ebay posts about the new IRS Rules ( the $600 Reporting Rule)

[my-cottage-books-and-antiques]

https://community.ebay.com/t5/Announcements/A-big-change-to-federal-tax-reporting-laws-that-will-aff...

[my-cottage-books-and-antiques]

for those who don't like to click links:

We wanted to share an update about a change to federal tax reporting legislation that will impact people who sell on any online marketplace, including eBay.

Here’s what’s changed

As of January 2022, the IRS will now require all annual online sales over $600 to be reported using Form 1099-K. This requirement previously only applied to sellers with at least 200 transactions and over $20,000 in sales each year. This change will impact your 2022 sales and your 2023 tax filing; it will not apply to your 2021 sales and 2022 1099-K tax forms.

Here’s how this change will impact your 2022 taxes

Many sales on eBay aren’t taxable, so if your sales are over the $600 threshold it doesn’t necessarily mean you will be taxed on those sales. Only goods that are sold for a profit are considered taxable, so you won’t owe any taxes on something you sell for less than what you paid for it. For example, if you bought a bike for $1,000 a few years ago, and then sold it on eBay today for $700, that $700 you made generally would not be subject to income tax.

But you will now need to report these sales as part of your tax return and we’ll continue to share updates that will help you prepare for these changes.

Here’s what we’re doing

This change will impact millions of casual and small business sellers on eBay. It has raised concerns in our selling community and we’re working to bring these concerns to Congress. We believe this new legislation will cause confusion, over-reporting of non-taxable income, and privacy concerns for millions of Americans who are just trying to get by. We are continuing to highlight the undue impact this increase will have on small sellers on eBay, and are urging an increase to the reporting threshold.

Here are some of the issues we’re working to address in our conversations with Congress:

Overly complicated tax forms for smaller transactions.
Targets casual sellers who are not set up to handle this kind of tax reporting.
Doesn’t take into account the selling of used goods, which are rarely taxable income as they are sold at a price below the original purchase price.

Here’s what you can do

We invite you to join the conversation on eBay Main Street, where you can contact Congress on behalf of our community of sellers, small business owners, and entrepreneurs.

We will continue to keep you updated as this legislation evolves. Going into 2022, we’ll also share more detailed information that will help you understand what’s changed so you know what to expect in the upcoming tax year. We’ll keep you posted on how we will support you, and what steps you need to take. In the meantime, we want to remind you that this change will impact your 2022 sales and your 2023 tax filing; it will not apply to your 2021 sales and 2022 1099-K tax forms.

Thanks for being part of the eBay community.

[nobody*s_perfect]

I'm certainly not going to rely on eBay to provide tax advice. They can barely explain their own policies.

[eleanor*rigby]

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@my-cottage-books-and-antiques wrote:

https://community.ebay.com/t5/Announcements/A-big-change-to-federal-tax-reporting-laws-that-will-aff...

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That link will come in very handy when replying to threads about this change. There have really been a lot of them already, and I'm sure there'll be plenty more . . .

Thanks for drawing attention to the announcement.

[coffeebean832]

Something a lot of sellers with multiple accounts may not realize- eBay will issue a single 1099-K for all accounts tied to the same SSN/EIN.

That was the case before the masses joined MP- I assume it's still operating the same way.

[jayjaspersgarage]

I doubt the biggest concern for casual ebay sellers is having to add a few hundred or perhaps a few thousand dollars to their annual gross income.  I think the larger issues will revolve around those operating illegal daycare or construction businesses out of their homes that happen to also sell on-line.  Or illegal nail salons, "beauty" shops etc...

I am a licensed contractor that has to deal with illegal landscapers pretending to be contractors.  Honest business people pay for licenses, bonding, insurance and a few other things that crooks don't ever pay.  

Anyhow, I hope this new reporting law puts the spotlight on some people who break the law daily by running an underground business.  At the least it might scare them away from selling on-line which can only help the honest people.

[mr_lincoln]

@my-cottage-books-and-antiques   Thanks for the reminder on this for those who need to be aware of it ... I for one wish they would have started this a lot sooner then 2022 ... not just eBay either, all internet sales venues. 

[lacemaker3]

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@coffeebean832 wrote:

Something a lot of sellers with multiple accounts may not realize- eBay will issue a single 1099-K for all accounts tied to the same SSN/EIN.

That was the case before the masses joined MP- I assume it's still operating the same way.

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@coffeebean832 , according to the eBay page about 1099-K forms, that is not correct.

If you have multiple accounts using the same tax ID number, the sales from all the accounts will be combined to calculate the total sales, but if the total exceeds the $600 threshold, each account will receive a separate 1099-K.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#section1

[justafemster]

I agree!  Ebay hardly even KNOWS their own policy(s).  

[powell-memorabilia]

Problem is that you are so invested in your position - on this any many threads - that you won’t open up to the possibility that you might be wrong.  

[nobody*s_perfect]

Indeed, maybe I should stick to posting links to IRS pages, and just say, "We certainly shouldn't rely on eBay or random posters on the internet to provide tax advice."

[powell-memorabilia]

I think that you are confusing hobby sellers with casual sellers.  It makes sense - all of the IRS provided examples in your links spoke to gains and losses for things like hobby farms.  The intent of those restrictions is to discourage “businesses” from operating under continual losses, which is indicative of someone trying to use lifestyle choices as a way to avoid taxes.

if I search “used goods IRS,” you’ll see tax expert after tax expert explain that you don’t need to pay taxes on used goods, unless you are operating as a business.  The “online garage sale” approach that the IRS details creates an avoidance of income tax on those online sales.

[mr_lincoln]

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@nobody*s_perfect wrote:

I'm certainly not going to rely on eBay to provide tax advice. They can barely explain their own policies.

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@nobody*s_perfect   This is not uncommon for large companies with numerous departments  - all responsible for their own  little corner of the business.  I'm sure eBay, like other companies, has to go through a series of approvals for any official statement that gets published ...

[coffeebean832]

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@lacemaker3 wrote:

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@coffeebean832 wrote:

Something a lot of sellers with multiple accounts may not realize- eBay will issue a single 1099-K for all accounts tied to the same SSN/EIN.

That was the case before the masses joined MP- I assume it's still operating the same way.

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@coffeebean832 , according to the eBay page about 1099-K forms, that is not correct.

If you have multiple accounts using the same tax ID number, the sales from all the accounts will be combined to calculate the total sales, but if the total exceeds the $600 threshold, each account will receive a separate 1099-K.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#section1

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Thanks @lacemaker3 for looking that up! It's separate 1099-K forms now, that's good to know- but the point I was making is still applicable- that eBay will add up the totals across your accounts to determine whether or not you're meeting the threshold for issuing a 1099-K.

[coffeebean832]

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@lacemaker3 wrote:

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@coffeebean832 wrote:

Something a lot of sellers with multiple accounts may not realize- eBay will issue a single 1099-K for all accounts tied to the same SSN/EIN.

That was the case before the masses joined MP- I assume it's still operating the same way.

---

@coffeebean832 , according to the eBay page about 1099-K forms, that is not correct.

If you have multiple accounts using the same tax ID number, the sales from all the accounts will be combined to calculate the total sales, but if the total exceeds the $600 threshold, each account will receive a separate 1099-K.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#section1

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Thanks @lacemaker3 for looking that up. It's separate 1099-K forms now, that's good to know- but the point I was making is still applicable- that eBay will add up the totals across your accounts to determine whether or not you're meeting the threshold for issuing a 1099-K.