1099-K Incorrectly issued for single member LLC

[zehnmonkey]

Just spent over an hour on the phone with support to try and get my 1099-K corrected.  All the business info on my account is current and correct, yet eBay issued the 1099-k to me, personally, and not the LLC.   Both tier 1 and tier 2 support told me I needed to contact a tax advisor to have them explain it and or I needed to contact my "department of taxes" to report the issue.   Incredible.  I have seller accounts with the same business on (other platforms that eBay censors) and short term rental sites that all issued 1099-Ks to the LLC, not me.   Finally getting in touch with tier 3 I spoke to a very crude individual that maintained the line that eBay is correct in issuing a single member LLC 1099-K to the individual and refused to correct it and again told me I needed to talk to a tax advisor to have it explained to me.  My CPA isn't going to be able explain why eBay isn't issuing businesses 1099-K and instead reporting it to the IRS as personal income.   Has huge tax implications for LLCs being taxed as an S-Corp and schedule C qualified expenses.  If anyone else is in this same boat, please file a complaint with eBay, the IRS, and your state attorney general.  Anyone else have this issue as well?

[sapphire_studio]

Apparently the IRS policy is that reporting to the EIN is optional and eBay is only required to report to the Social Security number if it is a single owner LLC. So at first what everyone assumed was a major technical glitch is now being reported as completely allowed.

You say "Has huge tax implications for LLCs being taxed as an S-Corp and schedule C qualified expenses". I won't pretend to know if that is true or not but I would sort of assume you could write off the same exact expenses.

I used to sell on Amazon and had over 100,000 in gross sales and I never considered making myself a corporation. As far as I knew the only thing it helps with was protecting me from being sued personally (and it would not change anything about the actual taxes I paid or write offs I could make). 

But I dont know a lot so take what I say with a grain of salt.

[rfmtm]

Here are the current in print rules from the IRS for issuing a 1099K. Apparently for Sole Proprietor either the SSN or the EIN is allowed, but the SSN is preferred. So it appears, ebay has a choice and choose the SSN.

From the IRS General Instructions for Certain Information Returns:

Sole proprietors. You must show the individual's name on the first name line; on the second name line, you
may enter the “doing business as (DBA)” name. You may not enter only the DBA name. For the TIN, enter either the individual's SSN or the EIN of the business (sole proprietorship). The IRS prefers that you enter the SSN.

Limited liability company (LLC). For a single-member LLC (including a foreign LLC with a U.S. owner) that is disregarded as an entity separate from its owner under Regulations section 301.7701-3, enter the owner's name only on the first name line and the LLC's name on the second name line. For the TIN, enter the owner's SSN (or EIN, if applicable). If the LLC is taxed as a corporation, partnership, etc., enter the entity's EIN.

[beautifuljewelrynyc]

You are not the only one. Many LLC sellers have the same problem. Please see other threads “Wrong issued 1099K on my name. Not LLC.” Devon@eBay is involved, is reaching out to some specialists. We are waiting for updates from him.

I made a mistake by choosing “Sole Proprietor/Single-member LLC” when I set up business information 7 years ago. My company is corporation (Inc.). eBay had been issuing 1099K under my Inc. name and EIN in the past years. So I didn’t realize my wrong business type on eBay until January 30, 2023 when eBay issued the 1099K to my name and SSN.

My company is a corporation (Inc.) which have been filing under 1120 form. My CPA is unable to handle this incorrect 1099K, and asks me to have eBay to correct it. I called eBay 5 times. They refused to correct my 1099K by saying it is IRS’s requirement  for 2022 to issue 1099K to personal name and SSN for business type of Sole Proprietor and Single-member LLC on account.

My business info is still “Business type: Sole proprietor/Single-member LLC”, but when I clicked on edit business type., the page showing up that my setting was changed from “Sole Proprietor/Single-member LLC” to “Sole Proprietor or Owner”. The page says “Confirm your business type. Sole proprietor or owner. This means you’re selling under your own name, not as a registered business.” eBay revised the setting with no notification to sellers. And currently the system doesn’t let me to to correct my business type to Inc. Corporation.

eBay gives me a headache.

[zehnmonkey]

I set mine up 24 yrs ago and this is the first time they've done this.  The attitude I received from the tier 3 person when I finally reached them was as though I didn't understand the IRS rules or tax law, which I definitely thoroughly understand and maximize - enough to file a 2096,taxing the LLC as an S-Corp and paying myself as a W2. A simple point of order is that if there is an error on the form, you contact the issuer for correction.   If there was an IRS audit, and I claim cost of goods for the enterprise IT repairs, but  I do but have any income reported for the business, it's an audit flag and the IRS has authority to disqualify the entire schedule C and declare it a hobby.  Again, eBay is the only marketplace doing this.  Amazon, Bonanza, Etsy all issue to the LLC if the LLC information is on the account.

[beautifuljewelrynyc]

An eBay service support (who is very helpful , professional and patient) worked with me to have my account’s business type corrected from the wrong one “Sole Proprietor/Single-member LLC” to a correct one “Corporation”. The process took 3 days, first to add my account to the technical issue list, then down grade my account to “Sole Proprietor”, after that change from “sole Proprietor” to the correct one “Corporation”.  Right now wait for all the updates to be verified, then the agent will send request to have my 1099K be corrected. The agent will get back to me again on Sunday.

[redbarntoys]

I've been on a chat for 45 minutes with eBay while they insist S Corporations are supposed to have their 1099 issued to the owners SSN, which is obviously incorrect. It looks like their system lumped all sole proprietors in with Single Member LLCs, not realizing that a Single Member LLC can also be an S Corporation. Please keep us posted.

[beautifuljewelrynyc]

I've been on a chat for 45 minutes with eBay while they insist S Corporations are supposed to have their 1099 issued to the owners SSN, which is obviously incorrect. It looks like their system lumped all sole proprietors in with Single Member LLCs, not realizing that a Single Member LLC can also be an S Corporation. Please keep us posted.

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In eBay's original business info setting version, Sole Proprietor/Single-member LLC were together as ONE business type with a slash between them only, they were not separated business types. If eBay generated 1099K according to business type, sole proprietor and single-member LLC of original setting version are getting the same. 

The new one (I saw yesterday when I updated my account's business type to Corporation) has 4 business types: 1. Sole Proprietor   2. Single-member LLC   3. Corporation/Multi-member LLC   4. None Profit.

I will share my come out.

[vinascrystals]

Please keep us updated with your outcome. 

Please eBay staff if you are reading this, give us some resolution. We don't really want to deal with IRS audits. 

[zehnmonkey]

Exactly. I can have an S-Corp LLC and be 100% shareholder.   Completely different than filing "sole proprietorship." Being a W2 of my own S-Corp saves 7.65% in taxes over direct income. Every CPA on the planet tells you to do this to reduce tax burden. 

The insisting that the business owners are the incompetent ones even by Tier 3 support is absolutely absurd.   

So were you able to get it rectified and the 1099 reissued?

[flexmotoring]

Did you ever get it fixed? My CPA is contacting IRS to let them know the PSE refused to change it. I have all correspondence saved from eBay CS refusal.

I mean this information is literally on the IRS website,

If you report your business income on a Form 1120, 1120S or 1065 and you receive a Form 1099-K in your name as an individual (showing your social security number), contact the PSE listed on the Form 1099-K to request a corrected Form 1099-K showing the business's TIN. In addition, request that the PSE use the business's TIN on all future Forms 1099-K. Report the income from the Form 1099-K along with any other sources of income on the appropriate income tax return. Retain all correspondence with the PSE to show that this error was corrected.

[flexmotoring]

Strange, I wrote you a reply asking if you got it fixed and it's gone. I mentioned we contacted CS telling them were elected as S corporation filing 1120S. Multiple attempts and they refused to change it. On the IRS website, it clearly says to contact the PSE, which is eBay to change the error.  Our CPA is waiting for the 1099K too.

[beautifuljewelrynyc]

The awesome eBay agent (who follows up my issue all the way down) just called me back. Yes, eBay will revise the 1099K to my company's name/EIN, and the correct one be ready in about 4 business days.

[beautifuljewelrynyc]

I've been on a chat for 45 minutes with eBay while they insist S Corporations are supposed to have their 1099 issued to the owners SSN, which is obviously incorrect. It looks like their system lumped all sole proprietors in with Single Member LLCs, not realizing that a Single Member LLC can also be an S Corporation. Please keep us posted.

---------------------------------------------------------------------------------------------------------------------

In eBay's original business info setting version, Sole Proprietor/Single-member LLC were together as ONE business type with a slash between them only, they were not separated business types. If eBay generated 1099K according to business type, sole proprietor and single-member LLC of original setting version are getting the same. 

The new one (I saw yesterday when I updated my account's business type to Corporation) has 4 business types: 1. Sole Proprietor   2. Single-member LLC   3. Corporation/Multi-member LLC   4. None Profit.

I will share my come out.

******************************

In addition, I saw some sellers said they have a few accounts (taxed as S Corporation), for some accounts, eBay issued 1099K to personal name/SSN, while for other accounts, 1099K issued to company name/EIN. Is it because the accounts were set up at different time, and under different eBay business type setting versions? 

[spark_hid]

I'm having the same issue with the 1099-K. Ebay reported under my SSN instead of my EIN for S-corp filing. Any one able to get them to correct this?