New Fees For Ebay Store Subscriptions - Ouch!

ebay Aus cost me $500 per month for an anchor store that has unlimited listings for auction & or BIN's listings.

My outside ebay sales are growing. Especially the more expensive items that are very popular.

Name me one major auction house that charges a buyer $20 on an $80 bid (25%!).

eyeonwall, the commission (buyer's fee) itself would not be 25% of the hammer price, but paying 25% of the hammer price in addition to the hammer price could easily happen if the auction house collects state sales tax for states in which they have a physical presence, as more and more are now doing. As a collector and not a dealer, I cannot use a resale certificate to avoid the state sales tax the auction house automatically adds to my bill based solely on my state of residence. So if a firm has a 15% buyer's fee and since my state has a 9% state sales tax, if the hammer price was $80, the buyer's fee would be $12 and the sales tax would be $7.20. This totals $99.20 (not $100 but close enough to make the point). Add in the typical $25 (low end of range) shipping fee (regardless of number of lots or total value of winnings) and the total cost to me would be $124.20.

Sure makes it hard to bid competitively with others when they don't have to consider the state sales tax in their bidding, either because they are dealers or they are collectors who happen to live in a state where the auction house does not have a physical presence!

Oh yeah, I forgot, some of the auction houses doing this now are applying the state sales tax to the buyer's fee as well as the hammer price so in that case if the hammer price was $80, the buyer's fee would again be $12, but the sales tax would be $8.28 so the total would be $100.28 prior to shipping cost.

I should clarify that the auction houses that do this are doing it due to a legal change that requires them now to charge sales tax for any state where they have a physical presence (according to my tax advisor), not just the state where the auction is held. The lesson for me is that I need to change states! (LOL - not easily done I am afraid!)

Getting back to the original question, between ebay and Paypal fees I pay slightly less than 10% of sales. For this 10% commission I am able to sucessfully sell my material all over the world. Sales are solid and I am able to turn over my inventory 6 1/2 times per year. I have been reviewing the new ebay sales metrics and I listed and sold 211 items in the last 30 days and these items received 18,600 views, I think that is pretty good return for the cost.

I see no possibility of moving away from ebay because unlike srailkb I am not a dealer. My wife and I run a small online business that sells stamps on ebay. We don't do want lists, buy from the public, maintain stock or do shows. We are retired and this business suits our life style, becoming a dealer would require a much large investment in both time and $ than we want to make. Public Auctions aren't an alternative for us. I buy all my collection via auction mostly from the Auction Houses but occasionally on ebay. I sell all my material via ebay auctions. My average sale is $45 well below anything an auction house would want to sell. Delcampe and Bidstart are the only other venues that I am aware of and when I tested them I received almost no bids and the ones I received were only about 6% of my ebay sale price, so for me those two aren't viable.

I have often wondered if we are hurting the hobby by undercutting dealers but on the other hand we spend $1000s each year buying stamps and certainly are helping the auction houses and people trying to sell their collections. In addition I know there are many other people doing the same thing. When I visit my favorite auction there are 3 of us ebay people in the room and we are by far the biggest buyers of worldwide collections and accumulations. The collectors will outbid for their specialties but overall we buy a lot. I've chatted with these guys and we all do pretty much the same thing, buy material in bulk and break it down and sell it using ebay auctions.

KRelyea - If you're paying taxes on your ebay sales then you are a dealer. I don't think you have to do shows or have selling lists to be considered a dealer especially since the traditional ways of selling are not what they use to be and many traditional dealers are turning to ebay and other online methods. I use the same methods you do - lower prices per item, but higher volumes (when I do have auctions) of sales. I consider myself a dealer (and so does the IRS).

I did the math too - ebay is still the best method to sale for the buck. It's just a bit more expensive, but still less so than other venues and faster returns and turnover of material. It just sucks that I know I'll have to shell out $150 more in May or June when I get to have my auction.

Not true. Paying taxes does not automatically make you a dealer. Technically, by law, collectors should be paying federal and state capital gains taxes if the sale prices exceed their cost basis in aggregate for the tax year. Now if you mean sales taxes rather than income taxes or capital gains taxes, then things get a bit more nebulous depending on the manner of sale and nexus.

"Taxes" is too vague of a term... partly because there are so dang many taxes.

Battlestamps said: "If you're paying taxes on your ebay sales then you are a dealer."

Huh? This doesn't make sense to me. Dealers losing money pay no taxes, and may even pay less taxes than non-dealers as some expenses may be deductible (not so for non-dealers), some purchases may be exempt from sales tax, etc. Collectors selling items on ebay from their collection at a profit should be paying taxes (capital gains), even though they're not dealers. What did you mean by that statement?

FWIW, The biggest problem I see is that many who would be considered dealers (like KRelyea; i.e. buying material with the intent to resell at a profit...) don't consider themselves dealers. They don't have the required business licenses, aren't collecting sales tax, aren't reporting their sales, etc. They've convinced themselves they're not "in business" because they're only doing it on weekends, still have a "real day job", don't have a store, etc. The government would almost certainly see it otherwise, and they would likely be hit with taxes, fines and penalties if audited.

revenuecollector beat me to comment on taxes, but I'll leave my other comments stand. I know several people who have gotten in trouble thinking they were not in business when they really were.

Okay, I stand corrected. What I meant by taxes is that he's probably selling more than a hobbyist would be (yea, I know you're suppose to pay taxes even on those sales too as noted above) and using methods typical of an online dealer, i.e. PayPal issues the 1099K form if you have substantial sales (20K plus and 200+ sales/year) Most of those sellers would be considered dealers - not likely to be solely hobbyists who typically roll their profits into buying more stamps. That's what I was going after.

Sidenote: In 30+ years I've only have had one dealer ever charge me sales tax - Maryland Stamps & Coins and only at their store.

At a minimum, a state business license or selling permit is needed to sell on ebay. I remit sales tax on all in-state ebay sales quarterly. Since in-state sales are such a small percentage of the total, there is no reason to deter buyers by tacking tax onto the sale. Some states may not require filing sales tax returns for "casual sales" under some fixed amount. Otherwise, move to Oregon or some other state with no sales tax.

Also, PayPal has started a stealth electronic distribution of 1099 forms to sellers who gross more than some amount. (As an aside, I am not sure if the gross amount in PayPal 1099 statements are accurate because their downloadable transaction logs are known to be inaccurate. Sometimes I wonder if they skimming small amounts in addition to fees from sellers)

Failing to file a Schedule C would be a red flag if PayPal happens to file a 1099 with the IRS.

The amount in the US is 20,000 if your not a real dealer you better stay under it. I sell the common things I have/get multiples of. I dont consider myself a dealer. I am on a fixed income and my checks go into paying my bills outside that I cant spend that money on stamps. When I was younger and working I spent my personal money but now I sell a little and all I have for my hobby is my paypal, I dont sell for making money, I sell of the common what I dont need and keep what I like for my collection. One day my wife will get this stuff and it will away for next to nothing, hopefully to someone else who enjoys it as much as I do. Over a whole year I might get to buy a couple dinners and some Christmas out of my stamp money.

You guys are making a lot of assumptions that are incorrect. I run a business, my simple definition of a business is if you get a Paypal 1099 you are in business. I have paid sales tax and reported my business income on Schedule C for many years.

Whether or not I am a Stamp dealer is semantics. I sell stamps on ebay, it could just as easily be clocks or old tools or boats, but I choose stamps because they are easier to pack and ship and I have experience as a collector. I see a dealer as having more of a commitment and tie to stamps than I do. I see a dealer having an inventory, filling want lists, buying estates etc. and frankly working a lot harder than I do. I just don't flatter myself by thinking I'm a dealer, I could be wrong.

KRelyea, many sellers (well) under the $20,000/200 payment reporting threshold for PayPal's 1099 would be considered "in business".

Getting a 1099 from PayPal is not a good measure of whether you are or aren't (although for others reading this, cfrphoto & KRelyea are 100% right - if you DO get a 1099 from PayPal and you don't have a corresponding line on your tax form that has at least that much revenue reported on it, you will FOR SURE eventually get audited). One of my customers (who also thought he "wasn't in business" because it wasn't his full-time job and he didn't need the money to live on) is in that unfortunate situation and is currently being audited for multiple years.

The IRS publishes a list of 9 things that they take into consideration in determining hobby vs. business. However, you don't have to meet all 9 (in fact, almost no one does). You can be in business by meeting just a couple. For instance, if you're buying for resale, and you have demonstrated knowledge in the area, and you're operating like a business (i.e. a seller account on ebay, a website, an online storefront, etc.), you're almost certainly "in business". That means you should be paying self-employment taxes on your earnings (in addition to income taxes), collecting sales taxes for you state (if they have one), obtaining all the required business licenses, etc., etc.

For instance, (IMO) there's little doubt that jim6092252 (with 13,000+ feedbacks received as a seller) and Battlestamps (31,000+ feedbacks as a seller) are both "in business" (as the IRS and state governemnts would see it). There's almost no way that "hobbyists" can rack up that kind of seller feedback. I'd would strongly suggest they talk with a tax professional BEFORE they get audited, if they're not already filing a Schedule C or other business tax return for their ebay sales...