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New IRS/Credit card rules

BigABigA Posts: 2,715 ✭✭✭✭
in U.S. Coin Forum
This may be old news to some but it was a shock to me....as of now (2013) any transaction completed worldwide with a US credit card is subject to an automatic 28% tax withholding. The only one enforcing this presently is American Express....

The reason I found out about this was my car rental guy in St. Martin told me he is no longer accepting AE until the proper waiver forms have been processed.....

But more important is in the USA....if this also applies here anything you buy from anyone will be subject to this 28% withholding....I'm sure it will soon extend to PayPal

I know there are the "You should ALWAYS pay taxes on everything you sell on Ebay" people out there but for the small time seller this could be ugly....

Here's the article as it pertains to Caribbean:

Tax

and from the IRS:

IRS
My Ebay Stuff

Comments

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    MsMorrisineMsMorrisine Posts: 40,141 ✭✭✭✭✭
    by worldwide you mean outside the USA, right?
    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
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    derrybderryb Posts: 38,621 ✭✭✭✭✭
    the 28% withholding applies to non-US merchants.

    The IRS link in the OP is only about the new 1099K reporting requirements for third party processors of payments (such as paypal and credit card companies) and requires reporting transactions only - does not discuss or require any withholding of taxes on the transaction. Basic reason for the new 1099k is to require someone else, besides a seller, to report income in hopes of catching non-reporters of income and to also let them know they can now be identified without reporting the income themselves.

    "Money does not care about speeches on morality. Capital asks whether the rules will remain the same tomorrow. With inflation, people assume price is the problem, and propose regulation—but price is simply the message." - Martin Armstrong

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    BigABigA Posts: 2,715 ✭✭✭✭
    From the IRS link:



    << <i>Payment settlement entities are the organizations responsible for reporting the payments made to participating payees. A payment settlement entity may be a domestic or foreign entity. >>

    My Ebay Stuff
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    MsMorrisineMsMorrisine Posts: 40,141 ✭✭✭✭✭
    merchants need only to file the proper paperwork to escape the 28% BACKUP withholding.

    the paperwork includes the TIN/SSN and the full legal name associated with that number.

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
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    BigABigA Posts: 2,715 ✭✭✭✭


    << <i>merchants need only to file the proper paperwork to escape the 28% BACKUP withholding.

    the paperwork includes the TIN/SSN and the full legal name associated with that number. >>



    So you can "escape" the 28% withholding but EVERY transaction (sale) by anyone will be reported to the IRS as income.....

    Correct???

    Sounds like we are going back to cash and checks.....
    My Ebay Stuff
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    MsMorrisineMsMorrisine Posts: 40,141 ✭✭✭✭✭
    well, over $20k (?) and 1k(?) transactions per year will have PayPal sending the IRS a 1099 on you....
    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
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    BigABigA Posts: 2,715 ✭✭✭✭
    Yup, I knew about that...I was worried about smaller transactions ($3-4 grand/yr) having 28% more sucked out since ALL are being reported not just over 20k

    We'll see what happens....
    My Ebay Stuff
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    derrybderryb Posts: 38,621 ✭✭✭✭✭
    IRS is forcing payment processors to report payment over the $20K cumulative threshhold in an effort to identify tax cheats not reporting income. Requiring the payer to also report the transaction(s) flushes out the non-reporting payees.

    Applies not only to processors but to buyers as well. Sold over $80K in coins (four transactions) to a cable tv reseller last year and just received a 1099 from them. This basically means they told the IRS, as now required, that I had $80K income from the transactions. If one were to try to hide this income from the IRS they would not be successful. Brilliant move on the part of the IRS, unfortunately at the expense of those now required to do the 1099 reporting, to force taxpayers to report income who might otherwise not report it.

    When it comes to withholding taxes, note that IRS requires withholding from those receiving money, not from those spending money.

    "Money does not care about speeches on morality. Capital asks whether the rules will remain the same tomorrow. With inflation, people assume price is the problem, and propose regulation—but price is simply the message." - Martin Armstrong

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    djmdjm Posts: 1,565 ✭✭✭✭✭
    Go out and buy a 5 million dollar nickel and you have a 4.9 million dollar operating loss for the year. Pay no taxes on all your and your spouses income for the next 10 years.

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    LakesammmanLakesammman Posts: 17,702 ✭✭✭✭✭
    Go out and buy a 5 million dollar nickel and you have a 4.9 million dollar operating loss for the year. Pay no taxes on all your and your spouses income for the next 10 years.

    Not how it works....see your tax advisor before proceeding! image
    Gone but not forgotten: IGWT, Speedy, Bear, BigE, HokieFore, John Burns, Russ, TahoeDale, Dahlonega, Astrorat, Stewart Blay, Oldhoopster, Ricko, Big Moose, Cardinal, CoinsAreFun.
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    MrEurekaMrEureka Posts: 24,789 ✭✭✭✭✭
    Andy Lustig

    Doggedly collecting coins of the Central American Republic.
    Visit the Society of US Pattern Collectors at USPatterns.com.
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    tonedwash66tonedwash66 Posts: 7
    BigA, Leslie Bruce at Kenny's is the best on island. He should have the problem resolved in short time.
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    orevilleoreville Posts: 12,429 ✭✭✭✭✭


    << <i>Text Friday February 15, 2013 4:35 PM (NEW!) Go out and buy a 5 million dollar nickel and you have a 4.9 million dollar operating loss for the year. Pay no taxes on all your and your spouses income for the next 10 years. >>



    Oh geez.......
    A Collectors Universe poster since 1997!
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    ColonelJessupColonelJessup Posts: 6,442 ✭✭✭✭✭


    << <i>

    << <i>Text Friday February 15, 2013 4:35 PM (NEW!) Go out and buy a 5 million dollar nickel and you have a 4.9 million dollar operating loss for the year. Pay no taxes on all your and your spouses income for the next 10 years. >>



    Oh geez....... >>



    I tried this. I got (FREE !) a semi-private room with excellent cable, adequate cuisine and a crappy nine-hole golf course. My attorney says I'm now part of a class-action suit relating to free porn. Mr Madoff from the next room says I never should have tried to take accelerated depreciation on a non-income-producing asset. Told me I was foolish to think anyone would believe there could be a $5M coin. He's given me the name of a man from Dubai named "Lefty" who knows someone in Singapore who..... It's the safe-deposit box in Mogadishu that has me wondering. But he's given me some great pointers on my short gameimage

    He laughs when I bring up Heisinger. Says he sucked at the market. Said he had cantpullthetriggeritis. Couldn't recognize a sure thing.image
    "People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf." - Geo. Orwell
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    s4nys4ny Posts: 1,594 ✭✭✭
    The amount reported on the 1099 is not reported as income. It is reported as
    "gross amounts of reportable transactions." This is the same for someone who
    sells securities.

    If I sell 1000 shares of stock for gross proceeds of $25,000, those proceeds will be
    reported on form 1099. When I file my taxes I have to report the proceeds
    and the resulting gain or loss on Schedule D.

    Same with the sale of real estate, art, etc.

    If the payee (you who receive the $) has not filed proper documents with the payor
    (paypal, etc.) there will be withholding.

    This is no big deal.
  • Options
    BigABigA Posts: 2,715 ✭✭✭✭


    << <i>BigA, Leslie Bruce at Kenny's is the best on island. He should have the problem resolved in short time. >>



    I agree and just used his service a few weeks ago......but...he's not the one I was concerned about
    My Ebay Stuff
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    TwoSides2aCoinTwoSides2aCoin Posts: 45,232 ✭✭✭✭✭
    Taxes and death are imminent. Humor is optional.

    Practice makes perfect & nobody is perfect. So, practice being nobody.

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    tonedwash66tonedwash66 Posts: 7
    I know, I was just name dropping, lol. I assumed you were talking about him since that is how I learned about this amex thing. (ttol)
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    7over87over8 Posts: 4,733 ✭✭✭


    << <i>When it comes to withholding taxes, note that IRS requires withholding from those receiving money, not from those spending money. >>



    Absolutely correct. But in this context and situation, if the payment processor is compliant with reporting - no withholding on the merchant either.


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