PayPal 24% tax hold

[BobC]

Originally Posted by Aquarian Sports Cards

Actually Bob, Auction houses have a carve out and are specifically exempted from 1099'ing their consignors. There were questions about this with the new reporting but the NAA (National Auctioneers Association) got it directly from the IRS that auctions are not considered payment processors and our exemption holds. I gladly accept paypal and credit cards and report all my sales to the IRS and my payments to consignors are basically a deduction.

Thank you Scott, I did not know there was a specific carve out for AHs. I'm assuming that they have to be properly licensed and/or members of a specified group such as the NAA to qualify for the exemption, right? In which case, what I was saying is still very applicable for someone like Howard, and other non-AHs in similar circumstances/situations.

My mistake, and apologies to everyone, for assuming they automatically applied these "nominee" reporting requirements to AHs as well. I've always admitted I don't know everything. But, given how everything else is going, I can also easily see the government possibly removing such an exemption in the not-so-distant future. Especially in the face of the lowered reporting threshold requirements for 1099-K forms, and the impact that is going to have on an awful lot of people. That ends up giving the AHs a distinct and somewhat unfair advantage over other consignment type sellers. And I am sure that they, and sites like Ebay, are not going to be happy with that advantage working against them, and thus exerting their own influence against/towards the government as well to correct this obvious inequity.

This is exactly why the Supreme Court finally ruled back in 2018 that online sellers were now going to be subject to sales tax on interstate sales, and to do away with the totally unfair advantage online sellers had over brick-and-mortar stores and businesses who were forced to charge sales tax, while online sellers weren't.

So Scott, I do have a very valid question for you. I assume then you do get a 1099-K for Paypal G&S payments, equal to the full amount of the sales through G&S and not just your commission fee on those sales, right? Paypal obviously wouldn't know how much your commissions actually are, so I assume they must still report the full amount of the sales you collected on behalf of your consignors in a 1099-K form then directed to you. Or are you able to send some kind of documentation, form, or something to Paypal in advance so that they do not send you any 1099-K form(s) at all? I am truly very curious for my own personal knowledge and reasons, as well as making sure you have the correct answer.

Or, is the exemption you're referring to based more on what I found in this accompanying link, from the NAA site itself, and only just recently confirmed with the IRS?

https://www.auctioneers.org/NAA/Advo...6-48f893f7a5b6

If the AH exemption you're referring to is based on this link and what it is saying, let me give you a word of caution then. This exemption refers solely to the designation of an AH as a Third Party Settlement Organization (TPSO), in other words treating the AH as though they are the same as Paypal or Venmo, and thereby requiring all AHs to report via 1099-K forms, ALL sales they collected for their consignors, and not just sales they got paid for through other actual Third Party Settlement Organizations (TPSOs). And I was already aware of this specific exemption whereby AHs are not considered as TPSOs. However, I don't think your AH not being designated as a TPSO automatically extends and exempts you from the "nominee" reporting rules and requirements, in regard to the IRS and 1099 reporting that I previously posted links to, either. That sounds and looks like an entirely different tax reporting issue and matter to me. You may want to do both of us a favor and contact the NAA for some clarification on this exemption they posted about, and specifically ask if it also covers and exempts AHs from possibly still being subject to the "nominee" reporting rules and requirements for valid 1099-K forms your AH does receive from other TPSOs you choose to do business through. This appears to be one of those "gray" areas that exist in the tax laws that aren't always fully known and clear right away, and may not ever be fully determined until someone takes the IRS to court over it, or the government changes the law somehow. I hope I am wrong and that the exemption you mentioned also covers "nominee" reporting rules and requirements as well. Please don't be mad at me if I end up being right though, and you do need to worry about 1099-K "nominee" reporting after all. As always, just trying to help and educate others on the forum as to possible issues that can possibly impact them in their various hobby activities.