Stimulus bill add on for online sales question...rumor or true?

[holifeld]

Just curious and can’t seem to find any info on the matter. Someone told me that within the new stimulus/relief bill just passed, there was an add in that would require companies such as eBay and mercari, etc. to give records of any sales totals over $600? Is this just a rumor or is their truth to it? 
let me add i am not looking to be ridiculed for posting false info if this is inaccurate. Genuinely would like to know. Thanks. 

[nobody*s_perfect]

There is already a federal law which requires marketplace facilitators to report your earnings (via Form 1099-K) to the IRS if you pass a specific threshold.  The current federal threshold is $20,000 and 200 transactions. Over the years since that law was passed, many states have passed lower requirements; already there are 6 states with a $600 reporting threshold, with probably more to come. So the new federal threshold of $600 was just acknowledging the inevitable.

You are supposed to report your eBay income even if you don't get a form.

[fuzzface50]

starts Jan. 1, 2022. Here is a cut and paste 

Beginning on January 1, 2022, third party payment processors will have to report any income for goods or services exceeding $600 during the calendar year on a form 1099-K. Previously, processors only had to report this income if it was BOTH: (a) $20,000 or more during the calendar year, and (b) 200 transactions or more. This allowed most smaller stuff (like Topcashback, Ebates, PFS, Swagbucks payments) to go unreported

[nuclearomen]

😂there is a ton of nonsense in the new bill, none of which deals with online market places. The IRS requires all sales to be reported, always has, always will. What your talking about the marketplace laws that were passed and in effect now for over a year requiring market places like ebay to report and pay state sales tax to state of sale origin. Nothing new here. Nothing concerning 3rd relief bill. 

[ky-thrill]

Yes.  It is true, not a rumor.  Has nothing to do with stimulus, just a money grab by the government to take money from casual middle class sellers.  Most people will now have to pay federal income tax and self employment tax ON THEIR SHIPPING & E-BAY FEES!

Democrats scam Americans again.  When will people learn...

[ky-thrill]

No they didn't.  Guidance on the IRS website says that if you sold an item for less than your cost basis, to not even report it.  They don't need to know you sold your used riding lawnmower for $600 that you paid $1200.  They don't want to be swamped with that garbage.

But now with $600 1099's, all Americans will have to report that type of transaction, just to show  the $600 should not be added as income.  So at the very least, more of your private info handed over to government and more paperwork an individual will need to complete.

It will also be a nightmare for many people.  Say you have a roommate that you split an apartment with.  That roomate sells online and reports everything EXACTLY as required by law.  Then the use the money in their Paypal to do a friends and family transfer for their half of the rent.

YOU will now receive a 1099 totaling their half of the rent money for the year.  And how are you supposed to justify that.  You aren't the property owner renting the property.  You didn't sell anything.  There really isn't a form to explain that to the IRS.  But if you fail to account for it in someway, you will greatly increase your chance of being audited by just ignoring the 1099.

The $600 level comes out of Democrat controlled states where they tax the **bleep** out of everyone and drive residents from their states.  Now they have imposed that on all of America.

[nuclearomen]

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@ky-thrill wrote:

No they didn't.  Guidance on the IRS website says that if you sold an item for less than your cost basis, to not even report it.  They don't need to know you sold your used riding lawnmower for $600 that you paid $1200.  They don't want to be swamped with that garbage.

But now with $600 1099's, all Americans will have to report that type of transaction, just to show  the $600 should not be added as income.  So at the very least, more of your private info handed over to government and more paperwork an individual will need to complete.

It will also be a nightmare for many people.  Say you have a roommate that you split an apartment with.  That roomate sells online and reports everything EXACTLY as required by law.  Then the use the money in their Paypal to do a friends and family transfer for their half of the rent.

YOU will now receive a 1099 totaling their half of the rent money for the year.  And how are you supposed to justify that.  You aren't the property owner renting the property.  You didn't sell anything.  There really isn't a form to explain that to the IRS.  But if you fail to account for it in someway, you will greatly increase your chance of being audited by just ignoring the 1099.

The $600 level comes out of Democrat controlled states where they tax the **bleep** out of everyone and drive residents from their states.  Now they have imposed that on all of America.

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no, you don't get a 1099 unless you did 200 transactions AND $20,000 in sales. From Paypal or Ebay. Yes, true, you don't need to report one time $600 sale, that's not what I meant of course, if your selling online regularly not the occasional sale of your used lawn tracker you paid $5,000 for and got $900 on the sale.  

[ky-thrill]

Yes.  A limit like $20,000 is more than enough for casual sellers.  What you have to keep in mind is their may be 10 million business sellers, and a few hundred million casual sellers.  Most of those casual sellers will have no idea what the implications are of this $600 limit, until it is too late.

And if you thought $20,000 is too high, you may have a valid argument.  Maybe it did need to be lower, but jumping to $600 wasn't a reasoned approach, it was a cash grab.  Maybe $6000 would have been a better decrease.  They admit the plan on the $600 limit to bring in $8.4 billion is additional tax revenue per year.  It was done with intent.

40 $5 items with priority mail shipping will put you over the $600 limit.  That is less than one cheap item per week.  With a couple of kids, you could hit that selling old winter coats, snow boots, and a few toys.  Then along comes Uncle Sam demanding you give them a list of everything you sold, how much you sold it for, how much you paid for it, how long you had it, etc. etc. 

Your house and everything in it, just became an inventory for the IRS!

A business already exceeding the $20k limit and reporting correctly, isn't going to generate any of that additional $8.4 billion revenue.  It's just squeezing the little guy that is going to generate it.

[nuclearomen]

consider that gross 20K is usually net at least half that, exclude costs like obtain item, shipping (i pay for shipping), supplies, ebay fees, paypal fees etc... I keep pretty detailed records in excel of my sales and all receipts for merchandise. 

Fact is dems aren't going to stop with power grabbing while they can, but I didn't want to throw in the political aspect. Just look at things as norm business, report what you made and have the proof to back it up. 

[ky-thrill]

I can tell you one group of sellers who will be wiped out by this... Wal-Mart employees.  Thousands of Wal-Mart employees making minimum wage buy in demand items with their discount, and sell for slightly above retail online.

If I buy a $15 action figure and sell it for $25, pay taxes, fees and shipping on it I LOOSE $0.43 on it.  But a Wal-Mart employee gets a 10% discount.  So they might make a $1.16 selling it.  And MANY, MANY of them do this kind of micro-flip for a small amount of gain.  They need to do it to offset their $7.25 minimum wage.  Of course, high dollar electronics make them a little more, but still a small amount.

But now if they flip two Nintendo Switches per year, they will run into this new 1099, and have to pay income and SE tax on a very small amount of money.  And as individuals, they won't be able to deduct the costs of shipping, taxes, or fees because they won't exceed the standard deduction.  

Suddenly  this activity that help sustain them with a minimum wage job, will actually cost them more than they make from it, because they will pay 18% income tax on their shipping and E-Bay fees, plus another 15% FICA on the shipping and E-Bay fees.  All their gains and then some will be wiped out.

Or, they across  the board raise how much  they sell this type of micro-flip for, and all consumers buying from these types of sellers pay more for in demand items, raising consumer prices, so the extra money is just pass-through to the IRS.

But this assumes the people working at Wal-Mart understand what is going to happen in 2022 and what that means for their taxes.  I doubt most do.  So what you will end up with is thousands of minimum wage workers having their wages garnished by the IRS for years to pay back taxes AND PENALTIES that will be assessed.

This is who the Democrats targeted to squeeze $8.4 billion from with this tax grab;  low wage earners.   It's pretty scummy of them.

[nuclearomen]

don't forget 15% self employment tax

[tsme35]

You gonna see a huge drop in sellers come 2021, FB market place is already getting flooded, not sure if or how they'll report off that. Its good and bad, I feel sorry for the people selling a few things getting by but will get rid of the part time sellers selling cheap and I see garage sales and flea markets growing or coming back. Those are where I get most of my inventory so hope its good for me. But then again its not just online sellers, it's gonna hit gig workers too like walmart personal shoppers, grub hub, ubers drivers and jobs like that

[luckythewinner]

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@ky-thrill wrote:

Then the use the money in their Paypal to do a friends and family transfer for their half of the rent.
YOU will now receive a 1099 totaling their half of the rent money for the year. 

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That information is not correct. 

The 1099K requirement is only for Goods and Services, and personal payments are not included. 

Are personal payments that I receive counted in the total that will be reported to the IRS?

No. Personal payments that are not payments for the sale of goods or services will not be counted when determining if the IRS thresholds have been reached and will not be included on your Form 1099-K if you exceed the thresholds. However, all payments received for the sale of goods or services will be used to calculate the gross payment volume to be reported. PayPal monitors accounts to ensure that personal payments are not being used for sales of goods and services.

https://www.paypal.com/us/webapps/mpp/irs6050w

[binderzz]

https://www.zerohedge.com/markets/freelancers-punished-new-irs-rule-covid-stimulus

A few hundred pages into the latest $1.9 trillion Covid relief law, the “American Rescue Plan Act of 2021,” you’ll find Section 9674. It says that a “third party settlement organization” does not have to report to the Internal Revenue Service (IRS) any payments to contract workers under $600.

These third parties include Uber, Airbnb, Etsy, eBay, Freelancer, and other platforms which facilitate payments to gig workers. The problem is that this little amendment lowers the reporting threshold from $20,000 to $600. Previously, a gig worker could earn up to $20,000 on these platforms without the IRS being informed of their income.

From this rule change the IRS expects to collect an additional $1 billion annually, presumably from the poorest gig workers who previously earned under $20,000 per year. These low earners previously flew under the radar.

[binderzz]

It seems to me like this is going to be a big problem for someone just cleaning out the garage of stuff they accumulated over the last 30 years and have NO original receipts saved to prove cost.

Thank you, Chuck.  Thank you, Nancy.  Thank you, Dementia Joe.