eBay Charges Minnesota Road Improvement & Delivery Fee On Orders That Don't Meet $100 Threshold
eBay is once again creating friction between buyers and sellers as implementation of new Minnesota Road Improvement & Delivery Fee charges additional tax in error.
The new $0.50 fee went into effect July 1st, 2024 and according to the Minnesota Department of Revenue, is to be applied only to transactions that total over $100.
Starting July 1, 2024, there will be a Retail Delivery Fee of 50 cents that applies to certain transactions involving retail delivery in Minnesota. Retail delivery means a delivery to a person located in Minnesota of certain items as part of a retail sale. (See Minnesota Statutes, Chapter 168E.)
The fee applies to each transaction where charges for these items equal or exceed $100:
- Tangible personal property subject to sales tax
- Clothing
Calculating the $100 Threshold
When calculating whether a transaction meets or exceeds the $100 threshold, a transaction includes all charges that are part of the sales price, not including the Retail Delivery Fee. See Examples below.
The DOR provides examples making it clear that in cases where there are multiple items combined into one transaction , the fee is only to be charged if/when the total of all taxable items is over $100 and, in such case, the fee should only apply once - regardless of how many shipments the transaction may require.
But a seller in the eBay community says that's not how it's currently working - causing confusion on a recent order they received that didn't appear to meet the threshold to have the fee applied.
One of my Minnesota buyers just got hit with that 50 cents "Road Improvement and Delivery Fee" -- for a purchase of only $19.65!
But the fee isn't supposed to kick in for purchases less than $100.00!
I've filed a complaint on eBay Facebook for business; but I have a feeling I'm not going to be the only one.
The seller came back to report the response they received from eBay support, which shockingly said that this item had been one of 5 items from 5 different sellers all purchased at the same time totaling over $100, so the $0.50 was applied to each order.
When I addressed this issue on eBay Facebook for Business, I was told that my buyer had actually purchased FIVE different items, from FIVE different sellers, and the total cost to purchase all FIVE items exceeded $100.00 -- so eBay slapped that 50 cents on EACH transaction, even though the FIVE items separately did not total $100.00.
When I argued with the eBay rep that that is not how the RIFD fee is written, the rep argued that that is how their automatic billing systems are handling those mixed purchases from Minnesota eBay buyers -- to which I replied that I would be reporting eBay's misapplication of the RIFD fee to the Minnesota Department of Revenue.
However, the Minnesota Department of Revenue has followed through with me: they requested a copy of my buyer's sales receipt, which clearly shows a sale well below $100.00, and they will be taking up this misinterpretation of Minnesota law with eBay.
So -- if you are an eBay buyer in Minnesota -- purchase your items individually -- one by one -- and not as a shopping spree amongst different sellers -- or eBay will hit each of your transactions with the 50 cent RIFD fee, even though you are purchasing from different eBay sellers.
As the seller rightly pointed out, that's not how it's supposed to work - the DOR clearly states that the fee "applies once per transaction, regardless of the number of shipments made."
If eBay insists on considering all items added to the cart at the same time as a single transaction for the purposes of this calculation (even if it is split between multiple sellers), then they are only allowed to charge a single $0.50 fee.
If they are going to consider each order per seller as a separate transaction in order to collect multiple fees, then they can only do so when/if the individual orders exceed the $100 threshold.
It's important to note that eBay charges Final Value and ad fees on the total transaction amount, including shipping and tax, so not only are buyers possibly being overcharged the tax amount - sellers may also be being overcharged fees on those incorrectly applied tax amounts.
While the average take rate of ~14% on a $0.50 fee may seem negligible, every penny adds up, especially considering the current difficult macroeconomic situation that already has eBay pushing sellers to provide shipping discounts, entertain lowball offers and whittle away their profit margins to satisfy increasingly price sensitive buyers.
Minnesota isn't the first state to add additional taxes on deliveries, with Colorado leading the way in 2022.
Liz Morton
At least it does appear that eBay is correctly showing the Minnesota fee stated separately in check out, a detail they still haven't managed to get right about the Colorado fee 2 years after it went into effect.
Washington and New York are also considering similar delivery fee taxes and other states may soon follow suit.
This also isn't the first time eBay has bungled implementation of new tax laws.
eBay has struggled in the past with battery recycling and disposal fees, white goods taxes, and e-waste fees.
Liz Morton
And when Michigan and Kansas both changed how tax should be calculated in regard to shipping costs last year, eBay failed to update their calculation procedures, resulting in a flurry of small refunds being issued to buyers months later.
Liz Morton
eBay could soon come under increased legal and regulatory scrutiny as well with unionized workers at eBay-owned TCGPlayer filing new NLRB complaints, a historic $59 Million settlement with the DEA, ongoing litigation brought by the EPA and 3 years of enhanced compliance monitoring as part of a deferred prosecution agreement related to the 2019 cyberstalking scandal.
Amanda Lewis, Co-Founder of the Responsible Online Commerce Coalition, has also recently filed a petition with the Federal Trade Commission calling for an investigation into eBay's acquisition of TCGPlayer, citing “serious concerns about apparently deceptive and anticompetitive conduct” including illegal monopoly maintenance, anticompetitive rollups, junk fees, and competing directly with 3rd party sellers without disclosing to consumers they would be purchasing directly from eBay.
Liz Morton
I would highly encourage any buyer or seller who is incorrectly charged sales tax or fees on sales tax to not only report the matter to the appropriate state tax authorities, but also to the FTC’s Bureau of Consumer Protection.
Have you been incorrectly charged the Minnesota Road Improvement & Delivery Fee on eBay? Let us know in the comments below!
