eBay

mydisneylife200 · ‎08-12-2021

I received a letter in the mail today from the IRS claiming I owe thousands in taxes for stuff I sold through eBay.

Anyone else receive a letter like this??

If this is the case I think I am done with eBay… I own thousands in collectibles which I purchased from many retailers and paid taxes upon purchasing. I sold stuff on eBay that I no longer wanted to collect with the money gain I purchased other collectible for my current interests. I think from now on I rather sale through garage sales or on platforms where people meet up and pay cash.

quiltgeek · ‎08-12-2021

You owe income tax on the items you sell at garage sales or on platforms where people meet up and pay cash.

The IRS expects you to report your income from those sales along with your eBay sales. They allow you to reduce the price you pay income tax on by reporting the expenses you incurred in the sale of each item.

PS You may owe your State income tax on your sales too.

lamber9347 · ‎08-12-2021

@mydisneylife200 Depending in which state you reside, online sales do count as income. Starting 2022 all 50 states will require sellers to declare income from online sales. You should take your letter to a tax specialist and you can use H&R Block even if they didn't create your taxes. They will charge you a fee but they can handle and assist you with any audits and save you money by advising you correctly how best to handle this. There are many offset charges that you can claim against this amount to lower the income shown. Best of luck to you....

printpeople · ‎08-12-2021

It happened to me once…many years ago. They said I owed them 10s of thousands. I talked to an IRS agent on the phone, and told him that I didn’t think I had to file when I lost money.

He told me that I had to find all the numbers, and file. Numbers…cost of everything, fees, bills, mileage, % of home I used for business….and every other thing I could find. After sending it in…and waiting a few weeks, I got a nice check in the mail from the IRS.

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coolections · ‎08-12-2021

OUCH. I assume you met the old $20,000 threshold or over 200 items sold ? Did you not receive a 1099 ?

stephenmorgan · ‎08-12-2021

Wow, you must to sold a lot of stuff to owe thousands in taxes. Did you not get a 1099 from eBay or PayPal?

Capital Gains on Collectables are are taxed at a much higher rate. I believe it is 28%.

dnasilver · ‎08-13-2021

Best to get a highly qualified tax accountant. Do not use one of the low end services that do taxes for basic incomes and tend to start advertising during tax season. Best you have records of everything and be prepared to be hit with penalties if you do indeed owe. The last administration removed almost all deductions for collectors/hobbyist. Hopefully you have a legally set up business so you can take deductions.

toysaver · ‎08-13-2021

Over 800 feedbacks in a year likely means over 1,000 sales. This is a business weither you want to admitt it or not. Hunt out the receipts for the original purchases to minimize the profits.

releasethekraken_1 · ‎08-13-2021

@mydisneylife200 wrote:
I received a letter in the mail today from the IRS claiming I owe thousands in taxes for stuff I sold through eBay.
Anyone else receive a letter like this??

If this is the case I think I am done with eBay… I own thousands in collectibles which I purchased from many retailers and paid taxes upon purchasing. I sold stuff on eBay that I no longer wanted to collect with the money gain I purchased other collectible for my current interests. I think from now on I rather sale through garage sales or on platforms where people meet up and pay cash.

The tax you paid when purchasing was sales tax. That’s completely unrelated to the income tax that the IRS collects.

mr_lincoln · ‎08-13-2021

@mydisneylife200 When you sell something it represents income and you have to report it on your tax return. If you sell over $ 20,000 eBay (and PayPal did the same) sends YOU and the IRS a 1099K form. As for yard and garage sales, many states have a minimum threshold for reporting purposes ... above that amount and you need to report the sales as income.

This has absolutely nothing to do with sales tax ... pay the income tax you owe and hope the IRS doesn't decide to Audit you in the future knowing you have been a tax evader ...

Regards,
Mr. Lincoln - Community Mentor

soh.maryl · ‎08-13-2021

The OP is speaking, I believe, about Federal income taxes (IRS), not about state income taxes.

farmalljr · ‎08-13-2021

LOL! You've sold over 300 items in the last 90 days. There is no earthly way the IRS would see your sales as ANYTHING other than a BUSINESS. If you haven't been keeping records, like you were supposed to, get prepared to cut the check to the IRS. Along with fines and interest, because that's coming too.

And just so any readers of this thread are mistaken into thinking CASH sales are so easily hidden, they aren't. The IRS can investigate anything. You can't put that cash in a bank and hide it, or buy stuff like a car for cash you were hiding, and them not know you are evading taxes. The OP has raised the eyebrow of the IRS. They can dig into his financials quietly and investigate them. Then some day, could issue an arrest warrant if they have found/suspect wrongdoing..

I expect to see much more of this in the future. The IRS isn't joking around about paying your taxes. Some think they can wait until 2022 to quit selling and the IRS won't know the difference. Lol. They'll see. Good luck to the OP, because at this point, you are at the mercy of the IRS.

maxine*j · ‎08-13-2021

@stephenmorgan wrote:
Wow, you must to sold a lot of stuff to owe thousands in taxes. Did you not get a 1099 from eBay or PayPal?

Capital Gains on Collectables are are taxed at a much higher rate. I believe it is 28%.

Yes, indeed, they are. Another reason to operate as a business, keep records, and pay income taxes due that way.

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mr_lincoln · ‎08-13-2021

@farmalljr wrote:
LOL! You've sold over 300 items in the last 90 days. There is no earthly way the IRS would see your sales as ANYTHING other than a BUSINESS. If you haven't been keeping records, like you were supposed to, get prepared to cut the check to the IRS. Along with fines and interest, because that's coming too.

And just so any readers of this thread are mistaken into thinking CASH sales are so easily hidden, they aren't. The IRS can investigate anything. You can't put that cash in a bank and hide it, or buy stuff like a car for cash you were hiding, and them not know you are evading taxes. The OP has raised the eyebrow of the IRS. They can dig into his financials quietly and investigate them. Then some day, could issue an arrest warrant if they have found/suspect wrongdoing..

I expect to see much more of this in the future. The IRS isn't joking around about paying your taxes. Some think they can wait until 2022 to quit selling and the IRS won't know the difference. Lol. They'll see. Good luck to the OP, because at this point, you are at the mercy of the IRS.

@farmalljr Good post. I think they know more then what Americans think they know. Big Brother IS watching, that's for sure.

Regards,
Mr. Lincoln - Community Mentor

maxine*j · ‎08-13-2021

@mydisneylife200 wrote:
I received a letter in the mail today from the IRS claiming I owe thousands in taxes for stuff I sold through eBay.
Anyone else receive a letter like this??

If this is the case I think I am done with eBay… I own thousands in collectibles which I purchased from many retailers and paid taxes upon purchasing. I sold stuff on eBay that I no longer wanted to collect with the money gain I purchased other collectible for my current interests. I think from now on I rather sale through garage sales or on platforms where people meet up and pay cash.

You paid sales tax on them. Your issue now is the income tax which you have failed to pay to the federal and your state governments for years.

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