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I was looking at an auction on Ebay:

http://www.ebay.com/itm/Sony-Digital-MD ... 2a2ecbc91b

The shipping rates struck me as huge. Then it occurred to me, do you suppose some Ebayers are trying to do a work around the IRS rules for the tax thresholds? In other words, if the sales amount is all that gets tabulated by Ebay, the shipping charges can be a throwaway? If so, then I guess PayPal does not report numbers to IRS, just Ebay's venue?

If eBay catches this, the listing will be taken down. They started imposing rules about shipping charges.

slickeast wrote:If eBay catches this, the listing will be taken down. They started imposing rules about shipping charges.

I remember when they did not take a PayPal cut on shipping charges years ago, then the S+H fees a seller imposed were scrutinized. Nowadays, if nobody flags the auction, does Ebay do an audit? I think most buyers don't care how the auction face cost and S+H cost add up. They do the math and decide if the total is worth bidding with. I'd be curious to find if Ebay does not use shipping charges as a reportable figure. Chances are they do, but this auction in particular struck me as a possible motive in the long run to keep auction face costs down. I am thinking down the road, eventually all online vendors will hav to report to federal and state revenue depts. The days of the wild west internet are gone.

Take a look at another auction by the same seller if you thought the shipping charges were high on the first item.
http://www.ebay.com/itm/Pivothead-1080p-Durango-Chameleon-HD-Video-Recording-Eyewear-/181172878748?pt=US_Video_Glasses&hash=item2a2ebebd9c

Ebay starting applying the 10% closing item fee to include any shipping charges, so they may not care so much anymore. It still probably violates an official policy but I have not noticed it being enforced.

Paypal reports to the IRS based on "gross payments received" and number of transactions. I don't think the shipping would be deducted. Though, I still see people playing the high shipping game. There must be a reason.

The reason for the high shipping game is to get some sucker in a hurry to bid on what appears to be a cheap item.

The reason for the high shipping game used to be for fee avoidance. Initially, Ebay only took their cut from the final sales price. Now they take their cut from final sales price plus shipping. Paypal has always taken their cut from total dollar amount processed (as far as I know).

I believe sales are reported to the IRS after a certain number of sales in a year or after a certain dollar amount processed per year. Sales price versus shipping price would have no effect on either number.

PayPal has always taken the same percentage of the shipping charge as they do the item price. PayPal fees are based on the total payment amount, it doesn't matter what the breakdown of item price and shipping charge are.

It used to be that eBay did not charge a final value fee on the shipping amount, only on the bid, which is why some people listed cheap bids and high shipping prices (which was against eBay policy). Nowadays the final value fee applies to the bid price AND the shipping charge so there is no savings for the seller. Sellers still doing this are behind the times and probably don't realize that they aren't saving anything but ARE violating eBay policy.

PayPal reports to the IRS, not eBay. They only report if you receive at least $20,000 AND 200 payments in the calendar year. The total payment amount counts, it does not matter how much was for merchandise and how much was for shipping.