is supporting your country all the time, and your government when it deserves it.....Mark Twain
I try not to worry about things that I have no control over and could not change by complaining.
Life is too short for that chit.
Sales tax is not "mandated by the feds", which is why some states don't levy one. Carry on.
And the fee is not a "tax on taxes". It's a fee for transferring funds.
That's true.
And it is perfectly legal to charge a transaction fee on sales tax, your credit card companies have been doing it forever.
Consumers don't get a breakdown of how the price they pay is broken down (aside from sales taxes) and allocated by the seller, just the total amount they pay. Since they don't see it, many don't know it's there.
Payment processing fees are charged for processing payments, however much or little they may be. The processor doesn’t care how much is for the item or sales tax or buying that soft toilet paper for the executive bathroom. It’s ludicrous to think that a processor would change their fee structure based on the reported distribution of funds. They process $X and charge a fee on $X. That eBay sends the sales tax allocation directly to the recipient state instead of to the seller who will then still owe the full sales tax amount is neither here nor there. The seller will never be allowed to keep those funds, the processor processed them. Carry on.
As another datapoint, it is very common for governments to charge a processing fee on certain payment types for various fees or taxes. Perhaps the only issue I could see is if they charged an extra fee on cash due to legal tender laws, though even that might not be clear cut. And the government could simply charge a processing fee for all payment types, which also happens with some frequency.
I can certainly see why people wouldn't want to pay any type of additional fee. But I can't begin to see how it would be illegal.
Edit: And to reiterate jmlanzaf's point, the government has nothing to do with this. The government is not receiving the processing fee.
Final value fees are not payment processing fees. Since the sales taxes are due on the amount the buyer pays, it makes sense that the processing fee be borne by someone, much as it is if I renew my license plates with a credit card, but taking the full vig on sales tax is no bueno.
Keeper of the VAM Catalog • Professional Coin Imaging • Prime Number Set • World Coins in Early America • British Trade Dollars
In the new ebay, they don't separate FVF and payment fees. It's all just one transaction fee.
Nevermind...
OK, but part of that fee covers processing costs, part covers their profit. Taking a profit on sales tax that's far more than standard payment processing fees is still no bueno, not that they won't continue to get away with it.
Keeper of the VAM Catalog • Professional Coin Imaging • Prime Number Set • World Coins in Early America • British Trade Dollars
FVF --
I indicated an objection to the collection of FVF on taxes collected.
handling -- and ebay's mishandling -- of taxes is another business expense. we'll pay ebay to mess with taxes one way or another.
however
it is definitely bad optics to assess FVF on a tax.
I have no clue.
Tax issues are just too taxing for this real estate lawyer.
All I can say with some confidence is that governments, businesses and many individuals constantly try to maximize their income, many times with no reason or purpose other than greed.
The IRS uses payment processing companies to accept income tax payments by cc. They all charge a fee.
I’m guessing it’s legal.
My Ebay Store
Texas promises to prosecute any transactions that don't collect their fees.
That being said, Oh hail NO!.
(sort of a loaded question. Kinda like taking a poll on whether one should cut off an arm or keep both arms)
Note that PP has been charging fees on taxes ebay collects since ebay started collecting taxes.
Whoever is the recipient of electronic funds should pay the fees to collect and forward them. In the case of taxes, it's the individual states. This should have been worked out and stipulated with the Wayfair decision. Yes the states should take a 3% haircut on internet taxes collected and remitted by another party.
Will 1099s from the payment processor who collects applicable state taxes correctly reflect that the tax portion of the seller's income was not actual income? For this reason my spreadsheet tracks collected state taxes separately so that at the end of the year I know, and can prove, my actual income vs. what is reported as income. 1099s for 2020 should give us insight.
Keep an open mind, or get financially repressed -Zoltan Pozsar
@airplanenut said:
I don't believe the seller is asking to keep the state's funds. He is simply asking not be be charged a fee for processing someone else's money.
The seller isn't asking the payment processor to process the state's money, the states are demanding it. The payment processor is actually working for two parties: the seller and the individual state. Each party should pay their applicable portion of the transaction fee.
Keep an open mind, or get financially repressed -Zoltan Pozsar
I'm waiting for the proposal that there be a federal tax levied on all online payment processing.
Keep an open mind, or get financially repressed -Zoltan Pozsar
The sales tax is part of the transaction. eBay is processing the transaction. It is no different than a credit card company charging you the 3% transaction fee on the sales tax.
My comments refer to all payment processing, including credit cards. "It has always been this way" is a poor argument when trying to defend an unfair practice.
There is no incentive for payment processors to seek fairness. It is to their advantage to have to deal with only one party when assessing the fee. Besides, fairness would dictate that they go after the states. Experience continually teaches us not to challenge our government, especially when it comes to taxes.
Keep an open mind, or get financially repressed -Zoltan Pozsar
Is it "fair" that I have various costs associated with income tax filing? Is it "fair" that I have costs associated with collecting sales tax at point-of-sale? Is it "fair" that there is an income tax at all? Is it "fair" to have a sales tax at all?
This is just an odd place to draw a line (6% of 6%).
Cost of doing business.
Kinda like, when lawyers hit the start button when you start talking
At least these costs are deductible business expenses. Is it fair that the fee on taxes are not?
Sure, provided it is done with fairness to those involved. Sales taxes in each state are equitable across the board, everyone pays the same percentage. Income tax rate based on income? Not so fair.
Keep an open mind, or get financially repressed -Zoltan Pozsar
The "fee on taxes" is deductible as a business expense.
By the way, you could just as easily argue that the income tax rate is fair because it is based on income and sales tax is not fair because it is regressive and not based on income or ability to pay.
A credit card company charging 3% is a bit different than eBay charging 10% for processing sales tax to some people (which is hardly a reasonable and customary payment processing fee) and 3.5% to others depending on the item being taxed.
Keeper of the VAM Catalog • Professional Coin Imaging • Prime Number Set • World Coins in Early America • British Trade Dollars
Some credit cards charge 5%, others charge 1.5%. I'm not sure that anyone who is complaining would be complaining less if it were a flat 3% eBay charge.
Edit to add: P.S. There are a lot of ways eBay could do this that would appear to be nominally cheaper but end up causing me to do a lot more accounting later.
Seems like a small fee to save a huge headache - Time is money, gotta go!
is double taxation legal in the USA?
it was all about taxes charged, not fees.
before bed I was thinking that the 10% FVF is like a tax on a tax. it's not double taxation but 10% vs 6.35% seems excessive. Yes there are business expenses with processing taxes and remittances but 10% of the tax?
That's the way I'm seeing it. I can't imagine it'll cost me even $100/yr. Well worth that to me to have eBay handling all the reporting and remitting to the different taxing entities.
I had a shop for 40 years. While my aim in starting a business was far from a desire to be a tax collector, I never found that aspect of business to be a 'huge headache'. I've also collected sales tax for my state on internet sales to residents. For anyone keeping accurate books, there was no headache at all. It never took me more than a few minutes per quarter to remit the money.
But you'd have to do 35 or 40 different states, all with different rates and different paperwork.