The IRS is charging me for eBay sales

[mydisneylife200]

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. 

[iart]

You've been able to undercut other sellers' prices by not paying taxes.

Sorry, no tears.

[mr_lincoln]

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@farmalljr wrote:

The only thing that stops me personally from getting the sales tax ID, is my state is "funny" about it. Like Quarterly income tax to the IRS I have to pay, state sales tax is paid at minimum, on a estimated basis. So even if all my sales are online, I still have to allow my state to dip into my checking account and take estimated sales taxes they believe I should be collecting. Then at the end of the year, they would refund me all they have overcharged. 

I don't sell face to face sales. All of my selling is online, so I don't want even more paperwork or the hassle of the state tax authority, dipping into the business checking for the online sales. 

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Our state ONLY requires reporting sales during the course of the year and based on sales volume we have to report bi-annually or quarterly.  There is no quarterly Income tax to be paid just because we have a state Sales Tax ID.  It is not uncommon to have to pay quarterly "estimates" for income tax BUT that is typically determined by your tax return from the previous year ...

[newdealpawn]

The only letter you will receive from the IRS if you made no mention of your eBay sales on your last tax return would be a discovered income notice, they would of done that due to the 1099 eBay was ALREADY sending if you exceeded 20k gross. I dont like new eBay procedures anymore than anyone, but the IRS coming after what they believe is due to the government has more to do with mandates coming from the current administration not any sort  of change eBay made. If you live in one of the workers paradise states like California or New York, they want what they consider their due as well and are fair aggressive about collecting it..   Want lower taxes? less government involvement in your life? DONT VOTE FOR DEMOCRATS..   The tax increases coming if Biden and co get their agenda through congress are STAGGERING.  Incidentally what eBay is charging nowadays your eBay sales wont increase your tax liability much, YOU HAVE TO MAKE A PROFIT TO OWE INCOME TAX...

[chapeau-noir]

Only a matter of time before someone dragged their own little political agenda into this, which doesn't help the OP. 🙄

[duffy4444]

   Sellers need to understand a critical difference between 1099-K threshold and reporting income for tax purposes...

 - The 1099-K threshold, currently $20k a year and soon down all the way to $600 a year, is only the minimum mark for eBay and other online sales venues to report  sales to the IRS.

-  Any amount Even Under  $20k per year, by law is to be reported as gross income by all sellers who are using online sales venues for profit - even as a "hobby" (which in many, if not most cases, is a "whistling in the graveyard" excuse to evade taxes - let's be honest here).

   It's been this way for many years, if not decades. The smart sellers here have known that and have paid taxes all along on their net  income after generous expense deductions.

   Sellers, it's time to stop kidding ourselves, and get into compliance pronto. Let the OP's situation be a wakeup call. Don't be the next person to have this rude awakening to stark reality...

Cheers, Duffy

[bearswatching]

I didn’t read every response so forgive me if this has been stated. It’s my understanding the IRS is pretty good about working with you on a payment plan. But strongly suggest you get professional help if you Take that path.

[inhawaii]

Unbelievable!  What's next, taxing you on your income?

[kensgiftshop]

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@bearswatching wrote:

I didn’t read every response so forgive me if this has been stated. It’s my understanding the IRS is pretty good about working with you on a payment plan. But strongly suggest you get professional help if you Take that path.

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They'll work with you, but that daily interest builds up pretty quick.

It's best to get it paid off as soon as possible.

[gardenofdolls]

Same thing happened to me when I didn’t know anything about accounting or taxes.  They said I need to pay $20,000 due to not having resale license and do not reporting what I sold.  I got it down to $10,000 by writing to them with an explanation letter, and all of my expenses throughout the year.  I also got a business license after that.

[whattheneck]

You grossed 40K in 2019 and didn't report it? I'll be honest, I'm struggling to sympathize for your situation.

[this*old*attic]

@duffy4444

I’m surprised no one has mentioned the ADVANTAGES of declaring their income and properly paying their taxes.

Those payments contribute to Social Security and Medicare.

If you have a regular day job the Medicare contributions likely won’t make a difference, but consistent additional income might conceivably increase your SS payments upon retirement.

[numisnorway]

Taxation is theft.

[Anonymous]

Since I've been selling more, my husband says that I have to keep a log book of what I sold, how much it cost me, fees.... I've been keeping a rough account, but it's going to be virtually impossible to know on some of these how much I paid for them. IDK if they'll believe me or not, but I really doubt I'm making much of anything doing this. In fact, I'm probably NOT making anything. Most of it is stuff I get too much of or have buyer's remorse on. I pay eBay prices on it to begin with so I rarely even break even. 

You know it's Democrats responsible for this new online taxing law. It's no coincidence gas prices are up, every bill I have is up. I hope everyone who voted for them is happy.... The economy will never come back. 

[stainlessenginecovers]

I'm not a democrat; but this taxation has NOTHING to do with Political Party. 

1099K Forms have been sent to the IRS and you (or you needed to print it from Paypal) since the 1950s'. Money paid to you by others would be taxable to them, if they did not give the IRS the 'who got it' information.

Looking at what you sold the past 3 months it may be hard to sell to the IRS that these were '1 of collectables that you accumulated over time'. You have new items, items released last year, the year before and multiples of these items as well as 'in a box' labeled as 'new'. 

So you best to start figuring you are a business and get all the write offs together (along with backup paperwork) for things like Shipping Cost, Ebay Fees, Paypal Fees, Cost of goods (original price) etc. as you will want to use this information. 

[this*old*attic]

@Anonymous 

I’m very pleased, thank you.

The alternative was… terrifying.

But seriously, you figured selling online should just be an income tax freebie? For reals?