Power Sellers Unite

elgato · Joined: 24 Feb 2005 Posts: 17240 Location: Texas

Some users are reporting they are unable to sell on eBay because they have not provided PayPal with their Tax ID numbers. EcommerceBytes has reported extensively on a new law that requires payment processors to issue 1099K reports to the IRS beginning this tax year.

Despite the fact that small sellers are clearly exempt from the law, payment processors, including PayPal and Amazon.com, have been requiring small sellers to provide their tax ID numbers.

http://blog.auctionbytes.com/cgi-bin/blog/blog.pl

Peniwize The Clown · Joined: 14 Jun 2009 Posts: 84

Yes, I can confirm this as I have 1 account that I have not issued as Tax ID number on and it was shutdown by Paypal and eBay.

swan20 · Joined: 19 May 2008 Posts: 14

this was announced a while back. I was asked and said will be reported to the irs when i received over $20k in paypal about 3-4 months ago. I have used my ssn for my taxes for over 6 years so that was fine with that.

Bloomingsales · Joined: 18 Feb 2009 Posts: 26

1099's are used for "outside services/vendors," and applicable to anyone who provides outside services through any venue. Ebay/Amazon vendors/sellers who create and make more than 20K per year and received thru Paypal must provide a tax ID; same is true if you are a "self employed" individual. Yet, if you notify PP that you do not sell 20K or over, and report your income and fee's/losses with the IRS all should be fine. Going hand-in-hand with this, those who don't meet the selling "limit" on eBay, receive notification of "low performance" which is geared toward not your "ratings" yet how much you sell! This is surely an indication of what is to come..... eBay will more than likely get rid of ALL small sellers and only cater to those "small businesses" generating 20K or more a year!

luckyalive · Joined: 27 Apr 2008 Posts: 589

Does not eBay classify the shipping fees as sales - thus a seller's actual sales will be inflated by potentially a huge amount. Depending on how you do your accounting this could lead to possibly audits from the IRS. For example, lets say you simply report your net proceeds deposited into your bank account as sales because you do not want to go throug thousands of transactions and report UPS, USPS, eBay fees, PayPal fees, and so forth as seperate expenses - well when the IRS look at eBay reporting a much higher gross sales then you are going to get audited. Exactly why eBay should be prevented from classifying shipping fees as sales or for that matter charging a fee on them.

Bloomingsales · Joined: 18 Feb 2009 Posts: 26

I agree with you 110% luckyalive. It is a big job to differentiate actual sales and fees on postage. Those making under 20K a year don't have to provide a federal ID number. And, let's remember when a seller provides a federal ID number, not only must the income declared on yearly taxes,(which a bookkeeper is now required to break the designated fees down to generate a P&L). Yet, that seller is now considered a bonafide "legal business" and mandated to collect "sales tax" applicable to their state; this is compounded with yearly business licensing fee's, ect., for that particular state.

Bottom line, it is eBay's game and if you want to play in their field, you play by their rules, yet know your RIGHTS! So glad I left them when they started raising fee's years ago....I could see the forest for the trees!

*southie* · Joined: 25 Aug 2005 Posts: 1728 Location: Sunny Florida

Not all States applies, Florida doesn't comply; like our Governor has said "It is not the law of the land ...." (Why he keeps repeating that quote, I don't know) yet he is correct in a lot of ways because in FL, there are many who have garage - yard sales; but it is not illegal for them to have them, depending on what their County or City Ordinance is.

Now as for the IRS - there is a threshold limitations, for one must exceed the criteria of this XXXX sum of money in order to meet the criteria; to pay taxes monthly, bi-monthly, or quarterly.

You would want to consult with the IRS first, because eBay cannot override the Federal Government, because like our Governor would say, they are not the law of the land. Or go to www.irs.gov and look it up yourself pertaining to commerce laws, self-employed laws, and those who are free-lance (garage sales - yard sales). You will then see the difference there.

Not stirring the pot there, but if someone is working at home is only grossing an income of $350 a month who only has an annual income of $11,500 a year, it only supplements to their income which is way below the US Federal Government's Guidelines for $27,540.00 for 2 I think it is for 2012 for the couple and to demand and force them to go out like that is going a tad-bit too far. Why did I bring that sum down for? With so many people on pensions, much of such Corporations and Companies have shut down years ago or recently shut down, they have nothing left;
so eBay is pretty much eating off of the poor.

Talking about the Sheriff of Nottingham (Robing Hood)... some just do not have any noggings in their heads to begin with, taking away the very livelyhood of those who are dependent upon it yet the taxman tells them they owe nothing ... they do everything every year trying to scrimmage and scrape with hopes they would be able to collect a surprise, an IRS Refund, but it's the same old, same old ... they don't qualify; back to eBay we go...

So NOW where are they supposed to go?

I suppose someone better start learning how to write a cookbook in a hurry, 100,001 ways of how to cook and eat grass ... because you are going to have millions of Americans out there who are going to have to learn to like it.

SAD!

Bloomingsales · Joined: 18 Feb 2009 Posts: 26

Southie ~ your governor sounds like an old western town Sheriff ~ "not the law of the land" LOL

If memory serves me correctly, eBay is a California based company originally out of San Jose....need I say more??!!

Californians also can sell at garage/yard sales, swap meets, and what about organizations who have sales, like Churches? Those individuals/organizations don't have to have a Federal ID number! Hey, there's an idea, tell eBay your a Church and therefore do not have to pay taxes, YOUR Exempt!! Or, pull the Politican card....Politican's have their own rules to govern them, unlike the ones impossed on the rest of us American's! Then we could get into being an illegal and and all sorts of other sects to elimate the problem! LOL

eBay is in a world of their own and there are so many verbs to describe their mishaps, yet why waste one's breathe? They are cutting their own throats, plain and simple!

I too can appreciate "hard times" with the economy impacting millions of American's. And adding to those out of work, (there are appx 349 billion people in America) did you know that almost 37% are on Social Security, all the baby boomers hit that mark w/in the past 10 years! Yet eBay could care less, they are a business.....baby boomers were the "material buyers generation" and now liquidating/downsizing and don't buy....so it just maybe that eBay will go under due to lack of sales plus lack of seller's due to eBay crazy tactics. In November eBays sales were down 34%! My best to you and yours this holiday season.

eBichin · Joined: 23 Feb 2008 Posts: 589

Real simple -

This year it is the $20K mark - they set it arbitrarily that high as a new law to 'miss' many of the sellers and allow it to become a regulation without much whiplash (not that ebay/online sellers could do anything about it anyway)

Soon it will be lowered to $10K, then $5k, then something low like $300 and no one will be immune.

By then $20K will be your 6 month fuel costs in your car and the US Dollar will be worth like $0.39-41 cents and you will be tripple screwed....

Basically, sell your used car on ebay that you paid taxes on when you bought it, paid taxes on to own it the whole while you had it, paid taxes on to fuel it and license it then pay taxes on it to SELL it on ebay....

Should only be about 42% tax rate by the time it is all parsed out....unless there is another healthcare type tax levied somewhere in there....

Don't forget the new bank fees and of course, the paypal and ebay fees - oh wait - they might be deductible if you make enough for it to make sense to itemize... but then you may be an audit risk, and the I******RS is incredibly hungry these days from what I hear....

johbuckner · Joined: 11 Jan 2012 Posts: 1

No one likes to pay taxes and many people are not contributing the full amount that the rest of us are. Tax season is upon us, like a plague of locusts and rats, both of which are irritated. However, not everyone is paying their fair share. The Internal Revenue Service estimates that in 2006, the most recent year for which data is accessible, working class individuals underpaid by about $450 billion. Source of article: Tax underpayment at $450 billion, says IRS.