IRS to Track Online Sellers' Payment Transactions Beginning Next Year
pendragon1998
Posts: 2,070 ✭✭✭
IRS to Track Online Sellers' Payment Transactions Beginning Next Year
By Barbara Weltman
AuctionBytes.com
March 07, 2010
<< <i>Internet sellers who don't report their sales will no longer be under the radar. Starting next year, any bank or other payment settlement company that processes credit cards, debit cards, and electronic payments such as PayPal will have to issue information returns telling the IRS what merchants receive. The new returns are Form 1099-K, Merchant Card and Third-Party Payments. >>
COMPLETE ARTICLE
By Barbara Weltman
AuctionBytes.com
March 07, 2010
<< <i>Internet sellers who don't report their sales will no longer be under the radar. Starting next year, any bank or other payment settlement company that processes credit cards, debit cards, and electronic payments such as PayPal will have to issue information returns telling the IRS what merchants receive. The new returns are Form 1099-K, Merchant Card and Third-Party Payments. >>
COMPLETE ARTICLE
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Comments
<< <i>This has been a long time coming. It shouldn't be any trouble for anyone who's been operating by the book. >>
I bet a lot of the smaller ebay bulk sellers are dropping gold bricks right now
Expect already high ebay BIN prices to soar once these same folks realize the umbrella has disappeared and uncle sam can see them and they will now make even less of a profit
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
The IRS and Treasury are so far behind with writing tax regulations for issues that matter, that it is somewhat comical that they are focusing on Ebay and the like. However, this makes for good press. Has anyone heard about the announcement by the Commissioner of the IRS a few weeks ago about their plans to require corporate taxpayers to disclose their "FIN 48" reserve positions to the IRS? Probably not because the popular press cannot write easily about it, but it will turn the tax planning world (and corporate taxpayers) on their heads.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Exception: Very small merchants won't be issued information returns. "Small" for this purpose means annual gross sales on merchant cards of no more than $20,000 or 200 or fewer transactions. In other words, reporting is required only if gross amounts for the year exceed $20,000 and there are more than 200 transactions.
Couple that with the fact that paypal and other processors can only account for the total sales amount minus their fees which in no way jives with the amount of profit gain or loss made on any one transaction and I think the government is bitting off more than they can chew. I think it's a good idea.....but in a practical sense it's going to be virtually impossible to calculate and enforce.
<< <i>The small fish will still be safe....power sellers be warned
Exception: Very small merchants won't be issued information returns. "Small" for this purpose means annual gross sales on merchant cards of no more than $20,000 or 200 or fewer transactions. In other words, reporting is required only if gross amounts for the year exceed $20,000 and there are more than 200 transactions.
Couple that with the fact that paypal and other processors can only account for the total sales amount minus their fees which in no way jives with the amount of profit gain or loss made on any one transaction and I think the government is bitting off more than they can chew. I think it's a good idea.....but in a practical sense it's going to be virtually impossible to calculate and enforce. >>
Yes, but does that mean that small merchants will be responsible for reporting themselves, or that they're exempt below that level?
but it may raise flags if a buyer bought $60K of stuff last year with $30K of taxable income
I can see a new rule: "no more than 5 posts per day"
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>I don't believe they are exempt....I just believe the IRS is saying it's not worth their time going after folks with sales under $20k so while they should report.......they won't be caught in the proverbial net. >>
Just as in the other thread, they can't be bothered with incidental collectible sales, I don't know why anyone who sells a coin and makes a few bucks, on a hobbyist scale, would report it to the IRS. Because it's the law? Speeding is against the law but every once in awhile I find myself going 68 in a 65 zone.
The next cycle didn't even include powersellers. For the years 2006, 2007 and 2008 you only had to sell $1000 worth per month for three months in a row to have your Ebay life history sent to Revenue Canada.
I'm wondering what 2009 and 2010 will be. $100 per month of sales?
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Of course, going against the IRS is not a wise choice, but in reality the IRS is operating outside of the law. I have never understood why the Fed Govt doesn't just pass laws to make income tax collection legal.
Dwayne F. Sessom
Ebay ID: V-Nickel-Coins
K
<< <i>Talk about an unenforcible nightmare. First of all, the IRS doesn't have the time nor resources to track every transaction online. Second of all, if you have ever investigated the matter, you would know that there is no Federal law saying that the government has the authority to collect income taxes. When I first heard this, I thought it was a load of horse cr@p, but I am ex law enforcement and have several friends working for the IRS and even US Marshals who confirmed it.
Of course, going against the IRS is not a wise choice, but in reality the IRS is operating outside of the law. I have never understood why the Fed Govt doesn't just pass laws to make income tax collection legal. >>
Why bother? Most people just pay, if you don't and they catch you, you really pay. I've heard that the "no law to collect taxes" is an urban myth.
even better if you keep good records, you should be able to claim your operating loss against other income
Keeper of the VAM Catalog • Professional Coin Imaging • Prime Number Set • World Coins in Early America • British Trade Dollars • Variety Attribution
<< <i>Second of all, if you have ever investigated the matter, you would know that there is no Federal law saying that the government has the authority to collect income taxes. When I first heard this, I thought it was a load of horse cr@p, but I am ex law enforcement and have several friends working for the IRS and even US Marshals who confirmed it.
Of course, going against the IRS is not a wise choice, but in reality the IRS is operating outside of the law. I have never understood why the Fed Govt doesn't just pass laws to make income tax collection legal. >>
They did pass a law. 97 years ago. And it's Federal.
16th Amendment to the US Constitution:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."
If so , what happens when a consignor is a dealer who is either working on their own behalf or that of a client?
Is it and or or, I wonder?
Lance.
so i'm always in the red. and of corse will be under 20,000.
<< <i>The small fish will still be safe >>
This small fish breathes a sigh of relief.
60 years into this hobby and I'm still working on my Lincoln set!
<< <i>Speeding is against the law but every once in awhile I find myself going 68 in a 65 zone. >>
You should turn yourself in.... and even offer to pay extra on the ticket!
60 years into this hobby and I'm still working on my Lincoln set!
<< <i>16th Amendment to the US Constitution:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." >>
The anti-tax people seem to forget that minor detail.
60 years into this hobby and I'm still working on my Lincoln set!
something, you will be taxed, as if you actually sold the item.
Camelot
something to think about.....
www.brunkauctions.com
<< <i>This will never happen. It would be the biggest Federal Government Give-A-Way ever. Losses from selling at online venues would be used to offset income from your real job. After spending 24 years trying to close this loop holes it is highly doubtful the Congress would open one up that you could drive a MACK Truck through. >>
I must be missing something. The law is not being changed. The gov't is requiring some formal reporting.
Lance.
``https://ebay.us/m/KxolR5
<< <i>Just think of those sellers that people consign with. That seller is going to have to keep good records and probably send out W2s to show the taxable money trails
No different than any other sale. You just pay after the sale rather than before. subtract costs from income. simple math. --jerry
<< <i>Just think of those sellers that people consign with. That seller is going to have to keep good records and probably send out W2s to show the taxable money trails
Money comes in and gets recorded. Seller writes a check to the consignor, and the remainder is profit less other recorded expenses. This is how it should be recorded even without the new paperwork.
<< <i>well for me i buy and sell, to improve my collection.
so i'm always in the red. and of corse will be under 20,000. >>
Profits/losses on individual coins are capital gains/losses. If you sell a coin for $500 and you're into it for $250, you have to show a $250 gain, even if you turn that money around and buy a $500 coin.
<< <i> Losses from selling at online venues would be used to offset income from your real job. >>
Why do I think that those less apt to report right now would have no problem reporting if they were to post a loss? This is much more likely going to get people to report profit, while the losses are probably getting reported anyway.
NGC registry V-Nickel proof #6!!!!
working on proof shield nickels # 8 with a bullet!!!!
RIP "BEAR"
<< <i>The small fish will still be safe....power sellers be warned
Exception: Very small merchants won't be issued information returns. "Small" for this purpose means annual gross sales on merchant cards of no more than $20,000 or 200 or fewer transactions. In other words, reporting is required only if gross amounts for the year exceed $20,000 and there are more than 200 transactions.
Couple that with the fact that paypal and other processors can only account for the total sales amount minus their fees which in no way jives with the amount of profit gain or loss made on any one transaction and I think the government is bitting off more than they can chew. I think it's a good idea.....but in a practical sense it's going to be virtually impossible to calculate and enforce. >>
I find it hard to believe that, once this program is in place, the IRS will let someone selling only $15,000 get a free ride without a Form K. That would be like the IRS not requiring W2s for income below $20,000.
Also, once Ebay sales fall, look for them to drop their "electronic payment" requirement and go back to letting sellers publicize acceptance of money orders.
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong
<< <i>Would be nice, then, if PayPal shipping could give you an itemized year-end report with eBay lot number cross-references where they exist and not make you pay extra for it. Last I checked, you could only get a paltry 30-60 day history. >>
Keep your own records, it's not that tough.
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong
<< <i>A 1099 from paypal will save me some work. --Jerry >>
If I could only get one from the Post Office!
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong
I recently sold three used radios and a men's watch (that wasn't in working condition) on eBay. My loss on the sale of the four items, not counting eBay and PayPal fees, was well over $1000. In spite of that I am very happy with what I got because, trying to sell locally, I would probably have gotten virtually nothing at all.
In the case of US numismatic coins I sold recently on eBay, I lost money on all but one coin. Still, I'm happy because I at least came close to break even and got far more than what dealers would have paid.
<< <i>
<< <i>The small fish will still be safe....power sellers be warned
Exception: Very small merchants won't be issued information returns. "Small" for this purpose means annual gross sales on merchant cards of no more than $20,000 or 200 or fewer transactions. In other words, reporting is required only if gross amounts for the year exceed $20,000 and there are more than 200 transactions.
Couple that with the fact that paypal and other processors can only account for the total sales amount minus their fees which in no way jives with the amount of profit gain or loss made on any one transaction and I think the government is bitting off more than they can chew. I think it's a good idea.....but in a practical sense it's going to be virtually impossible to calculate and enforce. >>
I find it hard to believe that, once this program is in place, the IRS will let someone selling only $15,000 get a free ride without a Form K. That would be like the IRS not requiring W2s for income below $20,000.
Also, once Ebay sales fall, look for them to drop their "electronic payment" requirement and go back to letting sellers publicize acceptance of money orders. >>
I think you seriously under estimate the sheer volume of work currently on their plate....I know a relative of mine who failed to pay taxes on pension or 401k proceeds...can't remeber which but the proceeds were like 15 to 20k.....and that was like 4 or 5 years ago and the IRS never caught it...and yes a 1099 was sent to him and the IRS. Now I am not saying that it's not risky.....just saying that the system is so overloaded now that huge loopholes do exist.
I think we can all agree that people that are making good money on Ebay...especially those that do it for a living should be paying taxes on that income.....heck I would love to not pay taxes out of my paycheck too but it's not realistic. All I am saying is that the tracking of this is going to be a real mess and I think it will take them several years to even come close to ironing out all of the initial problems this creates.
For the income recorded on these 1099s there is going to be very little work involved for the IRS. The IRS will do a computer match taking the 1099 and comparing it to a sellers tax return, if it does not match they will send a tax notice requesting payment of taxes, penalties, and interest on the entire sales amount without regard to costs and expenses.
The IRS recently sent out 10,000 letters to and met with several thousand tax preparers who prepare high risk tax returns. Based on the content of these letters it is very clear that small business is now becoming a priority for the IRS, a recent IRS study indicated that for every $1 they spend in small businesss auditing they can expect a $4 return.
I only collect coins, I don't sell on ebay or at coin shows , but if I did i would certainly keep good records. This could get kind of ugly.
<< <i>As a general rule, hobby income is taxable, hobby losses are not deductable. >>
Bingo, if people are not a legal registered business, cost of doing business are not legal deductions.
and losses are not deductible.
But all income must be counted !!!!