Ebay tax reporting drops from $20,000 to $600

[BobC]

Originally Posted by Dandor

I am really confused on what to do now for taxes. In the past I just kept spreadsheets and paid taxes on net profits. However, eBay accidentally sending out 1099-K forms has me a little worried.

eBay assured all California people that got 1099-K forms in the mail that this was a mistake and that they didn't send the forms to the IRS/California Franchise Tax Board. I for one can't trust eBay and I have no idea if they are telling the truth here.

If I use the 1099-K form that eBay gave me and the IRS/CFTB didn't get it, would this raise red flags? Or would they not care?

I am leaning towards using this 1099-K form, even if eBay says to disregard it. I have a feeling that I will do my taxes as usual and if I don't use the 1099-K form and eBay actually sent it, that I would get a bill for the 1099-K and have to amend my taxes to deal with this nonsense.

For people in California who got the 1099-K form we are supposed to throw out because it was a mistake, what are you going to do? Are you going to ignore it or use it?

Dandor,

What EXACTLY did Ebay say in their communication to you? Sending you a 1099-K form if you had not yet met the required threshold for 2021 in and of itself is technically not a mistake. The rule simply mandates that someone like Ebay must prepare and send you a 1099-K form when your sales (and number of transactions in 2021) reach a certain amount. If you didn't reach those threshold amounts, there's no law or rule that says Ebay (or whomever) still can't send you a 1099-K reporting your 2021 sales, regardless of what they were.

So when you said they told you it was sent in error, could they possibly mean the sales amount being reported on the 1099-K form they sent was wrong, and that is why you should disregard the 1099-K form, and also why they didn't go ahead and send copies of the form to the IRS and CFTB?

So, does your record of Ebay sales agree with what is on the 1099-K form you got? If not, see if you can reconcile it and figure out what the difference is. At least start there.

From what you're saying, it sounds like you've been reporting your past Ebay sales on your tax returns all along. If that is the case, reporting your sales on your 2021 tax returns shouldn't raise any red flags with tax authorities, even if Ebay sent no 1099-K forms in to them regarding your 2021 sales. The only red flag that would potentially be raised is if Ebay did send in a 1099-K form to the IRS/CFTB for your 2021 sales, and you did not also report AT LEAST the same amount of taxable sales on your returns as was reported on the 1099-K form(s) you got for last year.

Hope this helps at least a bit, but again, let me know exactly what Ebay actually said to you. Seeing the actual correspondence would probably be the best way to do that. For privacy purposes though, might be better to PM me, unless you can redact/hide your personal info.

NEVER SEND PERSONAL DATA ONLINE UNLESS YOU CAN HIDE/REDACT THE PERSONAL INFO, OR SEND IT IN AN ENCRYPTED FORMAT OR AS A PASSWORD PROTECTED DOCUMENT!

Thanks,

BobC