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

[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.

[parkplace33]

I have noticed an uptick of sellers online now saying no more paypal goods and services. Probably has to do with this change.

[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?

[Dead-Ball-Hitter]

Originally Posted by BobC

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).

Bob, just want to express deep appreciation for the clarity you provide on tax related issues. I feel like my tax accountant has, at times, struggled to articulate what I need to do to be a law-abiding, tax paying citizen in this area. He's meticulous, but doesn't deal with this specific type of income much.

I'd like to formally motion to the Board, that Bob C. hereby be proclaimed the Grand Poobah of Revenue Recognition & Taxation! I'll be placing your new avitar (below) in my forum contacts list. Truly, thanks again. Joe R.