eBay

longtimealaskan · ‎02-13-2022

I received a notice from ebay that they are holding my payouts until I give them my social security number. I have no issue with the 1099. I'm not a big seller and the vast majority of things I sell are things my wife and I bought over the years for personal reasons, used them, and then eventually stopped using them. Although I sell some items to make a profit, I mostly sell items that we bought but no longer use. I'm sure I would be showing a loss on the 1099. Either way, I don't have a problem reporting my profit or reporting my loss to the IRS. I've already set up an Excel spreadsheet listing the items I sold, the sell dates, the selling price of the item and any expenses like ebay fees, shipping cost, insurance, shipping labels, packaging materials, etc.

My issue is giving my social security number to ebay. I cringe at giving ebay or any other online business my personal/financial information. I wouldn't trust the ebay clowns to protect my information. Bigger and better firms than ebay have been hacked and personal information for the firm's clients stolen. My personal information has been hacked from large firms 4 times already, firms in theory more concerned about protecting personal information than ebay is likely to be. I'd rather ebay withheld the 24% and sent it directly to the IRS. I will have to file a 1099 anyhow so why not eliminate the weakest link with respect to protecting my social security number? I don't mind waiting to get my money back from the IRS. I'm more concerned about protecting my personal information. If ebay doesn't have my social security number they can't lose it or have it stolen from them. Do you feel comfortable trusting ebay to properly protect your personal information?

What's wrong with my plan? Any and all constructive comments and thoughts are welcome.

bearswatching · ‎02-14-2022

If you are this paranoid about identity theft, and having already been hacked 4 times, why on earth are you not freezing your credit? It’s free to freeze and unfreeze at will. In the twenty five—ish or so years since we froze ours there have been 2 attempts to use our SSN. Both were instantly shot down. You can Google the pros and cons but we have never felt there is a downside to freezing. When you anticipate a big expenditure coming up where a credit check will be necessary just unfreeze it and then freeze again after the credit check is finished.

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jda04121 · ‎02-13-2022

Well the biggest whole in your idea is that to submit to IRS they need your SSN.

lacemaker3 · ‎02-13-2022

@longtimealaskan wrote:
... Although I sell some items to make a profit, I mostly sell items that we bought but no longer use. I'm sure I would be showing a loss on the 1099. ...

...

You can't, be definition, show a loss on a 1099-K. The 1099-K form is used by payment processors, to report the total amount of payments (gross receipts) that they processed for you. Payments that you receive, by definition, have to be positive. They don't adjust the total or subtract any of your expenses, so it's impossible for a 1099-K to be issued for a negative amount.

That doesn't mean that you necessarily have any tax liability just because you receive a 1099-K. It just means that you need to be able to show whether you have any taxable income or not.

@longtimealaskan wrote:
...

... I'd rather ebay withheld the 24% and sent it directly to the IRS. I will have to file a 1099 anyhow so why not eliminate the weakest link with respect to protecting my social security number? ...
...

In theory, eBay could do that. If a payment processor does not have a payee's ITIN, then they are required to withhold an amount for taxes. However, eBay has never taken that option as far as we know. If you don't provide your ITIN, then eBay will not process any payments for you. That way, they don't have to issue a 1099-K, but you don't receive the payment(s).

Eventually, eBay will send any money (that has not been refunded to the buyers for non-receipt of their purchases) to your state's unclaimed money department, and you can claim it from there. Presumably, you would have to account for the income when you eventually receive it. However, most sellers would not be willing to ship items, if they know they aren't going to receive payment, so your eBay selling career would end quickly.

FYI, you don't file an 1099-K. Only payment processors are required to file 1099-Ks. According to the IRS, you are not even required to report income that was reported to them on a 1099-K, although it seems like a strong possibility that ignoring one is likely to result in an audit. In that case, you would need to show that the gross receipts reported on your 1099-K were for items that were sold at a loss, and as long as you can demonstrate that to the auditor, then you would not have any tax liability.

Your choice is to either provide your ITIN, or stop selling on eBay. You don't get any other choices, I'm afraid.

@longtimealaskan wrote:
...

What's wrong with my plan? Any and all constructive comments and thoughts are welcome.

eBay doesn't do that, so it's not a valid proposal.

longtimealaskan · ‎02-13-2022

Not necessarily. Ebay says if I do not supply my SS# they will withhold the 24% and send it to the IRS. I'm sure it can be done without having my SS#.

longtimealaskan · ‎02-13-2022

Yes, I didn't say it properly. When I said showing a loss I should have said my earnings will be canceled by my original cost of the item and any expenses I have. Most likely net result = no taxes.

lacemaker3 · ‎02-13-2022

@longtimealaskan wrote:
Not necessarily. Ebay says if I do not supply my SS# they will withhold the 24% and send it to the IRS. I'm sure it can be done without having my SS#.

There have been lots of reports from sellers, who did not supply their SSN, that eBay refused to make any payouts at all. There haven't been any reports of eBay sending payouts with tax withheld.

So, this is theoretically possible, according to the rules for issuing 1099-K forms, but there's no evidence that eBay has ever used this option. They just hold the payments until they receive an SSN or ITIN, or else they eventually send it to the seller's state as unclaimed income, if they don't use the money to refund the buyers for not receiving their purchases.

longtimealaskan · ‎02-13-2022

I would definitely report the 1099 information to the IRS. As you said, not submitting it would likely result in an audit. I'm very meticulous in filing my income tax return. Everything reported on the 1099 will be reported to the IRS. When I report dividends on my tax return I always report each individual dividend by date and amount rather than averaging them. If the IRS has the exact date and the amount for each dividend there isn't much that can be hidden and if they did choose to audit the dividends I can easily prove what I reported. I would approach the ebay sales in the same manner. The tricky part there is figuring out what the original cost was. Even much of that, at least for more expensive items, I have in my old checkbook stubs or Visa statements.

Ebay said if I did not provide them with the SS# they would withhold 24% and send it to the IRS. Yes, they could stop me from selling

longtimealaskan · ‎02-13-2022

Thank you. I'm not surprised that ebay would take that approach regardless of what they said about sending the money to the IRS. I may not have the option I was aiming for.

lacemaker3 · ‎02-13-2022

@longtimealaskan wrote:
Thank you. I'm not surprised that ebay would take that approach regardless of what they said about sending the money to the IRS. I may not have the option I was aiming for.

@longtimealaskan;

When and where were you told that eBay would withhold a percentage for income tax when sending you a payout?

I've never seen any other reports of this.

richard1rst · ‎02-13-2022

When you apply for job you have to give your social security number to your employer.

When I got my VA card I had to supply my SSN

When I got my state resale tax certificate I had to supply my SSN

When I got my city business license I had to supply my SSN

When I bought my house I had to supply my SSN to BOTH the bank and the credit reporting agency (in order to get my FICA score which the bank demanded)

I could go on but you have no doubt already given your number to who knows how many people.

Why is this hill any different?

"Laissez-faire capitalism (AKA The Great Material Continuum) is the only social system based on the recognition of individual rights and, therefore, the only system that bans force from social relationships." ~ Ayn Rand

tools* · ‎02-13-2022

@longtimealaskan wrote:
I received a notice from ebay that they are holding my payouts until I give them my social security number. I have no issue with the 1099. I'm not a big seller and the vast majority of things I sell are things my wife and I bought over the years for personal reasons, used them, and then eventually stopped using them. Although I sell some items to make a profit, I mostly sell items that we bought but no longer use. I'm sure I would be showing a loss on the 1099. Either way, I don't have a problem reporting my profit or reporting my loss to the IRS. I've already set up an Excel spreadsheet listing the items I sold, the sell dates, the selling price of the item and any expenses like ebay fees, shipping cost, insurance, shipping labels, packaging materials, etc.

My issue is giving my social security number to ebay. I cringe at giving ebay or any other online business my personal/financial information. I wouldn't trust the ebay clowns to protect my information. Bigger and better firms than ebay have been hacked and personal information for the firm's clients stolen. My personal information has been hacked from large firms 4 times already, firms in theory more concerned about protecting personal information than ebay is likely to be. I'd rather ebay withheld the 24% and sent it directly to the IRS. I will have to file a 1099 anyhow so why not eliminate the weakest link with respect to protecting my social security number? I don't mind waiting to get my money back from the IRS. I'm more concerned about protecting my personal information. If ebay doesn't have my social security number they can't lose it or have it stolen from them. Do you feel comfortable trusting ebay to properly protect your personal information?

What's wrong with my plan? Any and all constructive comments and thoughts are welcome.

The problem with your plan is that without your SSN or ITIN the IRS doesn't know who you are and can't apply payments correctly.

jda04121 · ‎02-13-2022

Then they lied to you because the CAN NOT send money to the IRS without the SSN.

stainlessenginecovers · ‎02-13-2022

@longtimealaskan Not necessarily. Ebay says if I do not supply my SS# they will withhold the 24% and send it to the IRS. I'm sure it can be done without having my SS#

That is simply 100% false; on 3 counts (they don't hold a percentage, they don't send a percentage to the IRS and there's no way to send it to the IRS without a SS#)

lacemaker3 · ‎02-13-2022

@stainlessenginecovers wrote:
@longtimealaskan Not necessarily. Ebay says if I do not supply my SS# they will withhold the 24% and send it to the IRS. I'm sure it can be done without having my SS#

That is simply 100% false; on 3 counts (they don't hold a percentage, they don't send a percentage to the IRS and there's no way to send it to the IRS without a SS#)

@stainlessenginecovers, and @jda04121

This isn't really that unlikely. According to the instructions for payment processors on how to file 1099-Ks, that is exactly what they have to do if they don't have an SSN or ITIN available, and they need to issue a 1099-K.

However, as I posted earlier, it doesn't appear that eBay is willing to use this option. From the reports of sellers who have not provided their SSN, it seems as though eBay is refusing to process the payments instead of doing this.

But, it isn't really fair to say it's 100% false because the 1099-K instructions do say this can be done.

https://www.irs.gov/pub/irs-dft/i1099k--dft.pdf

longtimealaskan · ‎02-13-2022

Yes to everything you said. Personally, right or wrong, I would put more trust in any of the businesses/government agencies you mentioned than I would in ebay. I simply have no faith in ebay protecting my personal information. It would not be the first time an e-company got in trouble for handling private/personal information. Knowing how ebay operates it would not surprise me to find out they were selling personal information. It has nothing to do with taxes and everything to do with ebay and the way they do things. That's why I feel this hill is different. I don't trust ebay to do the right thing.