PayPal 24% tax hold

[bnorth]

Just got a $495.40 payment from another member. Paypal told me if I didn't want them to hold 24% for IRS backup withholding I needed to add a tax ID or my SS# if/when I hit the $600 limit.

Just a heads up for anyone who didn't know.

[Casey2296]

Originally Posted by bnorth

Just got a $495.40 payment from another member. Paypal told me if I didn't want them to hold 24% for IRS backup withholding I needed to add a tax ID or my SS# if/when I hit the $600 limit.

Just a heads up for anyone who didn't know.

Sounds like a good time to short paypal stock.

[BobC]

Originally Posted by bnorth

Just got a $495.40 payment from another member. Paypal told me if I didn't want them to hold 24% for IRS backup withholding I needed to add a tax ID or my SS# if/when I hit the $600 limit.

Just a heads up for anyone who didn't know.

Was wondering, if/when that may happen. When someone that is supposed to be issuing 1099s to people doesn't properly do that, or say they did and the info they sent to the IRS doesn't match the name, ID#, etc. of the person/party receiving the 1099, the party that issued the 1099 is going to get contacted by the IRS and told to get the info correct, or initiate the backup withholding. If they do not, and they also continue sending 1099s to someone without the backup withholding, the IRS can then stick them with the liability of what they were supposed to withhold from the party they were sending the 1099 to, and/or disallow them the tax deduction related to the payments they were making to the person/party being reported on the 1099.

In this instance, Paypal is being proactive and telling people up front, give us your correct tax ID info so we can properly send you a 1099-K form at the end of the year, or we're taking out the 24% backup withholding from you right now, so if you don't give us the correct tax info, the IRS doesn't come looking for us. And if you end up having too much backup withholding taken out and paid to the IRS, then you'll have to file a tax return and report your business income/expenses to ever be able to claim a possible refund from over withheld backup withholding taxes.

And before any screaming or yelling starts, these backup withholding laws and rules have been around for a long, long time. This isn't anything new.

[Kzoo]

Originally Posted by bnorth

Just got a $495.40 payment from another member. Paypal told me if I didn't want them to hold 24% for IRS backup withholding I needed to add a tax ID or my SS# if/when I hit the $600 limit.

Just a heads up for anyone who didn't know.

Ben........Was this for a 'Goods & Services' or 'Family/Friends' transaction? I haven't used them much lately, but just curious. Thanks.

[bnorth]

Originally Posted by Kzoo

Ben........Was this for a 'Goods & Services' or 'Family/Friends' transaction? I haven't used them much lately, but just curious. Thanks.

Goods and Services

[Leon]

This was moved to the front page as it is definitely going to affect a lot of our members, of course me too, if I take Goods and Services.
.

[Exhibitman]

Originally Posted by BobC

And before any screaming or yelling starts, these backup withholding laws and rules have been around for a long, long time. This isn't anything new.

Bingo. It is just another example of PP compliance with existing, long-standing tax law. No need to get alarmed. The black UN helicopters aren't coming for your guns or your women.

[JustinD]

Originally Posted by Leon

This was moved to the front page as it is definitely going to affect a lot of our members, of course me too, if I take Goods and Services.
.

Jesus, does this mean a sale on eBay brings a 1099 from them, another from PayPal, and a seizure of funds? What a paperwork nightmare.

Seems a bit crazy.

As said prior, short PayPal and it might finally be time for people to accept opting into eBay Managed Payments. I hate paying that way, but I will understand if this is factual.

[bnorth]

Originally Posted by JustinD

Jesus, does this mean a sale on eBay brings a 1099 from them, another from PayPal, and a seizure of funds? What a paperwork nightmare.

Seems a bit crazy.

As said prior, short PayPal and it might finally be time for people to accept opting into eBay Managed Payments. I hate paying that way, but I will understand if this is factual.

The real quandary here is how are you still accepting PayPal through eBay?

I thought everyone was on eBay Managed Payments now.

[JustinD]

Is anyone else quietly waiting for the first BST post to change from "100 FF or add 3% for GS" to change to "100 ff or 127 GS"?

(Just a joke because I understand this would never work because for every jump the percentage is still 24% of that. I assume it will actually stop being accepted by most and be FF or check. Another boost for the auction houses.)

[JustinD]

Originally Posted by bnorth

The real quandary here is how are you still accepting PayPal through eBay?

I thought everyone was on eBay Managed Payments now.

Oh, I don't sell on there since 2016 honestly. I guess I am talking out my rear then.

I always pay with paypal for my winnings, does that run though managed payments? I thought MP was just when it's credit card only.

[bnorth]

Originally Posted by JustinD

Oh, I don't sell on there since 2016 honestly. I guess I am talking out my rear then.

I always pay with paypal for my winnings, does that run though managed payments? I thought MP was just when it's credit card only.

I also still pay with PP. The payments now all go through eBay to the seller. Mine is set up to a bank account used only for that. Not sure what other places you can have eBay send the money to.

[hcv123]

selling to or doing a private consignment (NOT an auction) with your local Net54 board member (ME ) who is in the business and handles all the taxes and other selling headaches!

[Ben Yourg]

A couple of weeks ago,my wife read in the
paper that this $600.thing was not going into
play,this year.
Did anyone else hear this?

[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.

[BobC]

Originally Posted by hcv123

selling to or doing a private consignment (NOT an auction) with your local Net54 board member (ME ) who is in the business and handles all the taxes and other selling headaches!

Howard,

This is a serious question, and not trying to be funny or cause problems, but have you in the past, or do you in the future, plan on issuing 1099s to the people who consign things to you to sell on their behalf? (And maybe don't answer that directly here on a public forum either, and consider my post as food for thought.)

You mentioned handling the taxes and such for people who would consign through you, which makes it sound like they don't have to worry about those issues at all then. That would supposedly take care of the sales tax issue, since you would be the one actually doing the direct selling, and thus incurring the sales tax collection/remittance responsibility. But that doesn't automatically remove any income tax responsibility your consignors may still have. One big thing to keep in mind is that when you act as the consignee and sell things for others, if you sell on a platform or use some third-party service that then reports those sales to you on a 1099 form, you are technically receiving those reported payments on behalf of others, in a capacity that is known as being a "nominee". The IRS recognizes "nominees", and expects them to actually create and send out what they then refer to as "nominee' 1099s to properly report the sales that really belong to all your consignors.

I assume you charge a percentage or fixed cost as a consignment/sales fee to people that consign with you, and take that out of the proceeds of the consignment sales you make on their behalf. So then, you actually only incur taxable income to the extent of your consignment fees. So, what are you going to do on your own tax return when you sell something for say $1,000 that was originally consigned to you, and for which you charged the consignor say a 10% consignment fee. You really only have taxable income of $100 ($1,000 X 10%), but if you sold that item through say Ebay, and got paid via Paypal G&S, you are going to get a 1099-K at the end of the year showing you had $1,000 of taxable sales to report, but again, you really only have $100 taxable income for yourself. How are you going to report that $900 difference on your tax return that the IRS automatically assumes is your taxable income, based on the 1099-K you get?

Just so you know, in my described circumstance the IRS technically expects you to prepare and send out 1099-K forms to your consignors to then report the "nominee" sales you originally received on their behalf. If you fail to report that $1,000 on your own tax return as taxable income, the IRS will get a hold of you if you don't otherwise report enough sales/taxable income to cover what got reported to you on the 1099 form(s) you receive. And if you do report that full $1,000 as taxable income on your tax return, what do you then put down on your tax return so you don't end up paying income tax on the $900 that actually went to your consignor? That "nominee" payment you collected and then remitted to your consignor is supposed to then be reported by you, to them and the IRS, on a 1099-K form as well. If the IRS ever came questioning you, and found that you had not properly issued a 1009-K form to your consignor, they could legally deny you the $900 deduction you may have taken against the $1,000 of taxable sales reported to you originally on the Paypal/Ebay 1099-K form you received. The 'nominee" 1099-K form for $900 you should have issued to your consignor is the proof the IRS would look for to show that $900 is a valid deductible expense on your own tax return. In other words, they could possibly make you pay income tax (and maybe self-employment taxes as well) on the whole $1,000 you originally got if they caught you and found out you didn't properly report the consignor's share of the taxable sales income on a 1099.

This is not anything new in the tax laws, and has been around for decades. It is also a probable reason why many AHs don't accept Paypal, or use any other payment services/platforms, that would require them to send 1099-K forms to the AHs once sales hit $600 for the year. If the AHs don't receive any 1099s, the IRS won't be expecting, or looking, for them to be sending "nominee" 1099 forms to their consignors. I've talked and posted about this "nominee" 1099 reporting expectation/requirement elsewhere on the forum before. Hopefully this will help to educate others to at least be prepared for what this could entail and involve given the new, lowered 1099 reporting threshold requirements that officially took effect on 1/1/2023, unless the IRS decides to postpone them again for another year from now. LOL

And for those that don't like me, and/or don't think I know what I'm talking about (not talking about you Howard), here are a few links to back up and prove what I'm saying, including the third/last link which it to the official IRS website. Just cursor down to Section A. Who Must File, and the very first thing the IRS talks about is nominee income and reporting. And don't get all hyper because these links don't specifically mention 1099-K forms. The 1099-K form reporting requirements weren't passed until 2011, and with 1099-K forms only first issued starting in 2012. These other links are pretty much just based on the IRS site terminology, which was written long before 1099-K forms even existed. The IRS just didn't see a need to specifically go back and redo their terminology since it already covered and referred to ALL 1099s being received and issued.

http://www.taxproplus-la.com/29729/N...20the%20income.

https://www.calculatedmoves.com/nomi...-requirements/

https://www.irs.gov/instructions/i1099gi

[Aquarian Sports Cards]

Actually Bob, Auction houses have a carve out and are specifically exempted from 1099'ing their consignors. There were questions about this with the new reporting but the NAA (National Auctioneers Association) got it directly from the IRS that auctions are not considered payment processors and our exemption holds. I gladly accept paypal and credit cards and report all my sales to the IRS and my payments to consignors are basically a deduction.

[BobC]

Originally Posted by Ben Yourg

A couple of weeks ago,my wife read in the
paper that this $600.thing was not going into
play,this year.
Did anyone else hear this?

Yes, there was already a thread started on it just before Christmas. Didn't last real long on the front pager though.

https://www.net54baseball.com/showthread.php?t=329367

[BobC]

Originally Posted by Aquarian Sports Cards

Actually Bob, Auction houses have a carve out and are specifically exempted from 1099'ing their consignors. There were questions about this with the new reporting but the NAA (National Auctioneers Association) got it directly from the IRS that auctions are not considered payment processors and our exemption holds. I gladly accept paypal and credit cards and report all my sales to the IRS and my payments to consignors are basically a deduction.

Thank you Scott, I did not know there was a specific carve out for AHs. I'm assuming that they have to be properly licensed and/or members of a specified group such as the NAA to qualify for the exemption, right? In which case, what I was saying is still very applicable for someone like Howard, and other non-AHs in similar circumstances/situations.

My mistake, and apologies to everyone, for assuming they automatically applied these "nominee" reporting requirements to AHs as well. I've always admitted I don't know everything. But, given how everything else is going, I can also easily see the government possibly removing such an exemption in the not-so-distant future. Especially in the face of the lowered reporting threshold requirements for 1099-K forms, and the impact that is going to have on an awful lot of people. That ends up giving the AHs a distinct and somewhat unfair advantage over other consignment type sellers. And I am sure that they, and sites like Ebay, are not going to be happy with that advantage working against them, and thus exerting their own influence against/towards the government as well to correct this obvious inequity.

This is exactly why the Supreme Court finally ruled back in 2018 that online sellers were now going to be subject to sales tax on interstate sales, and to do away with the totally unfair advantage online sellers had over brick-and-mortar stores and businesses who were forced to charge sales tax, while online sellers weren't.

So Scott, I do have a very valid question for you. I assume then you do get a 1099-K for Paypal G&S payments, equal to the full amount of the sales through G&S and not just your commission fee on those sales, right? Paypal obviously wouldn't know how much your commissions actually are, so I assume they must still report the full amount of the sales you collected on behalf of your consignors in a 1099-K form then directed to you. Or are you able to send some kind of documentation, form, or something to Paypal in advance so that they do not send you any 1099-K form(s) at all? I am truly very curious for my own personal knowledge and reasons, as well as making sure you have the correct answer.

Or, is the exemption you're referring to based more on what I found in this accompanying link, from the NAA site itself, and only just recently confirmed with the IRS?

https://www.auctioneers.org/NAA/Advo...6-48f893f7a5b6

If the AH exemption you're referring to is based on this link and what it is saying, let me give you a word of caution then. This exemption refers solely to the designation of an AH as a Third Party Settlement Organization (TPSO), in other words treating the AH as though they are the same as Paypal or Venmo, and thereby requiring all AHs to report via 1099-K forms, ALL sales they collected for their consignors, and not just sales they got paid for through other actual Third Party Settlement Organizations (TPSOs). And I was already aware of this specific exemption whereby AHs are not considered as TPSOs. However, I don't think your AH not being designated as a TPSO automatically extends and exempts you from the "nominee" reporting rules and requirements, in regard to the IRS and 1099 reporting that I previously posted links to, either. That sounds and looks like an entirely different tax reporting issue and matter to me. You may want to do both of us a favor and contact the NAA for some clarification on this exemption they posted about, and specifically ask if it also covers and exempts AHs from possibly still being subject to the "nominee" reporting rules and requirements for valid 1099-K forms your AH does receive from other TPSOs you choose to do business through. This appears to be one of those "gray" areas that exist in the tax laws that aren't always fully known and clear right away, and may not ever be fully determined until someone takes the IRS to court over it, or the government changes the law somehow. I hope I am wrong and that the exemption you mentioned also covers "nominee" reporting rules and requirements as well. Please don't be mad at me if I end up being right though, and you do need to worry about 1099-K "nominee" reporting after all. As always, just trying to help and educate others on the forum as to possible issues that can possibly impact them in their various hobby activities.

[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.

[philo98]

Who pays income taxes? I’ve worked in the past with quite a few investigative journalists in Europe, the Middle East and Asia and it’s amazing the flow of funds into offshore accounts. The best thing to ever happen was the release of the Panama papers, the Paradise Papers, HSBC papers, the Offshore papers etc etc etc.

[Fred]

Originally Posted by BobC

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.

I was being facetious with regard to N54 BST and any tax implications. However, if we all want to be good citizens and pay our taxes on what used to be a hobby transaction, then we conform.

It's understood what paypal appears to be doing at this time. It seems like they're trying to be compliant with new government regulations and prepping people for what's coming.

I rarely sell things so this doesn't impact me, but at least I'll be aware of this if I ever do decide to start selling via ebay.

What happens with AHs? If you consign something and the AH cuts you a check for $40K, does that get reported? Or has that been a standard practice for a while?

[BobC]

Originally Posted by Fred

I was being facetious with regard to N54 BST and any tax implications. However, if we all want to be good citizens and pay our taxes on what used to be a hobby transaction, then we conform.

It's understood what paypal appears to be doing at this time. It seems like they're trying to be compliant with new government regulations and prepping people for what's coming.

I rarely sell things so this doesn't impact me, but at least I'll be aware of this if I ever do decide to start selling via ebay.

What happens with AHs? If you consign something and the AH cuts you a check for $40K, does that get reported? Or has that been a standard practice for a while?

Fred,

No problemo, I wasn't in the least picking on you, and thought you might be joking around a bit. I just get concerned that someone else may not get that same take, and maybe think what you were talking about could seriously be true. Just like the post and my earlier response to Ben Young in this thread. He didn't see or know about the earlier thread here on the forum before Christmas, talking about the one-year deferral of the lowered 1099-K reporting threshold for Paypal G&S payments, and other TPSOs, to issue 1099-K forms to people. It is often the case that people who are not on here every single day may miss out on some important facts or issues being brought up that could affect them and their hobby activities. And when I see others posting things, especially regarding tax aspects of the hobby, that may not be really clear or easily answered, I try to make it a lot clearer for them and others by responding so that have a better idea and/or understanding of at least what to be aware of and look out for.

Unlike everyone debating who is or is not the greatest lefty of all time, or who does or doesn't belong in the HOF, those questions and debates don't really involve someone on the forum getting caught in a tax situation they didn't know about and weren't prepared for, and possibly costing them actual time, and money, by their lack of knowledge and potential improper handling of their tax situation in relation to their card collecting hobby activities. Much of what I'm sharing with members on here can save people time and money in the long run, or at least better prepare them for what may be ahead, and hopefully make their lives a little easier. If nothing else, it should give them info to at least know what questions to possibly ask their own tax preparers/professionals when the time comes. Also, if you do end up having questions for your tax preparer/professional, don't wait till after the end of the year to finally ask them. You want to ask them before the current taxable year ends, so they can maybe advise you on what you may want/need to change to help save you some tax money. And the earlier in the actual tax year you ask them, very often even better. Waiting till December to ask you tax person questions may still make it difficult, or even impossible, to have time to change things to your benefit.

Now, as for the question I was going back and forth with Scott about, whether AHs may be liable at some point for sending 1099s to their consignors, I'm hoping since he's a member of the National Auctioneers Association (NAA) that he can contact them for some clarification on their article I saw and posted a link to, and what exactly AHs are exempt from when it comes to having to prepare and send 1099s to the people they sell for. As I pointed out to Scott, the exemption he referred to may only be for AHs not getting considered the same as say Paypal G&S. Without that exemption, it would potentially make Scott's auction company a Third Party Settlement Organization (TPSO) (just like Paypal G&Ss) which would then require him to probably prepare and send 1099-Ks to every consignor that he collected more than $600 dollars for during the calendar year, along with also sending a copy to the IRS. He, and every other legit and licensed AH does not have to worry about or do that, as they are exempt form being considered as TPSOs.

But then, what about any 1099-K forms that say Paypal G&S may send to Scott's auction company for payments his auction company accepted during the year from/through Paypal G&S (or any other TPSO his action company also accepted sales payments on behalf of his consignors through)? The "nominee" reporting rules for taxable income/sales that you accept/receive on behalf of someone else are pretty clear. The taxable income/sales you received and got reported to you on a 1099 issued in your name as the recipient or payee, but that actually belongs to someone else (your consignors), should then be reported on a "nominee" 1099 of the same type of 1099 that you initially got that included your consignor's taxable income/sales. Except now, you are supposed to prepare a 1099 form as the payor, and make it out to the consignor as the payee/recipient you collected the taxable income/sales for. You show the amount of actual taxable income/sales that you received on behalf of each consignor, that was originally reported to you as the payee/recipient. And you're supposed to send a copy of those "nominee" 1099s to each party/person you collected/received such taxable income/sales on behalf of, along with filing/sending an additional copy with your friendly neighborhood IRS.

At the moment, it is a "gray" area I do not know the definitive answer to....yet. Hopefully Scott can get someone at the NAA to better confirm exactly what the 1099 reporting exemption they got feedback on from the IRS exactly does, or does not, cover, and if that also extends to "nominee" reporting requirements by AHs as well. I fear the answer may not be exactly what Scott, and others, want to hear. We shall see......

[Aquarian Sports Cards]

Originally Posted by BobC

I can also easily see the government possibly removing such an exemption in the not-so-distant future. Especially in the face of the lowered reporting threshold requirements for 1099-K forms, and the impact that is going to have on an awful lot of people. That ends up giving the AHs a distinct and somewhat unfair advantage over other consignment type sellers. And I am sure that they, and sites like Ebay, are not going to be happy with that advantage working against them, and thus exerting their own influence against/towards the government as well to correct this obvious inequity.

That's why we (AH's) were so adamant about our National association getting a clear answer on the matter. As it stood we weren't sure without clarification. Ebay's "mistake" was in becoming a payment processor like Paypal. As for what AH's are covered, that I don't know. Many states don't require any licensing, and most sports auction houses are located in those states. Hunt, Wheatland and The Collector Connection are all in PA and all have a licensed auctioneer of record. Can't speak for any of the others.

[BRoberts]

Originally Posted by hcv123

selling to or doing a private consignment (NOT an auction) with your local Net54 board member (ME ) who is in the business and handles all the taxes and other selling headaches!

Buy a banner ad.

[Fred]

Bob,

We all know who the greatest lefty of all time is and we all agree who shouldn't be in the HOF...

What this tax reporting means to me is that if I ever decide to start selling on ebay or other platform that uses e-payments, then I better be prepared to have a full accounting items that are being sold (which includes purchase price of the items sold).

What a pain. Going forward, people better be prepared to treat this like a business with full accounting efforts. I'm going to guess that a lot of people that were buying/selling to add to a few bucks to their income or have a few extra "hobby" dollars are really going to dislike this. Selling cards will be like day-trading. Better keep tabs of everything.

[Schlesinj]

I sold a couple of items last year and my accountant asked me to create a spreadsheet to figure out basis. Luckily for me all of the cards were bought at some type of auction platform so I can easily figure out when and how much I spent.

[JustinD]

Originally Posted by Aquarian Sports Cards

Ebay's "mistake" was in becoming a payment processor like Paypal.

Very interesting take!

I did not realize that after the PayPal split they could have been just fine, but greed and going after the direct managed payments pie could cost them dearly. This is very intriguing as a historical business misstep.

[BobC]

Originally Posted by Aquarian Sports Cards

That's why we (AH's) were so adamant about our National association getting a clear answer on the matter. As it stood we weren't sure without clarification. Ebay's "mistake" was in becoming a payment processor like Paypal. As for what AH's are covered, that I don't know. Many states don't require any licensing, and most sports auction houses are located in those states. Hunt, Wheatland and The Collector Connection are all in PA and all have a licensed auctioneer of record. Can't speak for any of the others.

Scott,

I'm with you. This stuff can be confusing as hell. That is why I'm hoping you may have some better luck in re-contacting the NAA and finding out if the 1099 reporting exemption they got clarification on from the IRS extends to not just AHs not being considered as Third Party Settlement Organizations (TPSOs), like Paypal G&S is, but also extends and covers an exemption for AHs from being subject to the "nominee" reporting requirements and rules as well.

And I'm not sure that Ebay in any way just voluntarily decided to become a TPSO like Paypal G&S. I think they were faced with additional scrutiny from the governments and tax authorities because they are so big, and made a "lesser of two evils" type of decision and agreed to take on the billing, collection, and remittance of sales taxes for all their sellers, as well as the 1099-K reporting. If memory serves, I thought Ebay was also supposed to be dropping Paypal as one of their primary/main payment service processors at some point a while ago. Seem to remember talk that Ebay was going to be partnering up with a European based payment processing service that would supposedly give them, Ebay, more control and say over the payment processing, along with probably a bigger piece of that processing fee pie as well. Yet when I purchase anything on Ebay, it still looks like Paypal is their major, primary player for providing payment processing services after all. At least it seems to be for me. And as for taking on the things like sales taxes and 1099 reporting, I think Ebay may have been agreeing to do that so those responsibilities wouldn't fall to or on their users/sellers. Not doing so could have potentially turned even more sellers away from using Ebay going forward, by saddling them more things they didn't understand or want responsibility for. And if Ebay didn't go along with 1099-K reporting, could see the governments/tax authorities threatening to come in and start reviewing their records and data to begin going after their sellers as well. Don't think Ebay made a mistake as much as they possibly weren't given a choice in the 1099 reporting issue.

[BobC]

Originally Posted by Fred

Bob,

We all know who the greatest lefty of all time is and we all agree who shouldn't be in the HOF...

What this tax reporting means to me is that if I ever decide to start selling on ebay or other platform that uses e-payments, then I better be prepared to have a full accounting items that are being sold (which includes purchase price of the items sold).

What a pain. Going forward, people better be prepared to treat this like a business with full accounting efforts. I'm going to guess that a lot of people that were buying/selling to add to a few bucks to their income or have a few extra "hobby" dollars are really going to dislike this. Selling cards will be like day-trading. Better keep tabs of everything.

Fred,

That coming up with tax cost basis is not a problem you alone are going to face at some point in the future, Many other collectors are in a similar boat and will have to also deal with it at some point. As I've said in the past, people should at least still go ahead and try to make reasonable estimates as to what their tax cost basis is, and be sure to include those estimated basis costs on their tax returns. The IRS does not summarily dismiss or disallow estimates when actual records are not always available or exist. They help, of course, but even the IRS can't rationally argue you may not have any cost basis at all for items you bought, where the seller only allowed you to pay them in cash, and never gave you a receipt. And if you do a reasonable and somewhat responsible job of trying to estimate tax cost basis of items sold, chances are the IRS isn't going to be wasting time coming to look for you anyway. Another big reason to file your tax returns accurately and completely the first time, so the IRS has no reasons to come back and look into your return further and ask more questions.