eBay opposes new tax laws (old news)

[+OLD CS1]

I missed this in my eBay messages, so I assume others did, as well.  This was sent to me on May 10.

 

Quote

You may have heard about a new

tax law that went into effect this year. We believe this new regulation just doesn’t make sense. It creates confusing and unnecessary paperwork for millions of casual sellers on eBay, who will now receive tax forms even when they don’t owe taxes.

 

To help support our sellers, we’ve been working to put pressure on Congress by bringing our community together to make their voices heard. We need sellers like you to speak out today and tell Congress to act in the interest of sellers across the US.

Here’s what’s happening

 Companies like eBay are required to report sales to the IRS using a tax form called a 1099-K. Until recently, you would only get a 1099-K if you sold over $20,000, or more than 200 items. Starting this year, new legislation has lowered that threshold to just $600, even if that was from a single sale all year. Where it gets complicated is you’ll get this form even if you don’t owe anything, because not all sales are taxable–for example, if you sell something for less than you paid for it. That means millions of sellers will now get unnecessary tax forms, creating confusion and pointless paperwork–both for the IRS, and for small-time sellers who aren’t set up to deal with it.

Imagine selling an old bike for $800 that cost you $1,500 a few years ago. Since you didn’t make a profit, the IRS doesn’t consider that taxable income. But under this new law, you’re still going to get a 1099-K. And now you’ll have to prove to the IRS that you don’t actually owe any taxes on that sale, which makes for complicated accounting work.

 Here’s what you can do

We’re asking our community to take action today. Recently, new legislation was introduced in Congress to raise the threshold and limit the number of sellers getting these unnecessary forms. But we need your support to make sure it will pass!

Go to our eBay Main Street website and tell Congress to act now to support Americans selling online. It will only take a few minutes, and if we succeed, it can save you, and millions of other sellers the hassle of needless tax forms for years to come.

Speak Out Today!

We’re committed to making sure all our sellers are set up for success, and will continue to keep you updated. Look for emails and alerts from us that will help explain what’s changed, and what you may need to do next. In the meantime, you can learn more in our FAQ about Form 1099-K and how it affects you.

Thanks for being part of the eBay community.

[kennybrooks]

Going to be a lot of surprised scalpers come January next year.  There will be an immediate drop in sellers on ebay, mercari, etsy, etc because the change from $20000 and 200 transactions is a huge deal. 

[Keatah]

Ebay asking for its users' help in trying to overturn a set of laws that makes it harder for them(ebay) to make a profit? Fuck that! Bring it on babycakes!

 

The old ball'n'chain is big on selling ALL our old stuff on ebay and I've been trying to put a stop to that because of time consumption. So maybe this new state of affairs will help?!

 

Then we can go back to selling stuff the old fashioned way, put everything out for a garage sale. And what doesn't sell, push it 5 more meters to the curb. Problem solved!

Edited June 9, 2022 by Keatah

[+OLD CS1]

2 hours ago, Keatah said:

Ebay asking for its users' help in trying to overturn a set of laws that makes it harder for them(ebay) to make a profit? Fuck that! Bring it on babycakes!

In this case, politics makes strange bedfellows.  This is not just an attack on eBay and other sales outlets, but on individuals.  This means that WE have to file taxes on supposed profits from sales.  Unless I can prove my 32" CRT TV which I sold for $50 actually lost me $50 since I bought it for $100, the IRS says I made a $50 profit on the sale.  As well, I now have to file a tax form for $600 in sales per year.

 

2 hours ago, Keatah said:

Then we can go back to selling stuff the old fashioned way, put everything out for a garage sale. And what doesn't sell, push it 5 more meters to the curb. Problem solved!

Technically, profits from any sales are taxable.  This article is from 2012, but so far as I can see, things are only getting worse.

 

Then, of course, the problem with garage sales is the lack of reach.  Very few people in my area will want to buy what I have, and I am less likely to reach them with my sales by traditional means.  This is where Craigslist, eBay, Facebook Marketplace, &c. stand up.

 

Remember, this is not just limited to eBay.  This also affects payment services, e.g. PayPal, Zelle, CashApp, &c.  I stopped accepting credit cards for my business because of the IRS filing requirements imposed on payment processors about a decade ago (plus that PCI is a joke,) and now that is coming to PayPal et. al.

[krslam]

Anything that hurts ebay is OK by me. I won't miss them a bit when they're gone.

[Turbo-Torch]

I wonder how an audit would go on this bullshit.  Do they expect people to keep receipts on everything they've ever bought?

 

Quote

Now, just as a one-time thing, if you had an antique lawn mower your great-uncle gave you and you sold it for $100 on eBay, that’s a $100 capital gain and it is reportable taxable income.

 

I guarantee I'll have a receipt showing I paid at least $100 for that mower...got it from some guy at a swap meet.

 

They could figure it out on a vehicle since you pay the tax when you register it, but what about inflation?

I have a motorcycle that sold new for $5,000 in 1983. That model often brings north of $20,000 today.

Do they consider it a $15K profit, or only $5K when you factor in 40 years of inflation?  And then the extra kick in the head, the new owner will be paying taxes on $20K.

 

[Turbo-Torch]

23 hours ago, krslam said:

Anything that hurts ebay is OK by me. I won't miss them a bit when they're gone.

 

Why is that?

As mainly a buyer, I think eBay is one of the best things to ever exist.  It's like a magic box that can give me whatever I want.

 

I had a lightening strike 2 weeks ago that took out a 40 year old cordless phone that I've had since I was a kid.

It needed a Toshiba IC that is absolute unobtainium and yet I managed to find someone on eBay selling them.  Had to buy a 5 pack, but it was only $10 delivered.  They were in the mailbox when I got home today, and as of an hour ago that phone it up and working again.

LNB on my FTA satellite dish also got fried, $10 bucks and it's back in business.   

 

I've sold very few items, but what I have sold went for far more than what I would have got locally.

 

[sirlynxalot]

I sold dozens of game items on ebay over the years. I wasn't a power seller or anything, but it was very helpful to periodically liquidate stuff I didn't want to keep anymore and recycle that money into something new to experience.  Ebay started sending out these tax docs to me and I guess a portion of other sellers about two years ago.  It basically made me stop selling entirely.  I'm probably not the only one.

 

I can try to sell things here or at yard sales or FB marketplace, but ebay was a huge convenience. I didn't have to deal with people who would message and then ghost me, or try to scam me, I didn't have to give potentially sketchy people my address or try to set up a meeting in a public place that they don't show up to, and I could get rid of items within a very short period of time if I wanted to since ebay has the national/international audience.

 

When I mainly need to use ebay to find whatever esoteric game stuff I want to buy, that means I need to pay the inflated ebay prices - so being able to sell my own stuff for inflated ebay prices made it easier to deal with that scenario.  I definitely support rolling things back to however they were. This is a huge headache and time sink in terms of the accounting and recordkeeping for small time sellers like me who just treat ebay as a casual periodic garage sale. There is no extensive income being made here, its just a crummy burden to keep records on all the junk I buy in case I sell it a few years from now in order to prove that.

 

Edited June 11, 2022 by sirlynxalot

[taxman]

4 hours ago, Turbo-Torch said:

I wonder how an audit would go on this bullshit.  Do they expect people to keep receipts on everything they've ever bought?

 

 

I guarantee I'll have a receipt showing I paid at least $100 for that mower...got it from some guy at a swap meet.

 

They could figure it out on a vehicle since you pay the tax when you register it, but what about inflation?

I have a motorcycle that sold new for $5,000 in 1983. That model often brings north of $20,000 today.

Do they consider it a $15K profit, or only $5K when you factor in 40 years of inflation?  And then the extra kick in the head, the new owner will be paying taxes on $20K.

 

Only in the event of an audit, will it ever become an issue, otherwise, the IRS will just take your word for it. Good idea on the "receipt" to justify no gain on that mower.

 

As for the gains, IRS doesn't care about inflation. That would be considered 15K in profit. However, since you're not operating as a business, you can count it as Capital Gains on Schedule D. This should fare better than Schedule C Profit/Loss from business. Long term Capital Gains tax rate can be as low as 0% depending on your income level. Plus you don't have to pay any Self Employment Tax.

[Tanooki]

I saw when they did that and filled it out, they do mail it off to the right house and senate members of your state.  In KY the house guy didn't say anything nor did mitch the bitch, but Dr Paul did a custom auto/modified by hand note they put out and left contact info if you wanted to direct discuss it or other things which was I guess kind of nice.  I had written them once before about this concern last year and I did get a few conversations back so at least they in his office seem to care a little bit I guess as it could have easily been ignored.

 

Yes ebay should be punished, hard, problem is it's harming far more people in the process that don't deserve it.  I bailed on the site last November to play it safe over the change.  I had been offloading some stuff locally to a good amount to collectors/gamers cash only through facebook, some stuff i ate it at 10-20% at half price that bugged me a little...more now, now that I found a collectibles place in town that'll pay 50-60% on stuff.  Keep that percent in your mind and read on.

 

I did the math on a theoretical ebay sale and wow...it's bad.  Imagine you had a $100 SHIPPED item, and ebay gets you with their FVF.  The FVF = sales item final bid, your shipping charges, and the taxes...they hit it all at 15% they don't break it up which is slimy.  Now let's pretend further you already made your $600/yr so now you're into self employment tax around 15-20%.   SO here's the fuzzy math.

$100 item = FVF of 15% so you're down already -15 to $85, and I told you my item is $10 to ship, so now it's at $75.

1099k narcs you out to the gov't at 15-20% right?  That's on the ORIGINAL full value of $100.  So that's $15-20 too on top of ebay.  Ebay already lowered your $100 shipped down to $75, and the 1099k eats what it does... $100-$25(ebay+shipping) -$15 and now you're at $60 and if you were at 20% now you're at $55/100 you "got paid".  You're losing about 1/2.  Why is it even worth it anymore at that rate?  It's not.  And I didn't even factor in the added charges for your packaging materials (tape, packing paper/bubbles, tape, printer ink and paper/labels) and then the repeated trips to the post office too so you are down by 1/2 easiy.

 

I'm taking my shit in mass to the collectibles shop for now on.  No arguing with lowballers and no show flakes on facebook.  No getting fucked by the IRS+ebay with the 1-2 punch either.  I'd rather get cash and not pay an accountant on old goods I have no receipts for as I'll end up with the same in cash anyway in a matter of minutes.

[+OLD CS1]

4 hours ago, Turbo-Torch said:

I wonder how an audit would go on this bullshit.  Do they expect people to keep receipts on everything they've ever bought?

Yes, they do.  I have known people who have been audited.  The seven-year rule is a guideline for most things.  If you have a car that is nine years-old and you are audited, you better have paperwork on the car.  And so on.

 

3 hours ago, sirlynxalot said:

Ebay started sending out these tax docs to me and I guess a portion of other sellers about two years ago.  It basically made me stop selling entirely.  I'm probably not the only one.

Not very good policy when we are concerned about the environment, huh?  I stopped selling when PayPal was no longer an option for accepting payment.  eBay payment terms are simply unacceptable.

 

26 minutes ago, taxman said:

Plus you don't have to pay any Self Employment Tax.

Federally. But several states every so often try to pull this bull hockey saying that if you make more than x-hundred dollars then you are a business for state tax purposes.

[Samuel]

I crossed that margin and will have to deal with the paperwork next year. It will be a hassle for sure. Thought of taking stuff to the second hand stores, but it was insulting when the offers are really low. I took in a huge box of games, movies, and books and the offer was under $20 store credit for the entire haul... cash was about half that. It's almost like they intentionally take forever to process them so you'll be tired of wandering around the store for a couple hours and just take the offer once it's ready since you've waited so long for it.

Edited June 11, 2022 by Samuel

[+GoldLeader]

Still not sure how they do this.  I wouldn't know what I paid for stuff,...There's no way.   I don't understand what their cost basis is,  and if you tell them you paid $30 for a game let's say 20 years ago, how would anyone know otherwise?

[sirlynxalot]

6 hours ago, GoldLeader said:

Still not sure how they do this.  I wouldn't know what I paid for stuff,...There's no way.   I don't understand what their cost basis is,  and if you tell them you paid $30 for a game let's say 20 years ago, how would anyone know otherwise?

My assumption is they would ask for proof like a copy of a receipt or bank account ledger, and if your only proof is your word that you bought the item for 30 bucks 20 years ago, that would not fly or be sufficient for a tax audit. 

Edited June 11, 2022 by sirlynxalot

[krslam]

13 hours ago, Turbo-Torch said:

 

Why is that?

As mainly a buyer, I think eBay is one of the best things to ever exist.  It's like a magic box that can give me whatever I want.

 

I had a lightening strike 2 weeks ago that took out a 40 year old cordless phone that I've had since I was a kid.

It needed a Toshiba IC that is absolute unobtainium and yet I managed to find someone on eBay selling them.  Had to buy a 5 pack, but it was only $10 delivered.  They were in the mailbox when I got home today, and as of an hour ago that phone it up and working again.

LNB on my FTA satellite dish also got fried, $10 bucks and it's back in business.   

 

I've sold very few items, but what I have sold went for far more than what I would have got locally.

 

Well, maybe they do still serve a purpose from a buyer's perspective, but as a seller, fees and risk are both much higher and to my mind, unacceptable. Consider these changes they've made over the years:

- FVF percentages approximately doubled.

- Shipping costs now added to FVF. Combined with above, typical fees are now 2.5 to 3x higher than they were as a percentage of sales price.

- Honest feedback about bad buyers is no longer allowed, meaning sellers can no longer screen out the bad apples. And without the possibility of reciprocity, buyers can use extortionist bad-feedback threats to demand partial refunds from sellers regardless of the legitimacy of the claim.

- Any buyer can claim not-as-described for any reason, and not only get the purchase price refunded, but also the original shipping cost and the shipping return cost (even if what they return isn't the same item as they received). Those costs come straight from the seller's pocket.

- Money is sometimes withheld from the seller for a time to allow for claims, This both denies the seller interest earnings on that money (interest which ebay pockets) and forces them to front the cost of shipping.

- The global shipping program sometimes repacks items into lighter and less-well protected packages, pockets the resulting postage fee reduction, and holds sellers responsible for damages caused by their substandard packaging.

- ebay sides with the buyer in virtually all disputes.

 

I'm glad you were able to find what you wanted at a reasonable price. There are, however, endless posts about how the prices of vintage computer and videogame bits have skyrocketed. While there are several reasons for this, one undeniable fact is that ebay's policies have driven away many a casual seller. This reduced supply, even as demand stays constant or increases, is a major driver in price increases, so yes, ebay's policies are hurting buyers, too, just in ways that are less obvious.

[Keatah]

And don’t forget to save and photograph any receipts for present-day purchases you may sell later.

 

The shit thermal paper in use today is prone to fading.

[+OLD CS1]

10 minutes ago, Keatah said:

And don’t forget to save and photograph any receipts for present-day purchases you may sell later.

 

The shit thermal paper in use today is prone to fading.

This.  Not just for the IRS, but for warranty.  Companies which have denied warranty replacements and the like because you did not keep the original receipt have been ruled against in a number of cases, where the court determined that a copy of the original receipt qualifies.

[Keatah]

8 hours ago, krslam said:

- Shipping costs now added to FVF. Combined with above, typical fees are now 2.5 to 3x higher than they were as a percentage of sales price.

That has to be like that because.. Consider how ebay would lose their rightful FVF if you sell a $50.00 item for $1.00, and charge $49.00 for shipping & handling. Especially when postage might be just $5.00.

 

Ebay would only collect FVF on the $1.00 and not the $49 (of which you pocketed $44).

 

 

[delmero]

1 hour ago, Keatah said:

That has to be like that because.. Consider how ebay would lose their rightful FVF if you sell a $50.00 item for $1.00, and charge $49.00 for shipping & handling. Especially when postage might be just $5.00.

 

Ebay would only collect FVF on the $1.00 and not the $49 (of which you pocketed $44).

 

 

Good evening:

I've seen this on eBay, a ridiculous low price for an item with a ridiculous high shipping fee for said item?

[Tanooki]

2 hours ago, Keatah said:

That has to be like that because.. Consider how ebay would lose their rightful FVF if you sell a $50.00 item for $1.00, and charge $49.00 for shipping & handling. Especially when postage might be just $5.00.

 

Ebay would only collect FVF on the $1.00 and not the $49 (of which you pocketed $44).

 

 

Yeah that's why they did it in the first place.  The thing is, it was the wrong thing to do in the first place.  They have records of everything going back to the 90s on every account, every thing moved.  They could have very easily implemented a system to just FVF anyone suspected of doing it, and if you can't prove you didn't, it stands, if you didn't do it, it's removed.  But hey, that nets them far more scam money on their shit eating fee on shipping and taxes which is ridiculous.  Most people didn't scam for 99 cents with $50 shipping just a few did and we all lost.

[krslam]

They certainly had other options. They could, for example, insist that all shipping labels be bought thru ebay and only charge FVF on amounts above that. Or, better yet, simply prevent sellers from receiving more than item cost + actual shipping. Instead, they hit everybody for the actions of a few. It was just another fee increase disguised as a way to catch the cheaters. A seller shouldn't have to pay more fees because they sell a heavier item, or because the buyer lives further away. Heck, even doing a superior packing job might make an item larger or heavier, resulting in increased postage and thus higher fees.

 

I neglected earlier to mention another reason to dislike ebay: thier cavalier attitude towards counterfeits. Just search for the word "reproduction" in the video game category and you'll get thousands of hits. These are just the fakes that self-identify. They claim thier buyer protection policy prevents folk from unwittingly getting a fake, but it relies on the buyer filing a claim, meaning they cater to those who are OK with buying pirated and stolen intellectual property. That makes ebay, quite likely, the world's largest fence.

[taxman]

Update: They have deferred the requirements for the $600 threshold for payment processors for another year. That doesn't mean that they won't issue a 1099-K, just that they are not required to. Plus there are still some states that have the $600 threshold already.

 

https://www.msn.com/en-us/money/personalfinance/irs-delays-tax-reporting-change-for-1099-k-on-venmo-paypal-business-payments/ar-AA15C1mG

 

[+batari]

6 hours ago, taxman said:

Update: They have deferred the requirements for the $600 threshold for payment processors for another year. That doesn't mean that they won't issue a 1099-K, just that they are not required to. Plus there are still some states that have the $600 threshold already.

 

https://www.msn.com/en-us/money/personalfinance/irs-delays-tax-reporting-change-for-1099-k-on-venmo-paypal-business-payments/ar-AA15C1mG

 

How nice of the IRS to tell us this with only one week left in the year.

 

I hope they rethink the law to something a little more reasonable. $600 is very low and I doubt this will really result in any more revenue than, say, a limit of $5k.

[+OLD CS1]

6 hours ago, batari said:

revenue

You think that is what this is about?

[Tanooki]

Those pricks, seriously, a week out????  I've offloaded a good bit of stuff locally this year because the payout at a shop would equal what I'd lose in those asinine taxes.  Good for anyone who played the gamble on this though.

 

This was all about punishing those who were making money without paying the gov't during the pandemic.  I don't think this ever would have happened, or at least not this soon, otherwise.  They very specifically said they were after gig workers wanting the money from all those personal taxi (lyft, etc) and personal food (grubhub, etc) delivery services.  People were not reporting all the money they were raking in far far more so when they'd be all paranoid hiding in their houses over the viruses, so these drivers were making a shit load of money going up against the 20K ceiling, then they'd shift the payment to another processor to get even more.  The gov't decided petty revenge was best and just played the fuck everyone card, that's how us selling games to each other, ebay peddlers of their old stuff, etc got fucked.  That's really what did it, virus gigs being paid out the nose for a lot more pick ups by people being shut ins or forcefully locked in.