consignment question

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Posted By: Jason

I was thinking about consigning some items to Mastro in a future auction. My question is, do the auction houses (Mastro, Goodwin, etc) report their sales to the IRS by collecting your SS number at consignment time? or is it like Ebay where no SS number is ever involved and it is up to you to be honest and pay the piper if and when you make a profit (or take a loss) on any cards?

Any insight into this realm of taxation would be appreciated.

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Posted By: leon

From my experience it's up to you to report your profit or loss. None of the auctions I know do it, that I am aware of. best regards


edited grammar..still not so great

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Posted By: barrysloate

I think a company like Sotheby's might, but none of the others that I know of do. I don't, and I leave it up to my consignors to take care of their own tax affairs. That is outside my domain.

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Posted By: Josh Siegel

I think you cannot be touched at anything under $2000. If anyone would ever have you fill out any type of W-sheet or ask for a SS # they are not worth dealing with. I always leave it up to the seller or just send them checks in smaller amounts once a week if it is a large sum. I should also add that if the company would ever get audited, the gov't is primy to all of their records. That would include all of the consignors signed contracts and final statements.

Thanks,
Josh Siegel

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Posted By: Ed Hans

I'm surprised to hear that auction houses are apparently not required to report to the IRS. The rule is that a 1099 for "non-employee compensation" be issued to any individual to whom payment of greater than $600 have been made.

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Posted By: Anthony

I was pretty shocked not to get 1099'd as well. My accountant is adament about issuing them to anyone that is not a corporation that receives over $600. from my company.
I go on the assumption that all proceeds are being reported, they just don't send me the 1099.

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Posted By: Larry

Hopefully someday soon the IRS stormtroopers will be out of business permanently. My cousin once worked for the IRS and she is too ashamed to even put it on her resume. The only thing worse than them is the ATF

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Posted By: Bob C

Ed and Anthony are on target. Generally speaking, Form 1099MISC must be issued to U.S. individuals that receive awards, honorariums, payments and prizes in the calendar year that total $600 or more.
Larry I am sympathetic to your thoughts but care should be taken espousing such things in a public forum...if it were me I would take care not to awaken any sleeping heavy handed governmental agency...just my two cents.

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Posted By: Bill Todd

...but I believe that if you're being a strict constructionist then it's the consignor who should be issuing a 1099 to the auction house. After all, who's providing the service here? If your item hammers down for $10,000, and you've negotiated a 5% fee, then essentially you've just paid the auction house $500 for their services in preparing, marketing, and displaying the item.

On the other hand, you could consider that the auction house is acting as a broker. In this case, the broker's fee is split between the buyer and the seller, and they should both be providing a 1099 to the house.

Yet another view is that the house is purchasing the item for resale, at a price to be determined by the market. In this case, there's no "service" provided other than what would normally be expected of a seller, so no 1099 would be required. It's no different from buying office furniture from Office Depot.

I've run out of hands, so I'll quit now.

Bill

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Posted By: Anthony

Bill- it's my understanding (and I'm not a CPA, so will defer to Mr. Craik on this) that it is not required to issue 1099's to corporations, only individuals. As such Mastro, and probably others, would not be required to have any fees reported to the IRS.
I'll also agree with letting sleeping dogs lie, especially on a public message board. Photographers assistants were always considered independent contractors until some grad student wrote a paper about photographer- assistant relationships, and the NY EDD picked up on it. Within months both NY and CA were all over everyone to put them on payroll and pay back penalties. Just because it hasn't happened yet with auction houses doesn't mean it won't in the next 5 years- which means they'll get you for today if you think you're flying under the radar.

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Posted By: leon

I have a spreadsheet of all of the cards I buy during the year, where I bought them, and for how much. I then sell them and do the exact same thing. If I consign them it's the same as me sellling them, with an additional fee...which I will take out of the sales price (if that's the case). At the end of the year I add everything up, keep a copy, and my CPA uses a Schedule C to report them on my taxes.....it's really not that difficult.. I have a corporation too but treat these sales as 1099 type personal income...If any of this doesn't make sense then I will defer to my CPA...he's pretty good at this stuff......best regahds....