New Ebay Tax Requirement/Form For 2022 - USA Sellers

Hi John - The new requirement gives the IRS visibility that they did not have before into all transactions, coming and going, that exceed $600 cumulatively per year. Will the money you sent be taxed? In theory there is no reason why it should be, but they now will have access to and see virtually everything that transpires through these apps once the threshold is reached.

If you purchase stamps through these apps are those stamps reportable assets at some point?

The IRS will now know that John Doe purchased a $1,276.99 stamp from Phineas Drummond's Rare Stamp Boutique. They have your name and number and they know where you live.

If the stamp is not suitable and the company refunds my money through the same payment app will it now be reported as income to me? You bet your bippy.

Perhaps I am paranoid, but I trust the IRS as much as I trust that Rolex salesman in the subway car.

It is a quantum leap in acquiring data on us and how we spend our money.

A corollary to Rog's comment is that knowledge of the payors gives the IRS and potentially states the ability to investigate non-payment of employment taxes. Probably tens of thousands of landscapers, painters, hairdressers, and housekeepers receive payment for services through these apps. On the upside, more of the middle class now will have to participate in the tax system, and if a good percentage of them get hopping mad about the confiscation of their pay, maybe they will change their voting habits, too. On the downside, more payors now will face employment tax demands, similar to the "nanny tax" enforcement effort of the late 1980s into the 1990s, because regular payments to a service provider will look like you are an employer, not a customer.

Ironically, the middle class will bear most of the burden. Service providers are bound to raise prices, provided the market bears it, to offset their losses in tax payments. At least some of the buyers of those services are middle class and many of the providers are.

We may also see a cultural shift back to a cash economy and/or a culture of tax evasion of the type common in Italy, Greece, and other countries.

All of which makes me want to ask the following questions -

What law specifically regulates this? By law, I mean legislation passed by Congress and signed by the President. Was it that Barf Back Better Bill?!

If it was some other edict (Executive Order or similar), is it being challenged in court as unconstitutional?

I can't imagine any sane average person agreeing with this invasion of privacy...

John

Biden was the President who signed the American Rescue Act legislation (Section 9674 contains the issue of concern). See here for prior discussion about the change which occurred 3-2021:

https://goscf.com/t/76615

Or: https://www.forbes.com/sites/lizfar...72711f793805



Edit: As with any tax issue you get to offset your income by legal exclusions or deductions while retaining the documentation needed to support the exclusions and deductions. Frankly at the $600 dollar level it make more sense to just call it taxable income and pay the tax. That should be less expensive than the cost of record keeping and your hourly accountant fees.

Remember there is no free money from the government, the government needs to collect money from some to give free to others. That is an apolitical statement. How much is collected and from whom as well as which folks get the free money and how become political.

Thanks, Parcelpostguy,

Makes it much easier for me to understand...



John

We have to remember that $600 is the trigger and that the previous threshold was $20,000. It becomes increasingly difficult for many people to say "just pay it" as the amount goes upward from that $600. This will be a colossal PITA.

Of course, and at some point, the efforts and costs associated with the record keeping as well as any CPA expenses will begin to reveal a savings. Even at $20,000 if the tax is $7400, if the cost of record keeping and your CPA are under $7400 you will see a saving in your tax bill. But, rather than paying the tax man $3000 instead of $7400, it costs you $4000 for record keeping and tax services then your real net saving is just $400 for the effort and time spent.

I agree parcel guy at some point, but none of this is even close to making sense at $600 sales. at $20,000 sales (not profit) its almost realistic

Compared to the 7% inflation rate 'tax', this tax is a drop in the bucket for middle- and lower-class US folks. Unlike the inflation 'tax', at least we can choose or not choose to use online payment services.

I'm thinking of starting a free Stamp Smarter barter service, a SQL database which allows folks to list their material for barter. Basically you would list it with the amount you want from the material (including shipping costs) and if someone wanted it you would pack it up and send it to them. The value would go into your 'account' and you could then use that amount towards anything anyone else had listed. I would have to vet folks, there would be a large amount of details to work out, and of course it would only work if enough folks participated so that the material to choose from would be decent.

On good days, I can see something like this being really great. On the 'less than ideal days' I can see this turning into a fluster cluck and going to bed angry at some and the hobby. LOL
Don

Don - I would be whole hog in on your idea.

The I.R.S. had the rules changed so their going after these third party payers . OK I understand that .

But I lived thru three major adjustments by the I.R.S. and stayed ahead of all this new and improved rule making by the I.R.S. ,NOW getting ready to move on .

My story starts with the first time as a Commodity Trader on the Exchange Floor there was NO tax reporting at the end of the year by Brokerage Firms ,if you don't belive me go ask Hillary Clinton ,we both worked/ traded thru the same brokerage firm . The second time was buying stamps from the big Stamp Auction firms and selling stamps both thru stamp ads in Linn's Stamp News and taking tables at stamp shows and bourses ,this changed as the I.R.S. caught up .

Then came ebay which was good for 20 years but now the I.R.S. is on to the sellers .

You ask what is next ???------We are headed to NFT's .

What are NFT's they are NON-FUNGIBLE TOKENS . They are non-interchangeable unit of data or as you would understand Cryptographic tokens that are units of data stored on a blockchain .

What would this accomplish? The payment STILL is tracked and aggregated against the recipient's $600 annual threshold. ALL third-party payment processors are subject to this reporting requirement, not just PayPal. So in your example, whatever payment processor your debit card payment goes through still has to do the same 1099-K issuance/reporting that PayPal would. You're shifting the target, but not solving any problem.

Me, too.

Although, barter transactions have their own set of IRS rules, don't they?

John

Do auction firms send consignors a 1099 or is it up to the consignor to report sales?