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?

[katzrul15]

🐑

(Pass the sheers)

*still think the change should have occurred years ago.  In fact, do away with any threshold at all and just report ALL income on each site to the IRS. 

[wildpitchsports]

The reason you got this notice is because FB Marketplace DOES process payments because somewhere in there , there is an option to mail the person the item directly. Which requires an online payment. Same with Let it Go! and Offer Up.

[bbravo65]

...tax to death...

...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...

...the career politicians are the ones benefit that tax money...that's how their salaries keep raising up by using COLA as an excuse...and if being public servants didn't make them rich, I bet none of them would keep seeking to be re-elected when terms are up...term limit is needed for those senators and representatives...

...I love this country but that doesn't mean I have to work my butt off with sweat, tears and blood sometimes, and my hard earning money is wasteful by those leaders whom secretly sneaking it into their own pockets, or freely spending in attempted buying votes to secure their chairs in Capitol Hill...

[tdrake]

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Although I agree that all income should be reported the $600 threshold is a joke.  

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There is no "$600 threshold".

Your tax obligation remains the same as it always has.  The only thing that has changed is the point at which companies like eBay, etc., is required to inform the IRS of the $$$ transactions. YOUR obligation remains the same as it ever was, re: taxes owed.

[lloydsteventaylor]

my 2 cents:

1. there are no  1%ers selling here or anywhere online. its just crazy to think this law will bring in income from the 1%ers

2. the irs has always had the ability to audit people who sell online. they dont need a 1099-k to show them who  online sellers are. all they had to do was create an ebay account, buy stuff, and match the sellers info to the irs data. no big deal and very easy. or just search ebay sellers info is right there.

3. this law will be a boon for CPA's. sellers will get notices and run to CPA's asking for help. 

4. the irs will actually lose money for the American taxpayer with this law. they have to   hire alot of new agents but those agents will not be able to collect additional revenue to offset their salary. there are no 1%ers selling here. you cant get blood from a turnip.

5. the irs does not have any guidelines in place for this. where do you record the 1099-k on your 1040? if you look at the irs website they treat the 1099-k as all business income. but we all know that many that sell here are not in business. they are just getting rid of stuff around the house.  ebay's notices on the 1099-k uses the example of selling a bike for $700 which you bought for $1000 which you don''t need anymore. where does the $700 go on your return? the irs will be looking for a schedule c and if they dont find one will you get a notice from the irs?  

6. even ebay is confused. you can have a personal or business account. will they send 1099-k s to personal accounts or just to business accounts?

ive always reported my online income. i just dont think this law will help pay for programs that the govt wants. 

[nobody*s_perfect]

1. Nobody said it would.

2. The notion of IRS buying stuff to catch people made me LOL.

3. Well, yes.

4. They don't need agents, just a computer to match up the SSNs on 1099-Ks and on 1040's that didn't report the income, then send out notices of what they owe.

5. The guidelines are in place, you just haven't found them. Reporting this income has been required for many years. Some states have required eBay to send out 1009-K's at a $600 threshold for several years already.

6. The IRS doesn't care whether eBay labels account as "personal" or 'business." If eBay processes more then $600 for your SSN, you will get a 1099-K and will be expected to report the income either on a Schedule C, as incidental income, or as a capital gain/loss.

[lloydsteventaylor]

"I found the senators response even more annoying when our current president used S Corporation tax loopholes to avoid paying 500K in taxes"

the current president posted his tax returns as required but....he and the first lady each created llc s so that you cant actually figure out what his/her income and expenses are. they arent required to post the details of the llc 's.  i wish he was transparent but the truth lies deep in the bowels of his llc s.

[maxine*j]

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@lightlily_arts wrote:

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

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Of course, eBay, et al, fought this.  They also fought having to collect and remit sales tax. 

One of the things that has always driven internet sales is tax evasion:  Buyers bought on-line to evade sales tax.  Sellers sold on-line to evade income tax. 

The state governments and the federal government were, combined, losing billions in tax revenue and they actually had a responsibility to do something about it.

As for changing tax laws that allow high-income people to avoid significant taxation, if they choose to do so, that is a worthy discussion but a different discussion. 

=

[jda09121]

Gee....another I have to pay my taxes whine.

[skeletonstore]

It has nothing to do with rich people.  Your rep probably didn't even compose that form letter and it definitely wasn't composed after receiving your email.  For as long as I remember living in Taxachusetts it has been $600 but I've never until now seen such a push to double tax or tax people on none taxable items as I do now.  As I've mentioned on these boards a hundred times this all has to do with what government did to the economy by shutting things down. I don't care if it was your rep,  gov,  state rep,  may or city counselor they all did major harm to the economy, some more than others.  To my knowledge they have not gone after ebay and amazon for their brazen disregard and even encouragement of selling STOLEN merchandise.  In a nutshell they don't have enough "tax revenue"(sick and twisted term)so they're taxing whomever they can find.  It wasn't until 2010 or 2011 paypal started reporting.  In my state unless you buy like $200 or something in one shopping trip for clothes you are not taxed but now on ebay you will be taxed.  This is incredibly unfair and mark my words those bowl cut  communists in washington who hide behind guards with automatic weapons will soon find the world is very small. Already on the streets of America people are looting everything from designer clothing all the way down to deodorant.  One fellow from down south said his local store was locking up $1 deodorant sticks.  Many of those items will make their way onto ebay or be sold on the street in pop up fleamarkets like you'll find in my small city.  No one should be taxed on used goods and Americans are not suppose to be guilty until found innocent.  No more trial by media.  Is the irs really going to start auditing people who declare losses selling recently purchased goods?  My state of taxachusetts has done that for years.  They want sales receipts of anything I declare as a cost of loss.  Technically on some items I manufacture myself I can declare an hourly wage for myself.  Government is out of control and treating us like cattle.  We need to demand change.  I'm afraid shutting down the country by the people is the only way.  None of us should even do out taxes(cue cheerleaders to argue how they love paying taxes).  

[bbravo65]

@skeletonstore 

"...cue cheerleaders to argue how they love paying taxes..."

...precisely comment...thank you...

[chapeau-noir]

I love to be honest - it doesn't bite you in the backside.

[buyselljack2016]

@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.

[beautifulbeauty2012]

I guess those who get their 1099-K for the first time for $600+, will be either claiming the full amount in 1040, cursing filing Schedule C, wasting money on CPA to figure it out for them (99.9% sites charge to file C, so it will be 1/6 of that $600 "income"), or stop selling alltogether. 

What also amazes me that those who are "managing" hard-earned money in form of tax, can`t even manage their own money! Those lunatics from the squad can`t even pay their student loans with six-figure salaries they also get from taxpayers. Add all illegals (in tens of millions!) who are using American taxpayer`s resources (school, hospitals, etc- they use them without paying) are also enjoying the freebies. This is very wrong.

[trustblue127]

Then there is also the problem of ebay reporting your income to the government that includes the shipping "income" and the taxes paid by the seller as your processed payment.  In other words eBay is over reporting your income from sales.