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

[Snowman]

Originally Posted by frankbmd

Are social security applications available on the Rio Grande?

Originally Posted by BobC

That's a good one Frank! LOL

That brings up the law giving anyone born on US soil automatic citizenship, jus soli. That thinking/law exists in only about 33 countries in the world, almost all exclusively in the American continents.

So are you for or against "anchor babies"?

I see the racists showed up to the party. Good to know.

[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?

[KCRfan1]

I received my tax form from eBay last week.

What the form does not indicate is the amount I PAID for the cards I sold.

The dollars on the tax form assume this is pure profit, when I could have actually LOST money. In any case, it is not pure profit because I had to purchase the cards.

[BobC]

Originally Posted by KCRfan1

I received my tax form from eBay last week.

What the form does not indicate is the amount I PAID for the cards I sold.

The dollars on the tax form assume this is pure profit, when I could have actually LOST money. In any case, it is not pure profit because I had to purchase the cards.

The sales amount reported on the 1099-K form is not assumed to be all profit, it is just the reportable gross taxable sales you had for the year. It is up to the recipient to report this gross taxable sales amount in the proper place on their tax return, and then also to list and report the allowable expense deductions on their return and then subtract those from the sales to arrive at their net taxable income/profit/gain (or loss). You want to be sure to report your gross taxable sales in the appropriate place(s) on your tax return so the IRS can easily match any 1099-K income reported to them on your behalf to the gross sales amount reported on your tax return.

Please note, the reported gross sales on your tax return doesn't have to tie exactly to the amount of gross sales you got reported to you on 1099-K forms you received for that same year, but you want that gross taxable sales amount reported on your return to at least be the same, if not more, than what was reported on the 1099-K form(s) you got. If the gross taxable sales amount reported on your return is less than what was reported on the 1099-K form(s) you got, and copies of which were sent the IRS, when the IRS tries to match the 1099-K form(s) sales to your return, they'll come up short and you will get a correspondence from the IRS questioning what they think may be un-reported income, along with an estimate of what they think you may owe them on that unreported income. If you fail to report anything at all about your 1099-K reported income on your tax return, the IRS figures you have no expenses to offset against those sales because you didn't report any. They don't just assume the sales are 100% profit.

[earlywynnfan]

Originally Posted by KCRfan1

I received my tax form from eBay last week.

What the form does not indicate is the amount I PAID for the cards I sold.

The dollars on the tax form assume this is pure profit, when I could have actually LOST money. In any case, it is not pure profit because I had to purchase the cards.

How would you expect ebay to know how much you PAID for your cards?? I'm confused.

[chriskim]

I figured consigning to auction houses cost less than selling on eBay years ago and now eBay craps just getting worst. Not only the tax perspective but dealing with non-payers, potential return, threaten of leaving neg feedbks by the buyers, eBay not returning fees becuz of disputes....etc etc etc

eBay just isn't a happy place to sell anymore.

[icollectDCsports]

Do auction houses submit the same info as eBay for sales by consignors?

[Johnny630]

Originally Posted by icollectDCsports

Do auction houses submit the same info as eBay for sales by consignors?

No I think that obligation is on the consignor.

[BobC]

Originally Posted by icollectDCsports

Do auction houses submit the same info as eBay for sales by consignors?

Technically, no, AHs don't have to give 1099s to consigners. First off, 1099s are normally given to mostly show what someone was paid for their service or labor (think independent contractor), intangible income (interest and dividends), or the proceeds from the sale of intangible investments (stocks and bonds). This recently added reporting of sales via 1099-K forms is specifically designed and geared/targeted towards third-party payment platforms/services. If you use a payment service such as Paypal, you can have money go into and out of your Paypal account for all kinds of transactions, with nothing ever going through a bank account where the IRS can easily access and check your activity records. The IRS can'/won't do it and go through accounts with Paypal, or similar payment platforms like Zelle, Venmo, etc., so they added 1099-K reporting so people couldn't completely run a business the IRS couldn't find out about and/or have the activity records easily checked if they want.

The sales of cards and items through an AH are what are known as the sales of tangible personal property, and there are currently no direct laws requiring the sales of tangible personal property be reported to the IRS via a form 1099. AHs don't own or technically sell anything. Consignors hire AHs to assist them in listing and selling their items, for an agreed upon fee/commission. It is NOT the AH paying consignors, it is the auction winners that pay the consignors, so the AH wouldn't really be the one responsible for sending a 1099 to the consignors anyway, if 1099 reporting were currently required on sales of tangible personal property, which it is not. In fact, if there is technically anyone that may be required to issue a 1099 as a result of an auction, it would be the consignors issuing one to the AH (if the AH is not incorporated), along with a copy to the IRS, to report the commissions/fees they paid the AH for the labor and service they provided in helping to sell the consignor's goods. The same way someone would report what they paid an independent contractor for work they had done for them.

For the record, very briefly back in 2010 I believe, there was a law passed that would have potentially forced places like AHs to start reporting such sales activity to the government. But apparently it was quickly caught and reversed in 2011, before anything ever took effect. But that doesn't mean the laws can't/aren't going to be changed requiring such reporting in the future. Fun stuff, huh?

[toledo_mudhen]

Originally Posted by chriskim

eBay just isn't a happy place to sell anymore.

That's for sure -

Been on eBay for 25 years now and the fun has long since completely worn the eff off.....

So Done with them -

[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

[Dandor]

Originally Posted by BobC

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.

They screwed up with everyone in California. I had less than $4000 in sales and less than 150 transactions. This is exactly what we were told. I received my 1099-K form in the mail today. Part of me is on the fence about if eBay truly didn't send the form to the IRS/CFTB. I guess I could take their word, but the mailed 1099-K form has me concerned.

A recent technical issue resulted in a 1099-K form being incorrectly provided to you. Please disregard the incorrect 1099-K form. The incorrect 1099-K form was not sent to the IRS or California Franchise Tax Board.

We’re working to resolve the issue and ensure that it will not happen again. Unless you had more than $20,000 in gross sales and 200 transactions in 2021, we will not submit a 1099-K form to the IRS or the California Franchise Tax Board.

We sincerely apologize for the error and any inconvenience this may have caused.

As always, thanks for selling on eBay, and for being part of the eBay community.

The eBay Selling Team

[BobC]

Originally Posted by Dandor

They screwed up with everyone in California. I had less than $4000 in sales and less than 150 transactions. This is exactly what we were told. I received my 1099-K form in the mail today. Part of me is on the fence about if eBay truly didn't send the form to the IRS/CFTB. I guess I could take their word, but the mailed 1099-K form has me concerned.

A recent technical issue resulted in a 1099-K form being incorrectly provided to you. Please disregard the incorrect 1099-K form. The incorrect 1099-K form was not sent to the IRS or California Franchise Tax Board.

We’re working to resolve the issue and ensure that it will not happen again. Unless you had more than $20,000 in gross sales and 200 transactions in 2021, we will not submit a 1099-K form to the IRS or the California Franchise Tax Board.

We sincerely apologize for the error and any inconvenience this may have caused.

As always, thanks for selling on eBay, and for being part of the eBay community.

The eBay Selling Team

Like I said, this is technically not an error. They (Ebay) can still send everyone the 1099-K forms and they've done nothing wrong, except maybe make more work and expense for themselves by doing something they didn't have to. In this case I think the "error" they are referring to is the one they created by sending these 1099-K forms out to people who weren't expecting to get these till next year, and are now pissed as hell at Ebay thinking they're going to have to start reporting these sales on this year's (2021) returns instead of starting on next year's (2022) tax returns. And i'll also bet a few people had already filed their 2021 tax returns not expecting a 1099-K this year, and then this "present" from Ebay showed up. I'm sure that made a lot of people happy!

I'm thinking Ebay is doing a lot of damage control because of all their sellers they've pissed off due to this. And as a result, I don't think they'd make an even greater monumental error by telling everyone not to worry because they didn't actually send any 2021 1099-K forms that did not meet the reporting threshold in to the IRS/CFTB, but then sending them in anyway. I can't believe even Ebay could be that effing stupid! So though I can't guarantee it, I think you'll be okay to assume your 2021 form 1099-K did not get sent in to any tax authorities. Good luck.

[Dandor]

Originally Posted by BobC

I'm thinking Ebay is doing a lot of damage control because of all their sellers they've pissed off due to this. And as a result, I don't think they'd make an even greater monumental error by telling everyone not to worry because they didn't actually send any 2021 1099-K forms that did not meet the reporting threshold in to the IRS/CFTB, but then sending them in anyway. I can't believe even Ebay could be that effing stupid! So though I can't guarantee it, I think you'll be okay to assume your 2021 form 1099-K did not get sent in to any tax authorities. Good luck.

I have talked to some upper management people there. I believe that they can be that stupid!

If I did use the 1099-K form for my taxes, would the IRS/CFTB question me using a form they never got? I know the run reports and can find out immediately if you didn't use the 1099-K to file. However, would they run a report the reverse way to see if you used a 1099-K form that they never received. I guess they wouldn't care since reported income means more money for them.

[BobC]

Originally Posted by Dandor

I have talked to some upper management people there. I believe that they can be that stupid!

If I did use the 1099-K form for my taxes, would the IRS/CFTB question me using a form they never got? I know the run reports and can find out immediately if you didn't use the 1099-K to file. However, would they run a report the reverse way to see if you used a 1099-K form that they never received. I guess they wouldn't care since reported income means more money for them.

You got it exactly right, what isn't reported to them, they don't know about and they don't really care. They get concerned when they see a taxpayer isn't paying tax on something they do know about. They assume most all taxpayers are generally honest and voluntarily report all sales on their tax returns (And you thought Ebay was stupid?). So if anything, the IRS probably expects to see more returns with higher reported taxable sales than what was being reported on those same taxpayer's 1099-K form(s) than not.

Sounds like you'll be okay filing your 2021 returns as you had in earlier years. Good luck.

And as for Ebay's intelligence, I was trying to be nice and give them the benefit of the doubt. LOL