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IRS to Track Online Sellers' Payment Transactions Beginning Next Year
Auctionbytes.com ^ | March 07, 2010 | Barbara Wellman

Posted on 03/14/2010 3:59:46 PM PDT by jsh3180

Internet sellers who don't report their sales will no longer be under the radar. Starting next year, any bank or other payment settlement company that processes credit cards, debit cards, and electronic payments such as PayPal will have to issue information returns telling the IRS what merchants receive. The new returns are Form 1099-K, Merchant Card and Third-Party Payments.

Purpose of Reporting The IRS believes that many online sellers fail to report their transactions. Some don't report because they mistakenly believe that Internet sales are invisible. Others do so because they are trying to evade taxes.

The IRS has found that using information returns, such as W-2 forms for employees, Form 1099-MISC for independent contractors, and Form 1099-INT for bank interest, goes a long way toward improving the reporting of income. IRS computers can match income reported on these information returns with the income reported on tax returns.

Who's Subject to Reporting All merchants who accept payments through credit cards, debit cards, gift cards and PayPal will receive information returns telling them - and the IRS - the gross amount of the merchant card transactions. This will be broken down month by month. While the form uses the word "card," the IRS has made it clear that this is interpreted broadly to include third-party network transactions (i.e., PayPal).

Exception: Very small merchants won't be issued information returns. "Small" for this purpose means annual gross sales on merchant cards of no more than $20,000 or 200 or fewer transactions. In other words, reporting is required only if gross amounts for the year exceed $20,000 and there are more than 200 transactions.

Mechanics As it now stands (proposed regulations have not yet been finalized), gross amounts reported for merchant transactions do not take into account any adjustments for credits, cash equivalents, discount amounts, fees, chargebacks, refunded amounts, or any other amounts. It will be up to sellers to report on their returns the full amounts reported to them and then make adjustments or explanations to account for differences in what is ultimately taxable to them.

For example, a seller who is paid $1,000 by credit card for a particular transaction does not necessarily have $1,000 profit even though $1,000 will be included on Form 1099-K. The $1,000 must be reported so the return will match what's in the IRS computers, but this amount will then be reduced on the merchant's return by the cost of goods sold (what it costs for the inventory sold), merchant account fees, and other costs.

Providing Your Tax ID Number to Processors Merchants will have to provide their federal tax identification numbers to the companies processing their transactions. If they fail to do so, they may become subject to "backup withholding," which means these companies will have to deduct and withhold income tax from reportable payments. Backup withholding won't go into effect until 2012.

Sellers who don't wish to provide their social security number to payment processors can obtain an EIN (Employer ID Number). Note that you can obtain an EIN even if you are a sole proprietorship. See the IRS website for more information.

More information on Form 1099-K You can find more information about Form 1099-K, the new information return that payment settlement entities will use to report the gross amount of merchant card or third-party payments, on this IRS web page (PDF format).


TOPICS: Business/Economy; Front Page News; Government
KEYWORDS: 1099k; form1099k; internet; irs; obama; taxcheatparty; taxes
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1 posted on 03/14/2010 3:59:46 PM PDT by jsh3180
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To: jsh3180

Sell your EBay stock today.


2 posted on 03/14/2010 4:01:20 PM PDT by BipolarBob (Officer I wasn't speeding. It's a Toyota and the accelerator stuck.)
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To: jsh3180
"Others do so because they are trying to evade taxes. "

Maybe they are just trying to avoid them ala Timmy G.

3 posted on 03/14/2010 4:04:59 PM PDT by Paladin2
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To: BipolarBob
Well, eBay was a good idea while it lasted...

It still looks like to me they would focus on food stamp, welfare, and medicare fraud first. That would net them a lot more money, and reduce the National debt as well.

But, democrats being mostly crooks themselves always bleed the little guy before they go after their fellow crooks.

I hope a new President comes in and says, "Stop the Fraud, or Stop the ENTITLEMENT.".

If you've been putting off something you need off eBay, better get it this year.

Also, cancel your Paypal account ASAP...the IRS is looking at it.
4 posted on 03/14/2010 4:06:01 PM PDT by FrankR (Those of us who love AMERICA far outnumber those who love obama - your choice.)
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To: jsh3180

This must be some of Barry’s $green$ jobs we keep hearing about.


5 posted on 03/14/2010 4:08:00 PM PDT by FlingWingFlyer (A proud American-American since 1949.)
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To: FrankR

The IRS should be FORCED to focus on the GRAFT in Congress and the STATE HOUSES.....NOT the American Tax payer and Revenue GENERATOR!


6 posted on 03/14/2010 4:08:41 PM PDT by goodnesswins (Tagline, oh, tagline, whereart thou tagline....)
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To: jsh3180

just another way the Obama administration is trying to kill off business in America.

We need to get rid of the IRS.


7 posted on 03/14/2010 4:08:48 PM PDT by CodeToad
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This sucks.


8 posted on 03/14/2010 4:18:52 PM PDT by Vermont Lt (I do not live in Vermont. I did for four years and that was plenty.)
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To: FrankR

The internet is a wonderful device for laundering money,for getting money into terrorist accounts and shifting it from pocket to pocket

Watching the flow is a step to curtail that flow


9 posted on 03/14/2010 4:19:29 PM PDT by bert (K.E. N.P. +12 . Tax the poor. Taxes will give them a stake in society)
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To: jsh3180

Mark of the Beast. “He might not buy or sell, save he had the mark...”


10 posted on 03/14/2010 4:19:48 PM PDT by Pearls Before Swine
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To: CodeToad

It’s a logical step that next they track everyone’s debit/credit card purchases and track expenses vs. stated income.


11 posted on 03/14/2010 4:20:01 PM PDT by jsh3180
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To: bert
The banks have been able to track the 20-$ bills for a long time, they know who takes them out of which ATM, and then who deposits them -- i.e., where they were spent.

However, unlike debit/credit cards, no one can find out the precise items purchased + precise identity of the purchaser when CA$H is used. I like cash.

12 posted on 03/14/2010 4:27:19 PM PDT by hennie pennie
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To: FrankR

Looks like what little Ebay/Paypal I do is going to be shut down after all. I remember when Ebay was fun and somewhat profitable.


13 posted on 03/14/2010 4:33:07 PM PDT by wally_bert (It's sheer elegance in its simplicity! - The Middleman)
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To: jsh3180

Considering every paypal sale I make is based upon a loss, it’s going to be fun getting cash back. Thanks, taxman, thanks.


14 posted on 03/14/2010 4:38:55 PM PDT by j.argese
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To: jsh3180

From the start the war on drugs has been nothing but a ruse by which to strengthen the tax system at the expense of our liberties. Unwarranted bank account snooping began with the so-called Drug Kingpin Act of 1986.


15 posted on 03/14/2010 4:40:53 PM PDT by SeeSharp
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To: jsh3180

This is why I’ve told my husband to get cash out of the bank to pay everything possible. We don’t use credit cards. I don’t want our privacy invaded in the future.


16 posted on 03/14/2010 4:42:57 PM PDT by cookiedough
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To: FrankR

Democrats use that fraud to buy votes.

Why would they do anything to upset that?


17 posted on 03/14/2010 4:44:48 PM PDT by DakotaRed (What happened to the country I fought for?)
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To: BipolarBob

Sellers will start only taking money orders.


18 posted on 03/14/2010 4:46:53 PM PDT by tiki (True Christians will not deliberately slander or misrepresent others or their beliefs)
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To: jsh3180

This is going to be a huge PITA for us. We have an internet-based business and we always report every dime we make to the IRS.

Now the accounting for it will take even more time.

I already spend too much time doing accounting for the IRS. A flat tax cannot come soon enough for me.


19 posted on 03/14/2010 4:47:14 PM PDT by cookiedough
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To: jsh3180
Everyone is a criminal.

Russians feared the KGB.
Germans feared the Gestapo.
East Germans feared the Stasi.
Americans fear the IRS.


20 posted on 03/14/2010 4:50:19 PM PDT by Bon mots
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To: Vermont Lt

yep sucks big time... as I am Mr Bump

damm sucks, so long money...


21 posted on 03/14/2010 4:52:24 PM PDT by VastRWCon
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To: tiki

eBay mandates use of PayPal now.


22 posted on 03/14/2010 4:54:26 PM PDT by packrat35 (Democrat Healthcare is a 9-11 Attack on the Constitution)
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To: j.argese

Considering every paypal sale I make is based upon a loss, it’s going to be fun getting cash back. Thanks, taxman, thanks.
***************************************************
I concur ,, that used item I sell for $20 whether or not I purchased it new at full retail or at a garage sale for $5 will be reported as a loss with a cost basis of the full retail price. I gave up on eBay when they changed their feedback and PayPal policies... I may have to start selling again.


23 posted on 03/14/2010 4:58:30 PM PDT by Neidermeyer
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To: cookiedough

You’ll get both.

Remember how the lotteries were going to fund schools?


24 posted on 03/14/2010 5:04:57 PM PDT by Leisler (What 'free market', where is it?)
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To: bert

Yeah, right.


25 posted on 03/14/2010 5:05:53 PM PDT by Leisler (What 'free market', where is it?)
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To: jsh3180

If a fundamentalist Libertarian view was taken, it would be preferable if such filings were not required at all.

Yet, at the present time, in the present realities, if they are legally required of all “bricks and mortar” merchants, then yes, they should be required of Internet based merchants and transactions as well.


26 posted on 03/14/2010 5:14:22 PM PDT by Wuli
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To: jsh3180

I have a lot of concern about this. I’m a fulltime ebay and Amaazon seller, and I’ve been reporting my net income every year.

In some ways it will help me because it may drive out a lot of the sellers who’ve been making their money tax-free.

But I worry because the IRS being the IRS, they have a tendency to treat gross income as net income, as if I just sit at a computer all day and people magically send me money for no reason.


27 posted on 03/14/2010 5:17:44 PM PDT by denydenydeny ("I'm sure this goes against everything you've been taught, but right and wrong do exist"-Dr House)
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To: cookiedough

Good luck with that.


28 posted on 03/14/2010 5:38:13 PM PDT by richardtavor
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To: jsh3180

Mark of the beast.


29 posted on 03/14/2010 6:04:25 PM PDT by Freddd (CNN is down to Three Hundred Thousand viewers. But they worked for it.)
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To: jsh3180
Looks to me like a move toward putting the unemployed back to work . . for the IRS.

Not good.

30 posted on 03/14/2010 6:08:38 PM PDT by logician2u
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To: packrat35

One more reason I have pretty much stopped selling on Ebay.


31 posted on 03/14/2010 6:15:20 PM PDT by wally_bert (It's sheer elegance in its simplicity! - The Middleman)
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To: BipolarBob

This will kill thousands of little cottage industry businesses like my wife’s and mine.


32 posted on 03/14/2010 6:16:37 PM PDT by Cobra64
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To: wally_bert

I quit almost 2 years ago when they raised fees again and took away my right to leave negative feedback on the bidders.

Was a 10,000+ shooting star in feedback and silver powerseller. Haven’t been back. Just too much BS to deal with.


33 posted on 03/14/2010 6:19:26 PM PDT by packrat35 (Democrat Healthcare is a 9-11 Attack on the Constitution)
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To: packrat35

Once in a while I will sell something of higher value for a friend or two for a piece of the action. Most of what I deal with is vintage radio gear that people in Asia go nuts over.


34 posted on 03/14/2010 6:24:03 PM PDT by wally_bert (It's sheer elegance in its simplicity! - The Middleman)
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To: Bon mots

“Did you really think we want those laws observed?” said Dr. Ferris. “We want them to be broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against... We’re after power and we mean it... There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced or objectively interpreted – and you create a nation of law-breakers – and then you cash in on guilt. Now that’s the system, Mr. Reardon, that’s the game, and once you understand it, you’ll be much easier to deal with.”
(’Atlas Shrugged’ 1957)


35 posted on 03/14/2010 6:32:13 PM PDT by satan
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To: jsh3180

Cash is King. These idiots will just force internet sales to go underground. The IRS sucks... “sweet land of liberty” is fading quickly.


36 posted on 03/14/2010 6:49:02 PM PDT by vortigern
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To: jsh3180

Render unto Caesar...


37 posted on 03/14/2010 8:07:59 PM PDT by LomanBill (Animals! The DemocRats blew up the windmill with an Acorn!)
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To: wally_bert; packrat35; doug from upland; abner
One more reason I have pretty much stopped selling on Ebay.

Is there another site where you can sell "stuff" like on eBay? But with less hassle, and you can leave negative feedback about buyers?

I was just about to get started on eBay, and it's all gone to Hell lately, from what I've heard... :-(

38 posted on 03/14/2010 8:19:18 PM PDT by nutmeg ("We have to pass the bill first so you can find out what's in it." - Nancy Pelosi, March 2010)
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To: StarFan; Dutchy; alisasny; BobFromNJ; BUNNY2003; Cacique; Clemenza; Coleus; cyborg; DKNY; ...

More good news...


39 posted on 03/14/2010 8:24:45 PM PDT by nutmeg ("We have to pass the bill first so you can find out what's in it." - Nancy Pelosi, March 2010)
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To: hennie pennie; Pearls Before Swine
“However, unlike debit/credit cards, no one can find out the precise items purchased + precise identity of the purchaser when CA$H is used. I like cash.”

This is the mantra I’ve been preaching to folks who cross the border into NH. Screw the few frequent flier miles or 2 quarts of free gasoline, the clampdown has been coming.

Well, it’s here now - spot on Pearls.

40 posted on 03/14/2010 8:40:59 PM PDT by GOPsterinMA (Camelot sleeps with the fishes!)
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To: jsh3180
Positive feedback: 100%|Feedback score: 121

My EBAY account!

This month will be my last on EBAY and Pay Pal!

41 posted on 03/14/2010 9:02:52 PM PDT by HuntsvilleTxVeteran ((B.?) Hussein (Obama?Soetoro?Dunham?) Change America Will Die From.)
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To: nutmeg

I tried several others and they were all pretty much useless.


42 posted on 03/14/2010 9:16:32 PM PDT by packrat35 (Democrat Healthcare is a 9-11 Attack on the Constitution)
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To: nutmeg

Thanks for the ping!


43 posted on 03/14/2010 9:22:02 PM PDT by Alamo-Girl
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To: jsh3180

btt


44 posted on 03/14/2010 10:32:08 PM PDT by Cacique (quos Deus vult perdere, prius dementat ( Islamia Delenda Est ))
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To: jsh3180
The IRS will cease to exist in the next 10 years.

Bet on it.

45 posted on 03/14/2010 10:35:32 PM PDT by Rome2000 (OBAMA IS A COMMUNIST CRYPTO-MUSLIM)
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To: nutmeg

I am trying Upillar.com but no bites yet. It has been a while since I have looked at the specifics regarding feedback and other stuff.


46 posted on 03/15/2010 5:07:12 AM PDT by wally_bert (It's sheer elegance in its simplicity! - The Middleman)
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To: Rome2000
Do you believe that they will institute the flat tax?

Why are you so sure that the IRS will not continue to exist???

47 posted on 03/15/2010 5:15:21 AM PDT by hennie pennie
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To: nutmeg

http://www.powersellersunite.com

this site has interesting info on other auction sites / forums ...


48 posted on 03/15/2010 7:34:14 AM PDT by DvdMom (Freeper Smokin' Joe does the freeper Avian / H1N1 Ping List)
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To: FrankR

They dont want to cut fraud and spending, they want to destroy free enterprise.


49 posted on 03/15/2010 7:36:52 AM PDT by east1234 (It's the borders stupid! My new environmentalist inspired tagline: cut, kill, dig and drill)
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To: jsh3180

Everything is just how Congress wants it in this nation. EVERYTHING. They have their grubby, greedy, sadistic, bitter fingers in everything. Nothing happens without their OK. The IRS is what they decide it is. China is no longer buying our bonds. We can’t fund our govt spending without massive deficits. They “need” every cent they can find.


50 posted on 03/15/2010 8:32:37 AM PDT by PghBaldy (Like the Ft Hood Killer, James Earl Ray was just stressed when he killed MLK Jr.)
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