New 1099-K reporting guidelines.

[lightlily_arts]

Recently I responded to eBay’s request to message my congressional representatives regarding the change in 1099-K reporting.   This is the response a received from my US Senator Representative.

“Thank you for writing to share your concerns regarding a proposal to reform Internal Revenue Service reporting practices. I appreciate hearing from you.

According to a March 2021 study by the National Bureau of Economic Research, the top one percent of earners fail to pay approximately $175 billion that they owe each year. Under his “American Families Plan,” President Biden has proposed revitalizing enforcement of the federal tax code to ensure that the wealthiest Americans actually pay what they owe. This plan includes a proposal to require financial institutions to report information on account flows so that earnings from investments and business activity are subject to independent reporting just like wages already are.

I deeply value Americans’ privacy and the responsibility financial institutions have in protecting their customers’ financial data. I also believe it is important to close the gap between taxes owed and taxes paid to ensure wealthy individuals are paying their fair share.”

I seriously doubt that this tax change will actually impact the so called wealthiest Americans.   Instead it will be a burden for individuals selling off their personal items to make ends meet.  Although I agree that all income should be reported the $600 threshold is a joke.   I found the senators response even more annoying when our current president used S Corporation tax loopholes to avoid paying 500K in taxes.  

I recently received a notice from Facebook regarding the new tax law reporting requirements.
I don’t know how many people who sell personal items locally through Facebook for cash actually get their asking price. When you delete a listing Facebook asks if it sold and whether it was on their site. So how is Facebook going to track cash payments?

[kosmosattik]

"...and when you are already dead, your next generations still have to fulfill your tax burden if they inherit anything left from you...unless you are government hand-out person or...homeless..."

Ridiculous.  

The 2022 estate tax exemption for individual estates in $12.06 million and it is adjusted annually for inflation to boot.  Further, the cost basis for inherited assets is accelerated to the date of death, i.e., unrealized capital gains accumulated during the decedents lifetime are set to zero at the date of death.

Now, if Pa didn't pay his taxes when he was alive then the estate is going to be on the hook, as it should be.

[beautifulbeauty2012]

Exactly! That is a pain to go through statements to sort those taxes out, which are reported as our income. At least, ebay figured out (eventually) not to include returns as the income (which they did for a couple of years).

[slippinjimmy]

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@buyselljack2016 wrote:

@lightlily_arts 

Your reps answer looks more like an answer to the $600 threshold for reporting movement of funds(that could/would include rent payments, car payments, and many other transfers) than an answer to 1099-K reporting thresholds.

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Seems to me the answer was all about one of the provisions in the Build Back Better bill which would roll back portions of the Trump tax cuts, specifically on the highest earners.

For sure it had nothing to do with 1099k's.

[downunder-61]

I hate paying taxes, hate it........

but I am pretty sure I would hate serving prison time as well - they are really harsh over here, a bit like ebay buyer's - 2 strikes and you're out.

[lightlily_arts]

I doubt that you'll find  that the wealthiest 1 percenters are sellers on eBay, Amazon, or Facebook.  As you can see Padilla's office didn't address the $600 threshold issue at all in his response.    I'm  annoyed because it's disingenuous to claim that the change in threshold is going to impact the wealthiest people at all.  They already know how to hide income and use tax loopholes.  This change was specifically aimed at those people who weren't meeting the required $20K threshold for the 1099-K.    According to Padilla "President Biden has proposed revitalizing enforcement of the federal tax code to ensure that the wealthiest Americans actually pay what they owe."    They should start with our president and have him pay the 500K he owed before using  an LLC S-corp loophole.  He also needs to trim the 3.5 trillion spending package and balance our deficits.

I don't have a problem receiving a 1099-K from eBay as I've already been reporting for years.   Previously it was PayPal that was sending me the 1099-K.   I download  eBay's monthly invoices to track sales and expenses which we all need to do.   Fortunately, eBay's monthly statements breakdown all your sales and expenses so you see the net income including return refunds and cancellations.  If you buy your shipping labels elsewhere you'll need to get that monthly statement too.  All you need are your presale expenses to determine your actual net profit.   It's important to get the monthly statements because you'll also need to deduct the state taxes paid that the buyers  paid from the 1099-K gross amount.

I was concerned about the changing the deposits of 10K threshold to $600  that they wanted banks and financial institutions to report to the IRS.

[lonebuck-books]

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@lightlily_arts wrote:

According to a March 2021 study by the National Bureau of Economic Research, the top one percent of earners fail to pay approximately $175 billion that they owe each year. 

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You know, 'cause the "wealthiest 1%" are selling on eBay.

The wealthiest 1% have the best accountants on the planet.  They know how to work the tax laws so they don't owe much if at all.  It seems to me the people who actually owe money but fail to actually pay are congress critters, other politicians and those connected to these people. 

Here's an idea, if they want what they think the rich "owe", how about fixing the tax loopholes that allow the rich to avoid taxes they supposedly "owe" instead of targeting the middle and lower income levels.  Of course that will never happen because the people in charge of writing tax laws will never write one that will make them pay more.

No , this is not a R or D issue, both parties are guilty of writing tax laws that they benefit from.

[lonebuck-books]

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@downunder-61 wrote:

I hate paying taxes, hate it........

but I am pretty sure I would hate serving prison time as well - they are really harsh over here, a bit like ebay buyer's - 2 strikes and you're out.

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Ummm, that's pretty much the textbook definition of extortion.  Government is really good at that.

[jda11121]

Oh Brother.....

[buyselljack2016]

I was concerned about the changing the deposits of 10K threshold to $600 that they wanted banks and financial institutions to report to the IRS.

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

But it appears (1st post) that you asked about

Recently I responded to eBay’s request to message my congressional representatives regarding the change in 1099-K reporting.

[kosmosattik]

1)  It is evident the Rep's response in the OP was boilerplate slapped into an email by some intern that relates to pending legislation unrelated to 1099-K reporting.  Since 1970, banks were required to report single transactions, a deposit or withdrawal, of $10,000 or more.   That was easy enough to avoid by breaking up transactions into amounts of $9,999.99 or less.  The current provision on the table in the Build Back Better bill changes it to aggregate annual transactions of $10,000 or more, excluding W2 salary and wage deposits.  It was originally proposed to be a $600 threshold, since amended.

2) 1099 reporting of income over $600 is nothing new and is not some newfound targeting of the little guy.  If you were a gig worker or independent consultant, you've been getting a 1099-MISC forever for income over $600 from one source.  It's now a 1099-NEC for gig workers.  Moving up the food chain, for example, insurance companies have been required to issue 1099's for payments in excess of $600 to doctors and other medical providers since forever, many of whom, believe it or not, are not in the 1%.

3) Writing your Rep at this late date is pointless which is probably why an intern would be thinking about the pending legislation.  1099s now applicable to platform sellers was included in the American Rescue Plan Act of 2021 passed earlier this year.  Even if it wasn't water under the bridge it would take hundreds if not thousands of like complaints out of a Reps 700,000 constituents to get past the interns and assistants to get on the Reps radar.  That requires grass roots organizing, not just a weak call-to-arms post or emails from eBay.  I'm not sure I even got an email on this issue.

4) Whatever lobbying eBay and other platforms directed at this provision it had nothing to do with your taxes.  It would have been about the expense in issuing those 1099-Ks.

5) Saying you don't like paying taxes is entirely gratuitous.  It's a complaint as old as the gods.

6) f there was one overriding theme in the current Zeitgeist it's, "I want what I want because I want it," regardless of the facts, science, reason, whatnot.

[kosmosattik]

Yeah, I've heard that before from some middle class Reagan / Trump Republicans in the family.  But when Ma burned through her assets in the nursing home and then Medicaid starting picking up the tab ($60,000, $80,000, $100,000?) per year I don't hear them changing their tune since they should now be well aware it is not just about "welfare queens".    Strange, huh?  Not to me.

[dq3141]

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@kosmosattik wrote:

Yeah, I've heard that before from some middle class Reagan / Trump Republicans in the family.  But when Ma burned through her assets in the nursing home and then Medicaid starting picking up the tab ($60,000, $80,000, $100,000?) per year I don't hear them changing their tune since they should now be well aware it is not just about "welfare queens".    Strange, huh?  Not to me.

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Millions of people on Social Security and Medicare rant about "socialism". Utterly clueless.

[beautifulbeauty2012]

Those are ignorant people who have no clue about socialism and communism they rant about. They hate rich people - that works every time - it worked in Russia in 1917, and it is working now in the US. The slogan " take from rich people what they earned, and give it to the poor ones" is alive as never before. I am amazed that this recipe of blaming rich people for issues of lazy ones works even on very smart folks - hate towards rich is what motivates them.

I`d recommend to anyone who thinks socialism is great to read George Orwell ("Animal Farm" and 1984") and Mikhail Bulgakov`s "Dog`s heart" - the latter is resembling the beginning of what we are experiencing now in terms of punishing smart and hard working people and promising and providing to lazy stupid ones - including the power.  It is really scary. 

[wildpitchsports]

I`d recommend to anyone who thinks socialism is great to read George Orwell ("Animal Farm" and 1984") and Mikhail Bulgakov`s "Dog`s heart" - the latter is resembling the beginning of what we are experiencing now in terms of punishing smart and hard working people and promising and providing to lazy stupid ones - including the power.  It is really scary. 

Speaking of...that dystopian future described? We're already living in it. That should be terrifying.

[mrdutch1001]

and you do realize that just because "Facebook asks if it sold and whether it was on their site.",  that no one actually has to choose any of the supplied reasons, that a listing can be deleted without giving a reason.

I highly doubt that at this point, the governing bodies are concerned with sales on a site like Facebook which does not have a dedicated payment system set up for sales transactions.