PSA: 1099k from Paypal reporting tax collected by eBay in your totals

[gotclubs]

As I sit here reconciling every day from my 1099 to my own records for 2019, I notice that starting on 11/4/19 my 1099 includes the "sales tax collected by eBay" in my total for any transaction in which tax was collected.

Is this a dirty money grab by the IRS? The sales tax is not paid to us, nor would we have an easy way to track it in out own records. Paypal fees is an easy formula in a spreadsheet, same with eBay fees. Sales tax, that only shows up in the details of the paypal transaction, when a buyer is required to pay the sales tax, at a different rate depending on location, this is untrackable.

You should always reconcile your records to your 1099, but now you need to be extra vigilant. Refunds aren't included in your 1099 which is one reason you need to reconcile if you do a lot of business, now sales tax is included even though it was never paid to us.

[chapeau-noir]

You can download an activity report in the 'activity' tab of your paypal account. I do so in a csv file.  For me column T shows the sales tax broken out.  The column needs to be changed from 'general' to 'currency', and I simply added it up.  But this is where you find the sum that Paypal collected in sales tax, then remitted to the various states with marketplace facilitator rules.  The IRS doesn't really come into it unless one doesn't deduct the sales from the total. The last three months (one of the options) does the job.

[gotclubs]

I thought that eBay collected the sales tax, not paypal. Regardless, this amount should not be included in a 1099 calculation as it was never paid to us. If we received the money ourselves then had to pay it out to the states, well then it's easy to calculate as 1099 minus what we paid out which we would have some detail of.

I'll take a look at the file you're referring to. I usually just use the CSV file of the 1099 to trace back and make sure each day ties out. I found a few items I had forgotten to record as sold items on my own spreadsheet, which means I would not have been deducting to COGS of those items.

This sales tax though should not be included, just as it wasn't included the prior 10 months of the year.

[nobody*s_perfect]

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@gotclubs wrote:

I thought that eBay collected the sales tax, not paypal. Regardless, this amount should not be included in a 1099 calculation as it was never paid to us.....

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It was processed as part of the buyer's wholePayPal  payment, and then immediately snatched away.  But not before PayPal charged you their 2.9% on it. And the 1099 is supposed to account for all payments they processed for you. Not clear to my why eBay/Paypal made that fundamental bookkeeping change on November 1.

[gotclubs]

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@nobody*s_perfect wrote:

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It was processed as part of the buyer's wholePayPal  payment, and then immediately snatched away.  But not before PayPal charged you their 2.9% on it. And the 1099 is supposed to account for all payments they processed for you. Not clear to my why eBay/Paypal made that fundamental bookkeeping change on November 1.

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Not sure if you were being facetious here or not, but I think we can tell why they changed the bookkeeping. I had no clue that this is how they were operating until now. Well, at least it is more that I can write off.

I tried to find the report the prior replier was talking about but I can not find it under statements. I may not have a business account, maybe that is why...

[luckythewinner]

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@gotclubs wrote:

As I sit here reconciling every day from my 1099 to my own records for 2019,

{snip}

Is this a dirty money grab by the IRS? The sales tax is not paid to us, nor would we have an easy way to track it in out own records. Paypal fees is an easy formula in a spreadsheet, same with eBay fees. Sales tax, that only shows up in the details of the paypal transaction,

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PayPal fees and sales tax are both available as columns that you can export in your PayPal activity report. 

If you are reconciling, wouldn't it be better to reconcile to *actual* transaction amounts, not formulas in a spreadsheet?

For isntance, how does your formula determine whether to calculate fees for a domestic transaction vs. a n intenrational one? They have different percentages. 

[mam98031]

[gotclubs]

I'm assuming I do not have this option because I do not have a business account

[lacemaker3]

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@gotclubs wrote:

I'm assuming I do not have this option because I do not have a business account

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I believe this is correct, however, try this and see if you can get to the Reports page. I have a Premier account (not available from PayPal anymore), and this will take me to the Reports page, the same as a Business account.

You should try this, and if it doesn't work for you, then you may need to upgrade to a Business account. I don't really know of any disadvantages to doing this, the main advantage is having access to reports like this. But I don't know if the reports would be available retroactively.

Click on Activity, and then Statements (you may need to increase the size of your browser window to see the Statements link):

On the next page, click on "Custom":

And that takes me to a page that looks just like the page shown in the earlier reply:

[mam98031]

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@gotclubs wrote:

I'm assuming I do not have this option because I do not have a business account

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So if you are expecting a 1099K from PP because you had over 20K move through your PP account for business [selling stuff], why wouldn't you have a Business account?

@gotclubs 

[gotclubs]

Because I only have one account I use for buying and selling, and it is all linked to the same checking account. I suppose it’s time to set up a new one.

[nobody*s_perfect]

You don't need to set up a  new PayPal account, just upgrade our current one. It's just a few questions and takes just a few minutes. Be prepared to make up a name for your "business."

[the*dog*ate*my*tablecloth]

The fees are the same and you get more information. If you’re selling as much as you are it would be helpful. Nobody’s flying under the radar by keeping a personal account. 

[mam98031]

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@gotclubs wrote:

Because I only have one account I use for buying and selling, and it is all linked to the same checking account. I suppose it’s time to set up a new one.

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I use mine for both too.  I always have.  But I still have mine set up as a business account.  

[bghunter916]

First I don't reply much to these because to many do gooders, but what I will say is I know for a fact that what is reported to the irs is your total positive flow of cash, meaning no matter if a family member sends you cash or a  from a refund from a cancelled transaction, whatever, if its incoming into your PP account its reported they "do not adjust your income on a refund", I had to go back through last years paper work and submit everything to the IRS because my actual shown income, not minus fees, shipping, anything, did not match what was reported by ebay/paypal. Reason, just what I said, they do NOT adjust your income to show gifts from family or friends, refunds, NOTHING, if it comes in its reported. After several months of paper work etc, the case was found in my favor. Ebay has become no more then an extortioner and the only reason we hang out is if we sale ok, if we don't "so what". You have people paying sales tax on used items, natural items that are not even from a store, they tax it all.  You watch there will be a lot of people get in tax trouble over this system, bet on it.