Back in December 2020, eBay users reported being charged exorbitant sales tax rates when purchasing batteries on the platform and the issue appears to have reared its head again.
I surmised that eBay was attempting to apply various state recycling fees for lead acid batteries, but had inadvertently included all items in any battery category instead. (editor's note, at the time I was using a different handle in the community and on Twitter - acc756.)
...it appears to me that eBay made an error with an update that presumably was meant to address various state regulations regarding fees for sale/recycling of lead acid batteries for cars, boats, RVs etc. but eBay was applying these fees to all batteries instead.
One example from Twitter was a 10 pack of watch batteries for $3.89 which incurred $5.31 in sales tax. The buyer was in New York and said tax is usually 8% for his location. That should have been $0.31. The extra $5 appears to possibly be a "return incentive payment" per NY regulations for Lead Acid Batteries. Other states have similar lead acid battery regulations at different amounts.
Other examples showed the fees really added up for multiple quantities! Presumably eBay was applying whatever the applicable state fee was on a per battery basis.
...eBay needs to make a public announcement acknowledging the error and immediately refund any excess taxes paid. Not only is it the right thing to do for buyers, it may head off negative feedback and chargebacks for sellers as well.
Secondly, eBay needs to refund any and all excess fees sellers paid on those incorrect tax amounts. Sellers using PayPal would have been charged 2.9%. Managed Payments sellers are on the hook for the full simplified fee on that amount. Regardless of the payment processor used, this is 100% eBay's responsibility to rectify.
eBay also needs to protect sellers from any negative consequences of this error by removing negative feedback and making sure any related claims or defects do not hurt the seller's account in any way.
At the time, eBay was quick to fix the technical issue causing the incorrect calculation, but they were reluctant to address the other issues I raised - especially the question about sellers being overcharged for fees due to the fact that sales tax is included in the final value fee calculation.
Fast forward to February 2022 and the problem has returned with 2 buyers so far reporting seeing these very high tax rates applied to orders of non-lead acid batteries again.
when intending to buy a lap top battery on ebay i realized i was being charged 23.9% tax. my state tax in ct is 6.35%. i will not make this purchase and now i will check the tax on any purchase i make in the future.
I just tried to order a set of AG3 button batteries for $2.19 and got taxed $16.58. Tried to ask why with Ebay chat and all they said was if I paid for them, they would refund me the difference.
I see that this problem has been going on since 2020. It is now 2022 and I believe they should have fixed the problem by now. For a dollar more I can get the same batteries from Walmart.
Sorry Ebay, you just lost my business. Did I mention they thanked me for being a member for 20years?
I did a test to confirm and sure enough alkaline button batteries in the Consumer Electronics>Multipurpose Batteries & Power>Single Use Batteries category showed over $6.00 in tax with a shipping address in New York.
To make things even more confusing, it appears that eBay is adding the item price plus the battery fee then applying the regular sales tax amount to that total, but then including the battery fee with the tax amount as far as how it is displayed in check out.
It's hard to tell for sure because they don't break it out separately, but for this test the sales tax rate should have been 8.8%.
$6.99 + $5.00 (battery fee) = $11.99 x 8.8% = $1.06 sales tax
$6.99 + $5.00 + $1.06 = $13.05
So not only is there an extra fee that shouldn't be there, buyers are paying tax on that fee as well, even though the fee itself is being included as part of the tax in checkout.
While buyers have been told they can contact support after purchase to have the incorrect fees refunded, that is not an ideal solution and doesn't take into account the many sales that will be lost simply because the buyer will abandon cart when shown these insanely high tax amounts with no explanation.
They never did address the issue of sellers being overcharged fees when the issue previously occurred, stalling for months even though they acknowledged it was clearly a systemic issue.
Community staff attempted to assist with the issue, but ran into an insurmountable internal brick wall. Obviously this tax issue isn't the only systemic problem in play - eBay's interdepartmental comms need some serious attention as well.
The last interaction with the tax team I had (last week) was that anyone who felt that they were charged tax incorrectly should contact Customer Service and request that a ticket be filed with them (the tax team).
I have been working with them since to help them understand (again) the nature of what we saw happen, that it appeared to be systemic in nature and less of an isolated incident, and what kind of resolution the community expects in this situation. They have not responded.
eBay absolutely can and should proactively address the situation on both the seller and buyer side by automatically refunding the tax over payments and additional fees for all impacted users, not just individual "squeaky wheel" situations.
Beyond that, they need to actually fix the system so it applies lead acid battery core charges or recycling fees accurately only to items that should qualify and clearly and transparently shows that fee broken out with an explanation of what it is for in the checkout process.
I'll update as soon as I have more information from eBay on this issue, but in the meantime I highly recommend anyone impacted either as a buyer or seller should report it to their state Attorney General's office and sales tax authorities.
It's been a rough week for eBay VP of Tax Carol Tabrizi, with many reports of errors and problems with 1099-K income tax forms as well.
One has to wonder how long a 26 year old, multi-billion dollar tech company can continue with these business impacting execution blunders, technical glitches and accounting errors before it attracts media and regulatory scrutiny.
It certainly doesn't bode well for CEO Jamie Iannone's multi-year payments and tech led reimagination journeys.
If you've been overcharged sales tax on batteries or are an eBay seller being overcharged fees on these sales - I'd love to hear from you! Drop a comment below or contact me.