OT But probably affects most on this board

[M's_Fan]

I am a tax lawyer so I might be able to explain what is going on here in very general terms.

IRS 6050W was passed as part of The Housing Assistance Tax Act of 2008. This was passed in July of 2008 under the previous Congress/Administration, to try and prevent the "subprime mortgage crisis" from spreading to the rest of the economy (this was passed in July of 2008, and the economy nearly collapsed in October, so we all know how successful this legislation was).

You may ask, "Why in the heck did they pass this tax reporting law in a housing bill?" To answer this, let me give you a background on how much tax legislation gets passed: Congress wants to pass a bill spending all sorts of money on government programs. To make the numbers look like at least part of the legislation is paid for, and thus won't add to the deficit, they pass some new tax provision which Congressional accountants have determined will raise money for the government. So that's where IRS 6050W came from. They passed all sorts of revenue raising gimmicks in the Obamacare legislation as well. Sausage making at its finest.

The purpose of this law is to try and match up the information reports with what people report on their income taxes. It provides an easy way for the IRS to claim that there is unreported income.

Right now the limits are $20k and 200 transactions, not $20k or 200 transactions. So I definitely will keep my paypal transactions under $20k.

Legal Disclaimer: None of this is to be construed as legal advice or forming an attorny-client relationship, see your own tax advisor.

[Leon]

Originally Posted by M's_Fan

I am a tax lawyer so I might be able to explain what is going on here in very general terms.

IRS 6050W was passed as part of The Housing Assistance Tax Act of 2008. This was passed in July of 2008 under the previous Congress/Administration, to try and prevent the "subprime mortgage crisis" from spreading to the rest of the economy (this was passed in July of 2008, and the economy nearly collapsed in October, so we all know how successful this legislation was).

You may ask, "Why in the heck did they pass this tax reporting law in a housing bill?" To answer this, let me give you a background on how much tax legislation gets passed: Congress wants to pass a bill spending all sorts of money on government programs. To make the numbers look like at least part of the legislation is paid for, and thus won't add to the deficit, they pass some new tax provision which Congressional accountants have determined will raise money for the government. So that's where IRS 6050W came from. They passed all sorts of revenue raising gimmicks in the Obamacare legislation as well. Sausage making at its finest.

The purpose of this law is to try and match up the information reports with what people report on their income taxes. It provides an easy way for the IRS to claim that there is unreported income.

Right now the limits are $20k and 200 transactions, not $20k or 200 transactions. So I definitely will keep my paypal transactions under $20k.

Legal Disclaimer: None of this is to be construed as legal advice or forming an attorny-client relationship, see your own tax advisor.

Thanks...always good to hear from someone in the know...best regards

[ChiefBenderForever]

So can you sell 199 items for a million dollars or not ?

[Leon]

Originally Posted by JohnnyHarmonica

So can you sell 199 items for a million dollars or not ?

You will still owe taxes (plus or minus) just like today, but the IRS won't require the reporting from the venue, is the way I understand it.

[Exhibitman]

Let me tell you how it will be,
There’s one for you, nineteen for me,
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
Should five per cent appear too small,
Be thankful I don’t take it all,
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat,
If you get too cold, I I’ll tax the heat,
If you take a walk, I’ll tax your feet.
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
Don’t ask me what I want it for
If you don’t want to pay some more
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
Now my advice for those who die,
Declare the pennies on your eyes,
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
And you’re working for no-one but me.

The brilliance of the Beatles aside as a general point, there really isn't an issue here if you run your card business as a proper business already. Honestly, the whining over the government creating a reporting mechanism that does no more than allow it to be sure that every business is complying with the tax laws is ridiculous. If being 'forced' to comply with the same tax laws as everyone else who runs a business is just too much for you, get out of the business. Otherwise, man up and be responsible businesspeople.

[ChiefBenderForever]

Just wondering how it is going to affect all the laundering/loop hole cash shenanigans going on, baseball cards are a tiny percent of their business. I don't see how ebay and paypal don't lose millions next year unless thousands of people are ready to go to jail. It doesn't affect me at all but very interesting to see what the outcome will be. Ebay stock at 29.90 a share right now, let's see what it is a year from now.

[Jim VB]

Originally Posted by JohnnyHarmonica

Just wondering how it is going to affect all the laundering/loop hole cash shenanigans going on, baseball cards are a tiny percent of their business. I don't see how ebay and paypal don't lose millions next year unless thousands of people are ready to go to jail. It doesn't affect me at all but very interesting to see what the outcome will be. Ebay stock at 29.90 a share right now, let's see what it is a year from now.

The "laundering/loop hole cash shenanigans" are treated exactly the same way as any other purchase. They count as one transaction and whatever dollar amout they are for.

Unless people go back to writing checks (which Ebay has made challenging, because they won't let you say you except them), Ebay will be fine.

[ChiefBenderForever]

But what about the people who have been selling hundreds of thousands of dollars of goods under the radar ? They either have to get multiple accts or limit themselves to sales or report income. We are talking about millions of dollars here. So less sales will equal less revenue for ebay. My unprofessional advice would be to sell ebay stock soon but I am no expert and really don't know anything, I guess time will tell.

[teetwoohsix]

Originally Posted by JohnnyHarmonica

But what about the people who have been selling hundreds of thousands of dollars of goods under the radar ? They either have to get multiple accts or limit themselves to sales or report income. We are talking about millions of dollars here. So less sales will equal less revenue for ebay. My unprofessional advice would be to sell ebay stock soon but I am no expert and really don't know anything, I guess time will tell.

Or stop selling on ebay

[Jim VB]

Originally Posted by JohnnyHarmonica

But what about the people who have been selling hundreds of thousands of dollars of goods under the radar ? They either have to get multiple accts or limit themselves to sales or report income. We are talking about millions of dollars here. So less sales will equal less revenue for ebay. My unprofessional advice would be to sell ebay stock soon but I am no expert and really don't know anything, I guess time will tell.

Multiple accounts won't help. Anyone who Ebay determines may be close to the limit will be asked to supply Ebay/Paypal with a Social Security Number (or an EIN, for a business.) Multiple accounts will be liknked to either your specific SSN or your EIN.

Yes, I suppose that some sellers could stop selling on Ebay, but other avenues to sell through are just as easy for the information to be tracked (unless you think there will be a resurgence of weekly card shows.) Other, large auction houses will be next. Any credit card sales are already tracked, through the bank.

I would never advise anyone concerned about paying profits on taxes that the solution is to do less sales. I do wish they would all pay the required taxes on their profits.

[baseballart]

Originally Posted by Exhibitman

The brilliance of the Beatles aside as a general point, there really isn't an issue here if you run your card business as a proper business already. Honestly, the whining over the government creating a reporting mechanism that does no more than allow it to be sure that every business is complying with the tax laws is ridiculous. If being 'forced' to comply with the same tax laws as everyone else who runs a business is just too much for you, get out of the business. Otherwise, man up and be responsible businesspeople.

Adam

I agree 100% with what you're saying. However, if everyone complied, that would be bad for my business

And to reiterate what I said before, any business person who doesn't report his or her revenue from traceable credit card sales is simply playing audit roulette with the highest degree of stupidity, and should be prepared to face very severe consequences if they are audited.