ebay authenticity guarantee limits now 250/750

[BobC]

Originally Posted by Exhibitman

Then don't be a business on eBay. eBay is no longer meant for scofflaws who want to hide taxable income or for dealers who want to pretend that they are hobbyists or investors rather than dealers.

Personally, I love selling on eBay because they determine, collect and remit the damned sales taxes for me. No muss, no fuss. Makes reporting my sales taxes each quarter a snap.

As for taxation, without getting into the specifics, filing as a business gives you a lot of flexibility in terms of timing, realizing and offsetting losses and claiming expenses.

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

[Lorewalker]

Originally Posted by BobC

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

I understand what you are saying Bob but don't taxpayers have to meet certain qualifications to be deemed being in business? I did not think how the income is reported dictated that but maybe only played a part in whether someone was in business or not.

[BobC]

Originally Posted by Lorewalker

I understand what you are saying Bob but don't taxpayers have to meet certain qualifications to be deemed being in business? I did not think how the income is reported dictated that but maybe only played a part in whether someone was in business or not.

Yes, but there is no specific, black and white list or measure to definitively say you are in business or are not. It is a grey area, to be determined by facts and circumstances in each unique situation. As I was saying, getting a 1099 can initially give the impression that you are operating a business on Ebay, and if you get one but fail to include the info from it on your tax return, when the IRS comes calling, do you think they'll view the income you may have earned from selling a card as a long term capital gain automatically? I don't think so. LOL That 1099 doesn't tell the IRS what you were selling. For all they know, you were selling widgets. So they generally assume the worst case scenario for taxpayers (and the most tax being owed to them), figuring that will get a response and explanations and answers back from the taxpayer.

The IRS actually follows a list of nine different factors they will look at to help determine if you are operating as a business, or if you are really in a hobby. The additional idea of being an investor for tax purposes is fairly new, and hasn't really been formally addressed by the IRS, yet, as sports cards being considered as true investments, like stocks and bonds. The following article lists the nine factors the IRS and their agents follow, which as you'll quickly see, are not yes or no, or black and white, questions or measures.

https://www.thebalancesmb.com/is-thi...a-hobby-397675

These factors are really more for situations where someone in a hobby is trying to be able to deduct the costs and expenses of it against their other income. With the way card prices, especially vintage, have gone up in recent years, most people with vintage collections they've had for years will not be worried about selling at losses. However, look at a modern collector who spent a ton of money on a modern rookie, that ended up being a bust. He ends up dumping it for a big loss, and tries to use that loss to offset his other income on his tax return. Here's where those nine factors can come into play.

[Lorewalker]

Originally Posted by BobC

Yes, but there is no specific, black and white list or measure to definitively say you are in business or are not. It is a grey area, to be determined by facts and circumstances in each unique situation. As I was saying, getting a 1099 can initially give the impression that you are operating a business on Ebay, and if you get one but fail to include the info from it on your tax return, when the IRS comes calling, do you think they'll view the income you may have earned from selling a card as a long term capital gain automatically? I don't think so. LOL That 1099 doesn't tell the IRS what you were selling. For all they know, you were selling widgets. So they generally assume the worst case scenario for taxpayers (and the most tax being owed to them), figuring that will get a response and explanations and answers back from the taxpayer.

The IRS actually follows a list of nine different factors they will look at to help determine if you are operating as a business, or if you are really in a hobby. The additional idea of being an investor for tax purposes is fairly new, and hasn't really been formally addressed by the IRS, yet, as sports cards being considered as true investments, like stocks and bonds. The following article lists the nine factors the IRS and their agents follow, which as you'll quickly see, are not yes or no, or black and white, questions or measures.

https://www.thebalancesmb.com/is-thi...a-hobby-397675

These factors are really more for situations where someone in a hobby is trying to be able to deduct the costs and expenses of it against their other income. With the way card prices, especially vintage, have gone up in recent years, most people with vintage collections they've had for years will not be worried about selling at losses. However, look at a modern collector who spent a ton of money on a modern rookie, that ended up being a bust. He ends up dumping it for a big loss, and tries to use that loss to offset his other income on his tax return. Here's where those nine factors can come into play.

And I read ya loud and clear. There is no place on the tax forms to supply answers to those questions and it likely would not be until an audit that most people would even think about the 9 factors. I understand the implication of the 1099 and how it would make most people feel getting one.

[BobC]

Originally Posted by Lorewalker

And I read ya loud and clear. There is no place on the tax forms to supply answers to those questions and it likely would not be until an audit that most people would even think about the 9 factors. I understand the implication of the 1099 and how it would make most people feel getting one.

And exactly why I keep saying that when you have questions or are in doubt, talk to a qualified tax professional. Even if it is just asking me something here on the forum!

I do not have all the definitive tax answers to every question and situation that can come up. Nobody does, not even the IRS. And even when everyone finally thinks they've got certain tax laws and situations nailed down, they'll change those tax laws, technology, or something else affecting those specific situations, to radically alter them. Never fails. LOL

[Exhibitman]

I really think people are overthinking this. If I am selling an investment and I have documented the cost basis for the item and the net I receive from the sale, characterizing it is my choice on my tax return (investment or business). As long as I accurately report my profit, in whatever form, there should be no problem in the end. I get a 1099 from Vanguard and Schwab for my investment income. That doesn't mean I am a stock brokerage, even if I trade every damn day.

Now, I could see the states getting pissed if there was no sales tax remittance from frequent selling 'investors', but eBay collects the sales tax for the sellers, so that isn't an issue either.

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

And don't think for a minute that this won't eventually get to auction houses. The big internet selling platforms were the first, but a multi-billion-dollar business is certainly going to attract the attention of the revenue agencies.

if you want to cheat the tax man, you have to go with cash and that cash can never, ever formally enter the financial system. And that is when you visit the cross-bar hotel if you get caught. Just pay your taxes. It's easier.

[perezfan]

What if you cannot recall what you paid for items 25 years ago (decades before they taxed these things?)

Guesstimate the amount you paid, or take it up the a$$?

[tschock]

Originally Posted by Exhibitman

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

I think it's because you view selling on ebay as a business for most people. And for most sellers, it is not. Now they will get a 1099 indicating sales income where many of them have no real proof of what they paid for a cost basis. So if/when the IRS comes calling, how do they prove what they claim when they have no records/proof because they didn't intend selling what they bought in the first place? I know a couple people who I doubt are "tax scofflaws" who are leaving because they don't want the hassle of now keeping records and retro-actively assessing what they paid for items. Since they were never "in business" as it was a hobby for them, they don't have records (ie proof) of what they paid.

Your assumption that everyone who leaves ebay is a tax scofflaw because they are now issued 1099 is unfounded if not downright silly.

[BobC]

Originally Posted by Exhibitman

I really think people are overthinking this. If I am selling an investment and I have documented the cost basis for the item and the net I receive from the sale, characterizing it is my choice on my tax return (investment or business). As long as I accurately report my profit, in whatever form, there should be no problem in the end. I get a 1099 from Vanguard and Schwab for my investment income. That doesn't mean I am a stock brokerage, even if I trade every damn day.

Now, I could see the states getting pissed if there was no sales tax remittance from frequent selling 'investors', but eBay collects the sales tax for the sellers, so that isn't an issue either.

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

And don't think for a minute that this won't eventually get to auction houses. The big internet selling platforms were the first, but a multi-billion-dollar business is certainly going to attract the attention of the revenue agencies.

if you want to cheat the tax man, you have to go with cash and that cash can never, ever formally enter the financial system. And that is when you visit the cross-bar hotel if you get caught. Just pay your taxes. It's easier.

Adam,

I'm not talking solely about just tax cheats, and yes, there are those. There are also people who are deathly afraid of sharing anything with the IRS, and it isn't always because they are tax cheats and/or not paying their taxes. You should see what happens on occasion when asking someone if they want their tax refund check direct deposited into their bank account, rather than having to wait for a paper check in the mail, and the possibility of it being lost, stolen, or whatever. Suddenly having another piece of paper regarding some aspect of their life and/or business now going into the hands of another government agency does not sit well for many more people than you may realize. I have come to respect such people's sentiments over the years and not be quick to judge them. You should try doing the same!

Go talk to your Uncle if you can. Maybe he can better explain the potential nuances to you. Of course, being a tax attorney, as you said he was, doesn't necessarily mean he was always doing personal tax returns for individuals and small businesses, and therefore was maybe talking to you in more general terms and not about specific instances or circumstances that are definite grey areas of the tax law, and subject to different interpretations and treatments. I don't know his exact background and experience, so I can't speak to that.

I obviously know that tax evasion is a crime, but I also know for a fact that tax avoidance is your constitutional (and God given) right! LOL And pretty much all of the tax related comments and statements I make are to point out the potential differences and nuances (and grey areas) that do exist in the tax laws, and to hopefully show other members on this forum many of those potential legal differences and interpretations for which a taxpayer may have to make choices, based on each one's unique set of facts and circumstances. You seem to have your own personal tax situation figured out and settled as to how you want things handled to your satisfaction, which I think is absolutely fantastic. But please remember that what may make sense and be right for you, isn't necessarily always the best, most accurate choice, for others. Have a great evening.

[perezfan]

Originally Posted by BobC

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

I've never paid taxes on stuff I've sold at garage sales (not that it amounted to much money). But then again, I never knew that we were required to... especially since virtually everything gets sold at a "bargain basement" style loss.

And what about the guy who sells his cards for cash, to a guy working the booth at a trade show? Or even the guy renting the booth, who sells the cards? I have a feeling these types of sales go largely unreported.

[jchcollins]

For people who have done mostly "casual" stuff, the threshold drop from $20K to receive a 1099 to $600 is a rather dramatic one. I'm not saying it's unfair, just saying in reality that is a big change. With the pandemic and more people than ever sitting at home and getting back into selling this that or the other, it was probably time for at least some shift in the laws; they were outdated at best for the state many forms of online commerce find themselves in today.

[BobC]

Originally Posted by jchcollins

For people who have done mostly "casual" stuff, the threshold drop from $20K to receive a 1099 to $600 is a rather dramatic one. I'm not saying it's unfair, just saying in reality that is a big change. With the pandemic and more people than ever sitting at home and getting back into selling this that or the other, it was probably time for at least some shift in the laws; they were outdated at best for the state many forms of online commerce find themselves in today.

Yup!

[jchcollins]

Originally Posted by perezfan

And what about the guy who sells his cards for cash, to a guy working the booth at a trade show? Or even the guy renting the booth, who sells the cards? I have a feeling these types of sales go largely unreported.

Or the LCS owner who offers a wan smile and doesn't charge you sales tax when you fork over a couple Franklins for something that caught your eye on a Saturday afternoon? Cash sales that go unreported and unreported income under certain thresholds will likely always be a thing.

[BobC]

Originally Posted by jchcollins

Or the LCS owner who offers a wan smile and doesn't charge you sales tax when you fork over a couple Franklins for something that caught your eye on a Saturday afternoon? Cash sales that go unreported and unreported income under certain thresholds will likely always be a thing.

Double yup!

[BobC]

Originally Posted by perezfan

I've never paid taxes on stuff I've sold at garage sales (not that it amounted to much money). But then again, I never knew that we were required to... especially since virtually everything gets sold at a "bargain basement" style loss.

And what about the guy who sells his cards for cash, to a guy working the booth at a trade show? Or even the guy renting the booth, who sells the cards? I have a feeling these types of sales go largely unreported.

Exactly correct, and why you shouldn't pay taxes on a garage sale. The government tax authorities realize that over time people may just sell off old things for a few bucks. They don't have the time and resources to go after such people, and realize that virtually everything being sold is old and used, and not selling for what was originally paid for it. Therefore, most garage sale/flea market sales are for a loss, so you would end up owing no income taxes on it anyway. Plus, you aren't normally running a garage sale all the time, maybe just once in a great while. So the tax authorities don't want to deal with all that info and detail, and just leave it alone.

But then we end up getting the internet, and online platforms like Ebay, Etsy, Craig's List, and so on. The initial idea behind these was really more of an online flea market or garage sale concept for people to get rid of their stuff on, by having a wider market. Heck, IIRC Ebay was started as a place for some collectors to sell their Pez dispensers among themselves. But times have changed and these former online garage sales have become big businesses, Amazon, Wayfair, etc. And then throw in an item like old sports cards, that used to be sold/traded for next to nothing for decades, and fast forward to today where they are suddenly going for hundreds and thousands of dollars. The rules and thinking are still changing and morphing. It is kind of like the situation with regard to sales taxes where the internet completely changed the idea of what really constitutes tax nexus and who should be responsible for collecting and remitting sales taxes. It wasn't until the recent 2018 SCOTUS ruling in South Dakota vs. Wayfair that we finally recognized a firm, specifically defined, measure to finally say for certain when someone should or should not be subject to having to collect sales taxes from online sales to other states they are not physically in.

People can still sell at a garage sale or flea market occasionally, and not have to worry about taxes. And they can also do the same thing using Ebay, Etsy or so on. But does doing so and using an online platform automatically change their intent and turn them into a dealer in a legitimate business? See how this can get grey and hazy real fast? There is currently no perfect, set answer that covers every possible situation. People selling for cash at shows and such will, at least for now, not have anyone chasing after them for tax reporting. Again, the tax authorities don't have the time, resources or the inclination normally to chase after them. Using an online platform though gives tax authorities the unique benefit of there now being a specific and precise record and detail of what someone is selling, and what they sold it for. It is changing the tax enforcement landscape and thinking by many state and federal (and local) tax authorities.

[tschock]

Originally Posted by BobC

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

And that's likely ties in with, and is not surprising that, ebay sent out emails titled "Tell Congress their new 1099-K rules are confusing and unnecessary" with details like:

"Companies like eBay are required to report sales to the IRS using a tax form called a 1099-K. Until recently, you would only get a 1099-K if you sold over $20,000, or more than 200 items. Starting this year, new legislation has lowered that threshold to just $600, even if that was from a single sale all year. Where it gets complicated is you’ll get this form even if you don’t owe anything, because not all sales are taxable–for example, if you sell something for less than you paid for it. That means millions of sellers will now get unnecessary tax forms, creating confusion and pointless paperwork–both for the IRS, and for small-time sellers who aren’t set up to deal with it.

Imagine selling an old bike for $800 that cost you $1,500 a few years ago. Since you didn’t make a profit, the IRS doesn’t consider that taxable income. But under this new law, you’re still going to get a 1099-K. And now you’ll have to prove to the IRS that you don’t actually owe any taxes on that sale, which makes for complicated accounting work."

Contrary to some opinions here, there are a lot of people selling stuff that are not a business on ebay, nor will likely become one.

[BobC]

Originally Posted by tschock

And that's likely ties in with, and is not surprising that, ebay sent out emails titled "Tell Congress their new 1099-K rules are confusing and unnecessary" with details like:

"Companies like eBay are required to report sales to the IRS using a tax form called a 1099-K. Until recently, you would only get a 1099-K if you sold over $20,000, or more than 200 items. Starting this year, new legislation has lowered that threshold to just $600, even if that was from a single sale all year. Where it gets complicated is you’ll get this form even if you don’t owe anything, because not all sales are taxable–for example, if you sell something for less than you paid for it. That means millions of sellers will now get unnecessary tax forms, creating confusion and pointless paperwork–both for the IRS, and for small-time sellers who aren’t set up to deal with it.

Imagine selling an old bike for $800 that cost you $1,500 a few years ago. Since you didn’t make a profit, the IRS doesn’t consider that taxable income. But under this new law, you’re still going to get a 1099-K. And now you’ll have to prove to the IRS that you don’t actually owe any taxes on that sale, which makes for complicated accounting work."

Contrary to some opinions here, there are a lot of people selling stuff that are not a business on ebay, nor will likely become one.

Exactly, makes the landscape for many on Ebay and other platforms totally confusing.

And don't think this reduced 1099 sales reporting threshold makes the IRS happy at all either. Just like the people who now get these 1099s, it is going to mean a ton more work for the IRS as well, which is already severely underfunded and understaffed. And a lot of that work, at least initially, is going to be dealing with people who really shouldn't be paying any taxes on used things they are selling, but now have to bother reporting. And all this additional paperwork creates more opportunities for mistakes and errors, even by the IRS. Trust me, the IRS, and every other tax authority out there are not infallible and do make mistakes and errors.

Why do you think you often hear those commercials for all those different outfits that will come to your aid if you owe the IRS thousands of dollars, and don't know what to do? They exist for just these kinds of tax issues and situations, to help (and also take advantage of) the taxpayers that didn't know better.