PayPal Alert

[mickey]

Saw in the news this morning that as of 2022
PayPal has to report all transactions of $600 or more to the IRS.
Forewarned is forearmed.

[mozz]

In my email I read it as total of 600 or more. I'm taking that means within the year. Just sold 1 fuzz pedal so I'm started. So I have to wait for all these forms before I file my taxes?

[mickey]

Likely either/or as in a single transaction of $600 gets reported or if you do $600 in a tax year?
Either way, PayPal will have to mail you a 1099 in time for you to file.

[uwmcscott]

This is not specific to paypal, it is a an IRS regulation that all online payment processors ( including venmo, paypal, cashapp, others ) will have to comply with. It is affecting auction sites like Reverb too

[mickey]

Yep, but the only one we usually talk about here is PayPal.

[honyock]

I made a thread about this back in the summer (sorry spring. AKA start of summer in AZ). They snuck this into the whole COVID relief package. I will probably be out of the selling guitars outside of in-person transactions.

https://r.tapatalk.com/shareLink/topic? ... source=app

Sent from my SM-G998U using Tapatalk

[LancerTheGreat]

If it's for an item you're selling for less than you paid for it, it doesn't apply.
Also doesn't apply to gifts or repayments, some of the services let you mark them as "personal" or "goods and services". Goods and services are reported, like they already should've been it's just that now they (the payment handling companies) have to report to the irs instead of just trusting people to do it because they're supposed to, and from what I understood it's any single transaction for $600+ from goods & services, or $600+ monthly cumulative from goods & services.

Still sucks, but not as much as it seems, just the taxman trying to catch up with the times and [s]extort everything they can[/s] get what taxes they're owed but missed out on from being stuck in the post-Pinkerton era.

Edit: I guess strikethrough text doesn't work? Or is it different now?

[Raindog]

If it's for an item you're selling for less than you paid for it, it doesn't apply.

Careful how you say that. You are correct. However, Paypal won't be making that distinction. You sell something for $800 and, even if you lost $1000 on the sale, you are still going to get a 1099-k. It's up to you to show that you lost money to the IRS. Basically, the $20,000 limit was lowered to $600 and the 200 sales stipulation was completely dropped.

https://www.atr.org/treasury-confirms-b ... -twice?amp

Treasury Confirms: Biden Plans to Hire 87,000 New IRS Agents, Enough to Fill Nats Park Twice

With 86,852 IRS agents, you could fill Nationals Park twice
86,852 IRS agents is more than the population of Biden’s hometown of Wilmington, Delaware which has a population of 70,644.
86,852 IRS agents could fill 1.74 Roman Coliseums.
With 86,852 IRS agents, you could fill the stadiums of Real Salt Lake, Houston Dynamo FC, Los Angeles FC and FC Dallas.
86,852 IRS agents would be more than the entire personnel on all 11 U.S. aircraft carriers.

[Buddha Pickups]

As previously stated, this was snuck into the last covid relief bill but prior to this, about 10 states had already adopted this change. I believe I posted this change the last time it came up after that last covid bill.
It unfortunately isn't hard to put 2 and 2 together on what states did this prior, and who wrote the bill this was included in but they always claim they're going after the "big guys" right? Sorry, hard to hide my bitterness.

Now anyone selling over $600 for the year will receive a 1099 from PayPal or reverb or eBay etc. Your tax rate will be 15% plus your income tax rate, and both will apply to anything that can't be written off or considered profit. It's ridiculous that anyone selling over $600 in a year has to pay a small business tax. It is up to you fill out a schedule C with your 1099 to try and justify anything you think you can write off.

If the government really has hired 80k new IRS agents, don't be surprised if this change becomes retroactive and they look back 3 years to see if you paid taxes like you were supposed to prior to them sending 1099s with this new change. You're technically supposed to claim any income every year and pay taxes on it anyway, including Craigslist and garage sales...I'm sure everyone did

[Chocol8]

Everyone is going to pay for this. There is the cost to comply for the companies that will show up in higher fees as they pass it on to consumers. There is the cost for the tax filer including trying to justify the expenses that offset the sale prices, and either higher levels of tax software or professional assistance. There is the cost to tax payers of hiring all the IRS agents that add nothing to GDP so they can review this crap and audit people they don’t like. There will be the costs to people who are audited and to tax payers to cover all the fights over whether $700 from selling a guitar you paid $800 for is a $700 gain or a $100 loss.

This won’t benefit anyone, except for the politicians who want their hands in absolutely every part of your life. It’s not about raising revenue (it won’t) it’s about collecting more data about everyone and their money so they can use it against you in the future. Elections have consequences.

[Buddha Pickups]

Everyone is going to pay for this. There is the cost to comply for the companies that will show up in higher fees as they pass it on to consumers. There is the cost for the tax filer including trying to justify the expenses that offset the sale prices, and either higher levels of tax software or professional assistance. There is the cost to tax payers of hiring all the IRS agents that add nothing to GDP so they can review this crap and audit people they don’t like. There will be the costs to people who are audited and to tax payers to cover all the fights over whether $700 from selling a guitar you paid $800 for is a $700 gain or a $100 loss.

This won’t benefit anyone, except for the politicians who want their hands in absolutely every part of your life. It’s not about raising revenue (it won’t) it’s about collecting more data about everyone and their money so they can use it against you in the future. Elections have consequences.

And this is also exactly why they were proposing a few months ago to look at every $600 payment/transaction because if it was $600 coming IN to your account, you can bet your ass they were gonna make sure you paid taxes on it.
Consequences indeed.
This is surely aiming for that top 2% Bernie is always talking about right? Lol

[Raindog]

It has other affects as well. For years, people barely surviving on SDI (Disability Social Security) benefits have been able to improve their lives by selling an heirloom or trinkets or whatever on ebay. They enjoyed a certain anonymity due to making less than 200 sales and/or less than $20000 a year. I'm not talking about professional disability scammers but people that, for one disability or another, can no longer perform steady work. Now, those folks will either be identified or they will have to cease and desist. Many have no problem paying 15% taxes but can't afford to be identified as selling anything. True, Social Security allows making a few dollars a month but they subtract those dollars from your payout and you possibly jeopardize future pay. It's a messed up situation.

[golem]

In an explanatory document on the new tax changes, the IRS said these changes also apply to people who sell items on internet auction sites like eBay and people who "have a holiday craft business" so long as they accept credit card payments through these apps.

PayPal said both "PayPal and Venmo offer a way for customers to tag their peer-to-peer (P2P) transactions as either personal/friends and family or goods and services by choosing the appropriate category for each transaction."

https://www.nbcnews.com/news/venmo-payp ... -rcna11260

I'm pretty sure we were always supposed to be paying taxes if we had a side hustle that makes money. Just because we could get away with it easier doesn't mean that it wasn't something we were supposed to be doing. I know I made a bit this year, but I didn't keep any records of what I paid, and I often paid cash locally to people I know and sold mostly on Reverb. I guess I'm saying, it's probably up for me to self report how much I made on these transactions and in some cases it'll be left to my recollection of what I paid vs sold. If I lost money, it's just the paperwork that I'll be responsible for.

[OMB]

Would like to avoid the "political side" of this argument if possible but if you bought a guitar for $1,000 and put $200 into it, then sold it for $800 why would you owe taxes?

[MichaelR]

I believe it also applies to zelle which I have used to send cash to relatives in need once in while.

[mickey]

Would like to avoid the "political side" of this argument if possible but if you bought a guitar for $1,000 and put $200 into it, then sold it for $800 why would you owe taxes?

Just my guess, but I think you'd better be prepared to provide a paperwork trail to show the taxman if one of these money transfer firms 1099's you on any part of it.

[andrewsrea]

That is very weird. The IRS hasn't changed its reporting requirements from the $10K and greater, per single transaction reporting.

The idea of lowering the limit to $600 has been kicked in and out of pending federal bills, but it isn't very certain that it will become a legal requirement.

If it is effective immediately, then it is voluntary reporting on Paypal's part. I have no idea why they would bear that expense or risk privacy lash-back.

My advice - keep your receipts. If you are like me, your gear losses balance your expenditures in a way that you are not profiting. Ot at least they offset in a way that profit does is below taxable threshold.

[Raindog]

The idea of lowering the limit to $600 has been kicked in and out of pending federal bills, but it isn't very certain that it will become a legal requirement.

If it is effective immediately, then it is voluntary reporting on Paypal's part. I have no idea why they would bear that expense or risk privacy lash-back.

Sorry to contradict but they passed this law 10 months ago, in the stimulus bill. You are thinking about the bill that directs the IRS to collect additional data on every bank account that sees more than $600 in annual transactions. This is different.


https://runningwithmiles.boardingarea.c ... je0lKDytBs

SEC. 9674. MODIFICATION OF EXCEPTIONS FOR REPORTING OF THIRD PARTY NETWORK TRANSACTIONS.
(a) In General.—Section 6050W(e) of the Internal Revenue Code of 1986 is amended to read as follows:

“(e) De Minimis Exception For Third Party Settlement Organizations.—A third party settlement organization shall not be required to report any information under subsection (a) with respect to third party network transactions of any participating payee if the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions does not exceed $600.”.

(b) Clarification That Reporting Is Not Required On Transactions Which Are Not For Goods Or Services.—Section 6050W(c)(3) of such Code is amended by inserting “described in subsection (d)(3)(A)(iii)” after “any transaction”.

(c) Effective Date.—

(1) IN GENERAL.—The amendment made by subsection (a) shall apply to returns for calendar years beginning after December 31, 2021.

(2) CLARIFICATION.—The amendment made by subsection (b) shall apply to transactions after the date of the enactment of this Act.

[Buddha Pickups]

That is very weird. The IRS hasn't changed its reporting requirements from the $10K and greater, per single transaction reporting.

The idea of lowering the limit to $600 has been kicked in and out of pending federal bills, but it isn't very certain that it will become a legal requirement.

If it is effective immediately, then it is voluntary reporting on Paypal's part. I have no idea why they would bear that expense or risk privacy lash-back.

My advice - keep your receipts. If you are like me, your gear losses balance your expenditures in a way that you are not profiting. Ot at least they offset in a way that profit does is below taxable threshold.

$600 is active already in about 10 states, mine being one of them. I thought federally it wasn't going to take effect til 2023 but maybe it's 2022. It was added in as part of the last stimulus bill to make the change for every state.

[andrewsrea]

The idea of lowering the limit to $600 has been kicked in and out of pending federal bills, but it isn't very certain that it will become a legal requirement.

If it is effective immediately, then it is voluntary reporting on Paypal's part. I have no idea why they would bear that expense or risk privacy lash-back.

Sorry to contradict but they passed this law 10 months ago, in the stimulus bill. You are thinking about the bill that directs the IRS to collect additional data on every bank account that sees more than $600 in annual transactions. This is different.


https://runningwithmiles.boardingarea.c ... je0lKDytBs

SEC. 9674. MODIFICATION OF EXCEPTIONS FOR REPORTING OF THIRD PARTY NETWORK TRANSACTIONS.
(a) In General.—Section 6050W(e) of the Internal Revenue Code of 1986 is amended to read as follows:

“(e) De Minimis Exception For Third Party Settlement Organizations.—A third party settlement organization shall not be required to report any information under subsection (a) with respect to third party network transactions of any participating payee if the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions does not exceed $600.”.

(b) Clarification That Reporting Is Not Required On Transactions Which Are Not For Goods Or Services.—Section 6050W(c)(3) of such Code is amended by inserting “described in subsection (d)(3)(A)(iii)” after “any transaction”.

(c) Effective Date.—

(1) IN GENERAL.—The amendment made by subsection (a) shall apply to returns for calendar years beginning after December 31, 2021.

(2) CLARIFICATION.—The amendment made by subsection (b) shall apply to transactions after the date of the enactment of this Act.

Totally missed that in that legislation. So, they give you $1,200 and take it back from you in perpetuity. Great.

[solteroblues]

The idea of lowering the limit to $600 has been kicked in and out of pending federal bills, but it isn't very certain that it will become a legal requirement.

If it is effective immediately, then it is voluntary reporting on Paypal's part. I have no idea why they would bear that expense or risk privacy lash-back.

Sorry to contradict but they passed this law 10 months ago, in the stimulus bill. You are thinking about the bill that directs the IRS to collect additional data on every bank account that sees more than $600 in annual transactions. This is different.


https://runningwithmiles.boardingarea.c ... je0lKDytBs

SEC. 9674. MODIFICATION OF EXCEPTIONS FOR REPORTING OF THIRD PARTY NETWORK TRANSACTIONS.
(a) In General.—Section 6050W(e) of the Internal Revenue Code of 1986 is amended to read as follows:

“(e) De Minimis Exception For Third Party Settlement Organizations.—A third party settlement organization shall not be required to report any information under subsection (a) with respect to third party network transactions of any participating payee if the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions does not exceed $600.”.

(b) Clarification That Reporting Is Not Required On Transactions Which Are Not For Goods Or Services.—Section 6050W(c)(3) of such Code is amended by inserting “described in subsection (d)(3)(A)(iii)” after “any transaction”.

(c) Effective Date.—

(1) IN GENERAL.—The amendment made by subsection (a) shall apply to returns for calendar years beginning after December 31, 2021.

(2) CLARIFICATION.—The amendment made by subsection (b) shall apply to transactions after the date of the enactment of this Act.

Totally missed that in that legislation. So, they give you $1,200 and take it back from you in perpetuity. Great.

you didn't think that was "free" money, did you? LOL

[Sinster]

It unfortunately isn't hard to put 2 and 2 together on what states did this prior, and who wrote the bill this was included in but they always claim they're going after the "big guys" right? Sorry, hard to hide my bitterness.

Unfortunately both side aisle only really represent themselves. They might "pretend" to be fighting for their constituents, but in the end they are in bed together and lining their pockets.



Everything you need is at congress.gov . A lot of these places who report like to word f*** stuff so I usually go to the source. I visit congress.gov almost daily to see how much the working class are getting f***ed.

[EDITED BY ADMIN. WATCH YOUR LANGUAGE IN THE FUTURE!]

https://www.congress.gov/bill/117th-con ... 7D&s=3&r=1

Then we have this proposed bill.
https://www.congress.gov/bill/117th-con ... 7D&s=4&r=1

[Flatline]

I guess in-person cash-only interactions it is then. I have no desire to deal with the paperwork headache for a few thousand dollars of buying and selling gear.

[yesca]

I move to abolish this three letter agency. They have run game on us for far too long. Time is up for them.

[andrewsrea]

you didn't think that was "free" money, did you? LOL

Fortunately, or unfortunately, I did not qualify for that round of stimulus. So, I really did not pay attention to the details.