PayPal 24% tax hold

[BobC]

Originally Posted by Fred

When we get friendly reminders from Leon to withhold 24% for BST sales to pay your capital gains and for everyone to start including the applicable sales tax to BST sales, then we'll know things have gone totally nuts.

I guess it's good that fleabay is providing these types of irritating reminders but 24% seems crazy. What if the gain on the card sale is 20%? You'd be paying more in taxes than the actual capital gains. Ok, I'm sure people would figure it out. Perhaps it's more of a friendly reminder that fleabay is now providing/reporting information to the IRS. At least they're trying to make sure the seller isn't going to be blind sided at the end of the year.

If I ever start selling on fleabay, I'll make sure to keep good records and not get burned at the end of the year..

Edited to add - ok replace ebay with paypal in the post.

Fred,

At this point, and hopefully never, would a site like Net54 be required to force users to do 1099 reporting or start forced backup withholding on sales. The backup withholding is totally linked and arising from non-compliance with the 1099 reporting rules and requirements. And as long as Leon and the site don't make anything off B/S/T sales and transactions, I don't see the IRS being able to come in and dictate anything to them regarding reporting. At least not that I am aware of under current federal tax rules and laws. Of course, my usual caveat, that can always change in the future, and lord knows what some particular state/city might try and throw into the tax mix as well. Always smart to check with your local, qualified and licensed tax professional/advisor then.