PayPal question

[sll]

Al, not trying to start a pissing match so if this gets out of hand feel free to delete it, but I have to ask others here if the same thing has happened to them recently. Two weeks ago I sold a couple fishing reels to a guy I had listed and he sent payment through Paypal G&S. That is the form of payment I have always accepted and glad to do it as it covers the buyer. I have never had an issue with paying their fee to use their service.....it has always been quick and easy. This time I got a notice from PP that they had put a hold on my funds until I can provide them a Tax ID to send a 1099 form to at the end of the year with me being responsible for 24% in taxes if you read the fine print. There is no way that I am doing that so I refunded the guy's money through PP back to him and he sent me a check to cover it instead as he said he wouldn't do that either. About 10-12 days later I get a notice from PP that my "hold" had been lifted after the fact of me refunding his money.

Has anyone else had this happen to them recently as it was a first for me and I use PP every couple of weeks or so?

[CatFan]

You are fighting a losing battle. The 1099 is required by the IRS, and PayPal is the one required to provide it, so they aren’t going to defy the IRS by letting people do business without being able to issue a 1099.

Your tax liability is determined on your return. Unless you made a profit on the reels, you won’t owe anything.

[sll]

Yea, I get that. It was part of the IRS hiring an additional 79,000 agents to help track it 2 years ago. But, last I heard the law had been deferred and you still had to have over $20K in transactions. I haven't had $500 this year so I couldn't figure out why they were now putting a hold on the account.

[pavi69]

Yea, I get that. It was part of the IRS hiring an additional 79,000 agents to help track it 2 years ago. But, last I heard the law had been deferred and you still had to have over $20K in transactions. I haven't had $500 this year so I couldn't figure out why they were now putting a hold on the account.

They are not going to wait until you get to $20k to ask for your ss#

[chwebmaker]

As long as you aren't running a business and your sales are considered personal sales, you don't have to pay taxes on your 1099 from paypal or venmo or any of the other payment processors. If it makes you feel better you can track your profit and loss from sales, which is what i do every year. Paypal will provide you with all of your G&S sales which all have notes on them. In almost all cases I've taken a loss on whatever it is I sold. If you get a 1099 from Paypal for $8,000 and it cost you $11,000 for the items you sold, then you owe nothing. It's really not that complicated.

[Okie74133]

Reminds me of when they started cracking down on untaxed Internet purchases a few years ago. Local brick and mortars were up in arms about that because the same items they sold and collected taxes on could be bought tax free online. The problem with the way it was handled here in Oklahoma was that reporting Internet purchases was just an honor system, no documentation was required. I know that as of the last 3-4 years everything we buy from eBay or Amazon is taxed at the time of purchase.

[sll]

That’s right…. The BUYER pays the taxes, not the seller. That is normal.

[wiget10]

The seller pays taxes on profit. Most sites PayPal, eBay, Ticketmaster, StubHub, etc are all low requiring your social to meet the irs requirements.

[Cestratton]

Reminds me of when they started cracking down on untaxed Internet purchases a few years ago. Local brick and mortars were up in arms about that because the same items they sold and collected taxes on could be bought tax free online. The problem with the way it was handled here in Oklahoma was that reporting Internet purchases was just an honor system, no documentation was required. I know that as of the last 3-4 years everything we buy from eBay or Amazon is taxed at the time of purchase.

Look up the Wayfair vs South Dakota Supreme Court case, that's why online retailers are required to collect and remit sales tax to other States where they don't have a physical presence. Each State has a different criteria, for example in Arkansas if a seller has 100k transactions or $200k in sales (whichever comes first) they are required to register here to collect and remit sales tax. As far as the "honor system" in reporting your untaxed online purchases to pay sales tax in your State that's been a thing for a long time but nobody knows about it, it's called Use Tax.

[zelmo]

The IRS changed the 1099-k threshold to $600 for the 2022 tax year. They moved it to 2023 and then on 11/21/23 moved it again. All the TPSOs had to put systems in place to deal with it which is why you got the notification.

Note that they are now saying 2024 is going to be a transition year with the threshold set at $5000. https://www.irs.gov/newsroom/irs-ann...implementation