COVID Bill has new regulations for selling on eBay in 2022. Sellers - Beware.

[coasternut]

I just read that starting in 2022,  eBay will start reporting to the IRS all sales totaling in a year of over $600.  It is in the new 2 trillion $$ spending bill.   Currently, it is $20,000.   Is that true?  Not sure what that has to do with helping get rid of COVID, but maybe it does in some way.   I'm sure someone will tell us.  

[vintagecraze50]

Technically and legally everyone who makes a certain amount of profit needs to report that to the IRS. THE Gov is probably going to get stricter and stricter regarding these profits made online so hold on and make some plans for this becuase it’s probably going to happen.

[vintagecraze50]

Yes, mostly ther IRS goes  after the cash cows not the itty bitty lambs.

[vintagecraze50]

What has been given can be taken away at any time in the future.

[shado-x]

A provision in the American Rescue Plan Act of 2021 (aka the COVID relief bill).

If you like your tax plan, you can keep your tax plan.  If you like your tax advisor, you can keep your tax advisor.  Oh wait, what I meant to say was that you could keep your plan and advisor before the law went into effect.

Sound familiar, peeps?

[go-bad-chicken]

@alcoforever said:

"I wouldn't worry too much about it since audits on lower income folks are pretty rare.   Also, if you kept a record of what you sold, not just the ebay stats but also pictures and descriptions, any reasonable auditor would be able to see a loss."

Maybe so maybe not. But a lot of casual are not necessarily going to be lower income per se. They may make $150k a year with their day job, and come here in their spare time and sell off things they no longer want. 

But as you state casual sellers who no longer have receipts for the old junk that they are selling will definitely need to be extremely diligent in maintaining not just sales records but photographic evidence documenting that the sales in question are in fact old purchases and hope that that will pass muster with an audit.

I m just hoping that this does not scare off to many casual sellers, as they can often times be a really good source by bringing rare and odd collectibles to market.

[southern*sweet*tea]

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@slippinjimmy wrote:

Only Sellers who are also Tax Evaders need be concerned.

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^^^THIS^^^

[m60driver]

This would cause me to think long and hard whether to continue selling on Ebay.  Not that I mind paying taxes, but the work and costs involved to keep accurate records for a Schedule C filing may not be worth the hassle

There is also the problem of proving cost when most inventory is purchased at garage sales where no receipts are available.  It might just be easier to estimate net profit margins on sales and then report the net profit as miscellaneous income and ignore the Schedule C.  It would not be the first time I have reported income in the wrong line of the 1040.  As a nano seller, I doubt it would be worth the time of the IRS to audit several hundred small sales on Ebay given the relatively small amount of taxable income at the end of the day.

But then again my state use to audit my retail business every few years.  Given the headache of providing them the details, I told the auditor I was willing to pay a few hundred dollars, sort of a nolo contendere plea,  for any errors we made.  The auditor refused that offer and after spending two full days looking through our meticulous records went away with the $80 we failed to pay on sales tax for a few online purchases, a net loss for the state given time spent. 

[jayjaspersgarage]

"So if a casual seller sells lets say $10k in a year of their old junk and declares that no profit was made on any of those items, AND THEN GETS AUDITED, but no longer has any receipts for that old junk, how do you think the IRS is going to treat them?"

The other aspect of this could be that since the IRS has the 1099 info that someone sold ANY amount above the threshold for their state then your tax return might be "adjusted" automatically to reflect the slightly higher income.  If you file electronically with Turbo Tax and are due a refund that refund just might be a little smaller than you expected.

A seller who is closer to the break even point on taxes each year that files without using the 1099 info from any online selling platform may be in for a bigger surprise.  The 10K sold on-line might put the seller on the IRS radar for years to come due to willful neglect to include the on-line sales.   

I think Bitcoin gamblers are going to be on the IRS chopping block sooner than a casual ebay seller who is literally unable to figure out their own taxes.  As the population continues to age hundreds of thousands of seniors who manage to operate ebay or other types of accounts would be protected as a class if the IRS started to get to handsy with their limited fixed income.  

[badgerboy2022]

It also states, "The amendment made by subsection (a) shall apply to returns for calendar years beginning after December 31, 2021." (We think that means it won't apply to transactions processed in 2021 - stay tuned.)

[badgerboy2022]

LOL. The blood suckers no longer care about Granny. You were told there would be no tax increase if you made less than $400K. Have you figured out you were lied to? You can keep your doctor and will be paying $2000 less on HC. LOL

[eeaadd]

So ends the hobby seller......

[tsme35]

Yep, the hobby sellers won't want to deal with the paper work, keep records for every thing they sold and trying to figure out ebay mangle financial reports for a few hundred bucks a year

[1931tb2]

The big companies will take over Ebay and miraculously not have to pay any taxes thanks to their favorable tax breaks due to their "campaign contributions".

[jbirkhofer760]

I am a small seller of miscellaneous household items and look at eBay as a nation-wide garage sale.  I realize for larger sellers eBay is their primary source of income and they look at it as an international business and have thousands of listings.

Unlike those folks, I am NOT buying items with the intent to list and resale them on eBay, yet I have more than $600 in items to get rid of every year, so this is completely ridiculous and unreasonable.  The fact is that every single item I sell was purchased with money from me working a full-time job and paying income tax on every single dollar before it ever bought the items that ultimately get listed on eBay.

If I have say two (2) laptops or iPads I no longer want, I could easily get more than $600 for, so this is ridiculous as an American.   Reasonable might be to NEVER send out a 1099-K for less than $2,000 regardless of transaction count, but to not consider someone a business unless he or she exceeds $2,000 AND 50 transactions ... OR anytime $4,000 or $5,000 is exceeded... OR whatever the reasonable threshold is for a typical American renter/homeowner getting rid of their own stuff.  Perhaps allow half the standard deduction???

The problem with 1099-K income is while it can be balanced against cost one has to itemize, which most Americans cannot do even with a house anymore with the standard deduction >$24k filed jointly or >$12k single.

Does eBay accurately handle cancelations and refunds, so they don't count against the sellers?  Is there a report I could run?

The reason I ask is if I saw say $609 sold, I would be going back in and gifting some buyer $10 letting them keep the item just to avoid paying 25%+ tax on $600+ that was already taxed.

[bobo-one]

Lots of people will be leaving  ebay because paper work is too much and pay pal reports the GROSS sale. 

Example you sell a baseball glove for  $169 and then the buyer has no resale number so tax is say 10.00 Your GROSS SALE going towards your k form is $179  and if you charge shipping say 10 dollars then that is added to your gross sales.  I just checked with pay  pal its the GROSS SALE ON THE ITEM  so be wary you can get up to 600 dollars real quick.  If you sell to a dealer with a resale number your lucky.  You have to do all the math pay pal does nothing.

You need to track sales tax, shipping ebay fees pay pal fees and hope you have a sales slip to back up what your selling even if you bought the item years ago and lost the sales slip this is for each item.

What a night mare.  Even if your a small seller say less than $5000 if the IRS audits you it could lead to other things and they can go back several years.  And yes they do audit  lower incomes