mam98031 • Volunteer Community Member • Buyer/Seller since 1999
@jimshad wrote:I did not give it to Paypal.
Then after 2011 you would not have been able to use them as your money processor for your online payments from buyers.
@kinnickinnick1963 wrote:Not true. You had to meet the income threshold first.
You are confusing two different things. The need for the SSN and those that qualify for a 1099K.
Money processors can't wait until a seller has had enough money run through their account to qualify to receive a 1099K. That would be a disaster for the money processor. If the seller said no and just would not provide it, come tax time when the forms are due to be filed, IRS can fine the money processor for every 1099K they didn't properly file because of no SSN.
Trying to collect the SSNs after the fact would be labor intensive and like full of penalties to be paid to IRS. Which is why money processors collect them up front. Then they have more leverage so it works better for the sites.
I'm not wrong, you just misunderstood. Maybe I wasn't clear enough in my previous post.
@kinnickinnick1963 wrote:Not true. You had to meet the income threshold first.
Then it is simply too late and puts the site such as PP or MP at risk for IRS penalties. They can't go chasing this information after a seller has met the threshold for a 1099K, then keep their fingers crossed that the seller will comply before they have to file the forms with IRS. And if the site does not file the forms properly they are assessed a penalty. What site would do that? The labor alone spent trying to chase sellers for the information would be cost preventative as well.
"Most occasional sellers on eBay sell things at a significant loss." How do you know this? I doubt very seriously it is true. Maybe some things, but most, extremely doubtful. Casual sellers often sell off stuff from around their house that they no longer need. If you are comparing what they originally paid for an item verse what they get for it after it has been used, that would be an unfair comparison. It is used after all and no longer has the same value as if it were new. The seller got use of the item for however long they had it. That has value too.
"But if you now have to start reporting the sales as income, you have to have some record to show your profit basis (original receipts). " This is NOT a new requirement. It is something that should have been happening before this, it is just that many have not comply with the IRS rules on reporting income. Reporting income is NOT just for those set up as a business.
As time moves on, things change. Just as what we use to sell in classified ads have changed. IRS rules have changed over the years too. But the list of changes in the world since that period of time on most any subject would be endless. We are not frozen in time. Things move forward and things change.
"The government is wasting taxpayer money by funding employees and programs to track and audit on something that should never be taxed in the first place. " You would need to take this up with SCOTUS [Supreme Court of the United States] as it was them that passed the rule that states could charge sales tax on internet sales. So if you want it changed you'd have to start with your state or with SCOTUS.
"The $12K limit is **bleep** If you sell $12K worth of stuff at a loss, it's still a loss and not taxable. What law says that at $12K you're now a business and should have to prove your original cost basis with a receipt? " What 12k limit? I'm not aware of any such limit. So what are you referring to exactly.
If your costs are higher than the amount you got paid for an item or items, then that you will be able to prove out of the Schedule C of your Federal Tax report. And if it was a loss, then you will not be paying any additional income tax on it. But you have to be able to prove it. And if you are selling used stuff, you can't value your cost at what it was when you purchased it new. It doesn't work that way. Most things depreciate with use. Certainly there are some things that can appreciate but most will depreciate.
To be clear, claiming your internet sales on your Federal Income tax report is NOT limited to those that are set up as a business and that has NEVER been a requirement.
