Is This Sneaky New eBay Fee Illegal?

so eBay recently made a change that has resulted in us sellers paying more paypal fees than we were paying before now in the one hand it could kind of be argued that we're actually saving money sort of but on the other hand I'm not entirely convinced that what eBay is doing is actually even legal here so this change happened starting November 1st 2019 so throughout the end of 2018 and 2019 eBay has started to collect sales tax for us for items shipped in to certain states and to keep adding more states it's currently about 35 States now the way they used to do this was let's use an example let's say we sold a $100 item and we sold it into a state that charges 7% sales tax now keep in mind that each state charges a different amount for sales tax but in this example we'll use 7% so we would see the hundred dollar order plus $7 for sales tax and eBay would get that $7 right away they would hold on to it and they would take care of sending it to the state whenever they needed it the $100 would then come in to your PayPal account and you would be charged paypal fees only on the $100 that you received starting November 1st 2019 eBay kind of change this a little bit they said that now you will receive the full 107 dollars into your PayPal account you'll be charged paypal fees on that full amount and immediately after you're charged a fee eBay will take the seven dollars out and then hold on to it and then send it to the state when they have to do that obviously this means we are paying more paypal fees than before now I looked at the past year and first six months of the year and I collected 19050 $3. 59 sales tax so if we double that it's a little under 40,000 let's just round it up to 40,000 because we're going to assume I'm going to make more money in court or four so we'll say this year I'm going to collect around 40,000 dollars in sales tax so if I had been charged fees for that full $40,000 that's an additional one thousand one hundred and sixty dollars a year in paypal fees now keep in mind that I am a high-volume seller and most people aren't going to be charged this much or have this high volume of sales tax to take care of but this is the situation that I'm in an extra one thousand one hundred sixty dollars a year in fees and that's not chump change now why is this happening what is going on here well before 2018 you were only really responsible for collecting sales tax for one state and that was the state that you lived in so for me that was New York State I used to live in New York so I only charge sales tax to customers if I shipped items to them in New York then in 2018 a bunch of the laws changed it became a little bit more confusing and all of a sudden I had to start collecting sales tax for multiple states throughout the country and I had to organize that all myself keep track of that all myself and to help do that I used a service called tax charm well increasingly the states started to realize how confusing this was for small sellers like us so they started to enact these laws called marketplace facilitator laws and basically what they say is that now eBay and Amazon are responsible for taking care of the sales tax and we small sellers don't have to worry about it so now eBay is taking care of it for us so you'd think I would actually welcome this change because eBay is currently as of now collecting sales tax for us for 35 or 36 different locations so it's much easier for me and like I said I was using tax jar which you're paying forty-four dollars a month for so that's five hundred and eight dollars a year in addition to that tax jar only shows you how much sales tax you collected if you wanted to automatically file the sales tax for you it costs you anywhere from $16 to $20 per filing now every state requires you to file a certain number of times a year some states is only one sometimes it's four times a year sometimes it's 12 times a year but even if it's just twice per year on average if we had tax jar

file all those for you automatically that would be an additional two thousand dollars a year just to use that feature of tax jar in addition to the five hundred and eighty-eight dollars a year you're already paying just to use the service so two thousand five hundred eighty dollars a year compared to the one thousand one hundred and sixty dollars that I'm now being charged extra you can see how it kind of seems like it's almost like a bargain to have eBay do it for us instead now of course eBay is not being generous here they're not doing this out of the goodness of their heart they are being required to do this by the states that told them they have to start collecting the sales tax and taking care of it and here's where things start to become a little bit fuzzy so remember I mentioned before about these marketplace facilitator laws these are the laws that require eBay to collect and remit the sales tax and remit is just a fancy word for pay the sales tax to the States now these sales tax laws differ for each date but let's look at one here for Colorado it says in general a marketplace facilitator that's eBay must collect and remit to the department all applicable state and state administered taxes a marketplace facilitator has all the administrative and substantive rights obligations and liabilities of a retailer with respect to any sales made by by a marketplace seller that's us or multi-channel seller that's us to through the facilitators marketplace so that sounds to me like eBay has to directly collect the sales tax but it's kind of fuzzy right are they allowed to first have us collect it and then grab it from us I'm not really finding good answer so reading further along in Colorado's new law it says this the duties of collection can not be delegated to marketplace sellers that's us this sounds to me like what they are doing is not right that they cannot delegate to us the collection of it now it could be argued that they didn't do that that the process they set up is not a delegation that they've still set up an automated system where we get the sales tax and immediately comes out but I think there's also an argument for the other side that eBay is doing this wrong I took a look at a bunch of other states laws as well Virginia for instance says beginning July 1st you and you in this case means eBay you will be responsible for collecting and paying sales tax on behalf of all marketplace sellers so again a little bit fuzzy the language there and all the states pretty much say the same thing so it's a little bit fuzzy but where I really begin to believe that eBay is doing something wrong is when you consider this let's go back in history a little bit so back when I was responsible for collecting sales tax here is what happened the states would say you are only responsible to collect sales tax once you hit a certain number of sales that you ship into our state once you hit that point you are now legally responsible to collect sales tax but before you can collect sales tax you have to register with the state and if you don't register with a state you are not allowed to collect sales tax for that state let me repeat if you do not register with a certain state to collect sales tax for that state you are not allowed to collect sales tax for that state now going back to Colorado it says here marketplace sellers that's us generally do not have the rights obligations and liabilities of a retailer with respected sales facilitated by a marketplace facilitator like eBay a marketplace seller that sells exclusively through one or more marketplaces such as eBay and Amazon is not required to obtain a Colorado sales tax license so we are not obligated to get a scholar ATO sales tax license if we sell only through eBay and Amazon that's their responsibility but we are also not allowed to collect sales tax unless we have a Colorado sales tax license which means that eBay is forcing

us to do something that is not legal they are forcing us to collect Colorado sales tax even though we're not allowed to because we don't have a sales tax license because we don't need one because we are marketplace sellers so that's where I really think that eBay has done something that's not entirely legal not entirely right but I may be overthinking this way too much let me know in the comments section what you guys think maybe I'm way off base here and way overthinking this I love to hear what your opinion is on this as well I know that this is really frustrating maybe I was just looking for a way to kind of attack eBay with regards to this new policy of theirs but before you say I'm wrong just kind of consider this last little bit of information when I was paying sales tax myself I would collect it and send it to the states every month quarter or a year depending on the state and what I found was that if I paid my sales tax early I received a discount and you better believe that eBay is following their sales tax early getting that discount and that discount is going right back into their own pocket so if you guys found this video helpful at all please be sure to give the video a thumbs up and consider subscribing to the channel for more tips about eBay and Amazon and again let me know in the comments section what you guys think start a dialogue about this and maybe I'll gain some insights or calm down a little bit but if you guys want to check out another video I did I'll have it linked up here I'll try to link up one about sales tax if you want the full scoop on why all these changes happen thanks so much for watching guys see you in the next video