Message from "The eBay Government Relations Team about $600 Reporting Requirement

[stephenmorgan]

Looks like eBay is still trying to get this overturned.  IRS delayed it for a year because they were not prepared for it last year but I think they are well ready for it now and have posted instructions on how to account for the information provided on the 1099k.

[tobaccocardyahoo]

There was never a chance of a federal repeal.

Perhaps, if it suits them, the IRS will delay it again.

Those of you who are in tax hungry states have already seen reporting requirements at low levels.

It is well known in certain political circles that all online sellers are despicable and likely to cheat on their taxes as well as cheat their customers.

[gamersbaystore]

What you stated is not true. There are no taxes due when selling used items from around your house at a loss. Please explain to me the logic in requiring people to file additional tax forms for income that was not taxable to begin with.

You could sell a billion dollars of goods on ebay and there would be no taxes due if you sold them at a loss. You people need to learn what taxable income actually is.

[gamersbaystore]

Not all income is taxable, nor is all income required to be reported. If I sell something I previously bought at a loss, there is no income tax due and there are no legal reporting requirements for it either.

ebay opposes the lower tax thresholds because they're scared they'll lose too many sellers. This was further clarified by the mountain of sellers in these forums who stated they planned to stop selling given the new $600 threshold.

Though you're right that it costs ebay time and money to report all those 1099Ks.

[maxine*j]

I've said it before, and I'll say it again: 

eBay, Amazon, et al, oppose the new federal reporting requirement because it costs them to prepare and issue the 1099Ks, they face substantial penalties for errors -- plus they know that dodging income tax is one of the drivers of e-commerce.

eBay, Amazon, et al, opposed state legislation that required them to collect and remit sales taxes, too (but they lost one that in a Supreme Court decision), because it costs them money, they face substantial penalties for errors -- plus they knew that dodging sales tax was one of the great drivers of e-commerce.

If anyone has studied the issue and personally opposes the reporting requirement, that person should oppose it.  But no one should ever think that eBay, Amazon, et al, are opposing it on behalf of sellers or buyers on their platforms.

[albertabrightalberta]

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@tobaccocardyahoo wrote:

It is well known in certain political circles that all online sellers are despicable and likely to cheat on their taxes as well as cheat their customers.

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As evidenced by all the threads from irate posters who are complaining about the $600 threshhold for the 1099K form and their surprise that they now have to "claim their income," I'd say it's true. And it has nothing to do with "certain political circles."

[stephenmorgan]

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@tobaccocardyahoo wrote:

There was never a chance of a federal repeal.

Perhaps, if it suits them, the IRS will delay it again.

Those of you who are in tax hungry states have already seen reporting requirements at low levels.

It is well known in certain political circles that all online sellers are despicable and likely to cheat on their taxes as well as cheat their customers.

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Has nothing to do with cheating your customers.  You cheat your customers and it won't be long before you have no customers.

[gamersbaystore]

So true, the reporting threshold dropped here in Missouri to $1,200. So even if ebay has its way with the federal reporting, states have already changed the rules. Though lawmakers here have talked about raising the threshold again.

And yes there are people who cheat on their taxes, but its ridiculous to demand people file on $600 when the majority wont actually owe any taxes on such sales to begin with.

Maybe the $20K reporting threshold was too high, but the $600 threshold is way too low. Its negatively affecting people who're just selling off old stuff in desperation to pay a few bills.

[beautifulbeauty2012]

My Senator (actually both of them) are opposing this. And I never hear from my Congressman; he is too busy with sending money to Ukraine -that I know is being his main priority: the wars - waste taxpayers money on the corrupt Ukrainian and other government people.

[stephenmorgan]

If you are selling personal items you may be able to report them on IRS Form 8949 Sales and Other Dispositions of Capital Assets. 

https://www.irs.gov/pub/irs-pdf/f8949.pdf

Individuals.

Individuals use Form 8949 to report the following.

• The sale or exchange of a capital asset not reported on another form or schedule.

Look up the form and instruction and see what you think.

Column (d) is Proceeds of sale, Column (e) is the Cost or other basis.  The Cost Bases is where you would determine and remove the value of what it cost to sell the item.  You just need to keep very good records of all the amounts that determine the bases. 

Example, I sold a item for $20 (d) Proceeds, I paid $5.00 for the item, I paid $2.65 to eBay, I paid $4.20 shipping.  My Cost Basis (e) is the $5.00 I paid for the item plus the eBay Fee of $2.65 and the Shipping of $4.20 for a total of $11.85.  The $20.00 (d) Proceeds minus the $11.85 (e) Basis equals $8.15 (h) Gain or loss.  The $8.15 is the amount of the gain that may be subject to taxes.

If you use the shipping from eBay there is an excellent report (Order Details) that provides most of this basic information and all you need is the Item Cost to determine the Basis.  I believe prior reports are available for about three years or so.

This is just basic information and there are other costs that can adjust the Basis.  I would suggest anyone who has not used this Form before to use a Tax Preparation Service the first year and then maybe you could do it yourself in subsequent years.

[stephenmorgan]

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@beautifulbeauty2012 wrote:

My Senator (actually both of them) are opposing this. And I never hear from my Congressman; he is too busy with sending money to Ukraine -that I know is being his main priority: the wars - waste taxpayers money on the corrupt Ukrainian and other government people.

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Opposing this meaning they do not want to see the amount lowered?

I think most politicians are ok with the $600 as is and it is unlikely to change.

[beautifulbeauty2012]

From the Senator:

"On April 18, 2023, I joined Senator Bill Hagerty (R-TN) in reintroducing the Stop the Nosy Obsession with Online Payments, or SNOOP Act (S. 26). This bill would reverse the Biden Administration’s efforts to invade the privacy of Americans by requiring third-party payment platforms, such as Venmo and PayPal, to report individuals with more than $600 of transactions a year to the IRS. Instead, it would change the IRS reporting requirements back to a minimum threshold of $20,000. S. 26 was referred to the Senate Committee on Finance.

On April 25, 2023, I joined Senator Tim Scott (R-SC) in cosponsoring the Prohibiting IRS Financial Surveillance Act (S. 453), which would prohibit the U.S. Department of the Treasury and the IRS from implementing any new reporting requirements for financial institutions regarding individual account inflows, outflows, balances, transfers, or any similar information. S. 453 was referred to the Senate Committee on Finance. "

[doc-holmes]

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@beautifulbeauty2012 wrote:

From the Senator:

"On April 18, 2023, I joined Senator Bill Hagerty (R-TN) in reintroducing the Stop the Nosy Obsession with Online Payments, or SNOOP Act (S. 26). This bill would reverse the Biden Administration’s efforts to invade the privacy of Americans by requiring third-party payment platforms, such as Venmo and PayPal, to report individuals with more than $600 of transactions a year to the IRS. Instead, it would change the IRS reporting requirements back to a minimum threshold of $20,000. S. 26 was referred to the Senate Committee on Finance.

On April 25, 2023, I joined Senator Tim Scott (R-SC) in cosponsoring the Prohibiting IRS Financial Surveillance Act (S. 453), which would prohibit the U.S. Department of the Treasury and the IRS from implementing any new reporting requirements for financial institutions regarding individual account inflows, outflows, balances, transfers, or any similar information. S. 453 was referred to the Senate Committee on Finance. "

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To rephrase, they want it to remain easy for people to cheat on their taxes. 

[frankenhobbit]

I need to dig further on that. I was aware of form 8949, but not aware of the possibility that I could add costs of disposal of the item to the basis, only the costs to acquire. That may be just what I need. It's certainly fair that way. 

Thanks for taking the time to put together that reply. It's greatly appreciated!

[beautifulbeauty2012]

Do you think even those whose gross sales $20K are the ones who are actually the cheaters, and not those who want to make the new law to lower to $600? 

This has been a very hot topic for a while now. It will be a lot of headache to those who never had to file Schedule C unless they include the gross amount in their total income (which is the easiest thing to do, but do they really have to pay tax on something they bought or received as a gift-without another form to file?). Those who know what is a business expense, even if they have gross sales of $100K+, not necessary will pay even 1% of the gross sales in taxes.

In my opinion, $10K of gross is the starting point when people treat online sales as an income, not a hobby. Maybe $20K is high, but $600 is way too low. Just saying.

[gone.c-33]

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@beautifulbeauty2012 wrote:

From the Senator:

"On April 18, 2023, I joined Senator Bill Hagerty (R-TN) in reintroducing the Stop the Nosy Obsession with Online Payments, or SNOOP Act (S. 26). 

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What does this read like it was written by The Onion?