January 1 could be interesting thanks to congress.

[theshowandme]

Talk to your CPA and do not listen to influencers on YouTube

/thread

[90feetaway]

Wondering if this influenced the number of sellers and sales on eBay this year?

[Jason19th]

The IRS is not coming for us. Everyone need to calm down. The law has not changed. It was always our responsibility to account for our sales and profits. The IRS is not going to assume that we bought all of our cards for zero. They are not going to second guess reasonable valuations and expenses. They don’t have the time for this for people who are getting a couple of 1099’s. Now that may be different for people with hundreds of thousands in sales. But those people are running businesses and should be held to the standard of people who run businesses.

[bobbyw8469]

Originally Posted by Jason19th

The IRS is not coming for us. Everyone need to calm down. The law has not changed. It was always our responsibility to account for our sales and profits. The IRS is not going to assume that we bought all of our cards for zero. They are not going to second guess reasonable valuations and expenses. They don’t have the time for this for people who are getting a couple of 1099’s. Now that may be different for people with hundreds of thousands in sales. But those people are running businesses and should be held to the standard of people who run businesses.

It's a nightmare for the casual seller. I guess they want to set up at my next yard sale as well.

[soxinseven]

Originally Posted by bobbyw8469

It's a nightmare for the casual seller. I guess they want to set up at my next yard sale as well.

It's not a new development for some of us. Massachusetts and some other states have been doing this since 2017. Seems like it's pretty much nationwide now, with a few exceptions I'm sure.

[Keith H. Thompson]

that my sales are entirely from my personal collection acquired fifty years ago, and it bothers me that I have to pay taxes, even though I understand why the eBay platform requires it. But, I solved this problem by simply taking my 1099-G to my tax accountants and let the chips fall where they may. And some of them fall pretty hard and leave dents.

[Exhibitman]

Bogus. False. Complete BS hyperbole. We've been over this before but apparently some people aren't paying attention.

First of all I have dealt with IRS and state auditors. You do not need paper proof to prove basis. Testimony is evidence. I've had clients face down the IRS with direct testimony. I paid $500 for a Warren Spahn card that I sell for $1,000 on eBay and I get a 1099, I report it as such and that will stand up in a court or in an audit. The only things you absolutely must have receipts to prove on your personal return are charitable deductions.

Second, all a 1099 does is alert the IRS that you received money, not net income. I get them every year in the millions because any payment to an attorney is 1099'd and any settlement money paid to an attorney's trust account is 1099'd, all under the law practice's tax ID. The settlements and my deductible costs and the proceeds all are flushed through on my tax return and never hits my net income.

The people panicking over this are worrying about nothing, unless they are tax cheats who didn't intend to declare their incomes from card transactions. Don't do that. Just pay your taxes. If you made huge profits, be happy you did. Profits are a nice problem to have.

[BobC]

Adam, and others, are on the money. We've talked about this before, and my fingers have come close to falling off with all the typing I've done in answering questions for people about taxes and the potential implications they may face. just look at the thread Brian (the OP) linked to in the opening post.

To directly respond to Brian/OP, even if you don't have a receipt for an item(s) you sell that gets reported to you on one of these 1099-K forms for this past year, you still want to at least reasonably estimate what you paid for the item and show it as a deduct against the price you got from selling it, and thus properly determine if you had net income/capital gain, or a net loss/capital loss, from the sale. As Adam/Exhibitman stated, the IRS is not completely unreasonable, and they realize you must have paid something for the item you sold. If you do the best you can to at least reasonably try and remember and report what you may have paid for things you bought for cash years ago, most IRS agents will give you some benefit of the doubt and work with you. But that would only come into play if the IRS came back and actually wanted to audit your card sales reported on your tax return. And the chances of someone just doing some side sales, and not really a full-time card dealer, being audited are really remote. That is as long as you remember to not ignore these 1099-K forms you may now get, and be sure to properly report them on your tax return. Failing to report them on your tax return, or screwing up how and/or improperly reporting your sales activity on your return, are what will get you noticed by the IRS, and significantly increase your chances of actually being audited by them and maybe needing that supporting documentation you may not have 100% of.

And don't forget, just because you get a 1099-K form reporting sales you made during the year, that doesn't automatically mean you are in an actual business and have to report and file your card sales on federal Schedule C - "Profit or Loss From Business". I've said this numerous times on the forum now, for people who buy and sell cards you can actually end up being treated as one of three different and distinct types of taxpayers in that regard. You can be treated/taxed as a collector/hobbyist, as an investor, or as a seller/dealer actually in business. And honestly, to be even potentially more confusing, you can actually be more than just one single type of taxpayer in regard to selling cards, all at the same time. You can be a dealer who has inventory that you sell as a business, then a personal collection you keep for yourself, along with another group of cards/items that you acquired strictly for long-term investment purposes. The trick is to segregate the cards that fall into each of these different areas/categories, and be sure to properly document and record which is which if ever asked and you have to prove it to an IRS agent.

Rather than going into this in more detail, I've already written numerous posts on this and other related tax topics and issues here on Net54. Best thing to do is to go to the search function, look under Advanced Search, and type in my handle, BobC, and look for any posts I've made. Then just peruse the list of threads that come up and look for those that look like they may have something to do with taxes (sales, income, etc.) or reporting (1099s, IRS, etc.). Even some of the threads about "vaults" delved into tax implications and issues. Then just look through them for my posts. Not necessarily the most efficient way to go back and read a lot of what I've said already in regard to our hobby and taxes, but the best I can do. Wish there was a simple/easy way I could go back and somehow accumulate all my tax related posts in one place that people could then use as a resource. Or, just ask direct/specific questions on here or through PMs even. Have had several people doing that as well. There are also some other tax/CPA people on the forum that can feel free to chime in.

As always, if you are uncertain or uncomfortable with what you may need to do in regard to your taxes when it comes to your hobby/dealer activity, I've always advised talking to a local, qualified, tax professional for assistance and advice. Every single person/taxpayer's tax situation is going to be unique, and I am giving a lot of more generalized information. Still hope this helps.

[BobC]

Whatever you do though, do not ignore any 1099-K form(s) you may get. If it is not reported on your tax return, you WILL get contacted by the IRS. Even if you didn't actually have a taxable profit/gain from cards you sold.

[mrreality68]

Great information

Thanks and appreciated

This is where the CPA’s make their money

[nwobhm]

Originally Posted by Exhibitman

Bogus. False. Complete BS hyperbole. We've been over this before but apparently some people aren't paying attention.

First of all I have dealt with IRS and state auditors. You do not need paper proof to prove basis. Testimony is evidence. I've had clients face down the IRS with direct testimony. I paid $500 for a Warren Spahn card that I sell for $1,000 on eBay and I get a 1099, I report it as such and that will stand up in a court or in an audit. The only things you absolutely must have receipts to prove on your personal return are charitable deductions.

Second, all a 1099 does is alert the IRS that you received money, not net income. I get them every year in the millions because any payment to an attorney is 1099'd and any settlement money paid to an attorney's trust account is 1099'd, all under the law practice's tax ID. The settlements and my deductible costs and the proceeds all are flushed through on my tax return and never hits my net income.

The people panicking over this are worrying about nothing, unless they are tax cheats who didn't intend to declare their incomes from card transactions. Don't do that. Just pay your taxes. If you made huge profits, be happy you did. Profits are a nice problem to have.

If it’s all just false BS then why was it lowered to $600?

Not saying you’re wrong… certainly not saying you’re right either. Whole lotta experts running their mouth yet it hasn’t happened yet.

Only way to know what will play out is watching it happen. When has trusting that .gov has nothing but honorable intentions played out well?

Just sayin’….

[JustinD]

Meh, I think being excited about January is a bit of a waste of thinking time.

A divided government is is good for the economy as neither collective can pass stupid programs. Nothing honestly soothes the panic of investors like gridlock.

However, reversing previous poor policy takes more than the House. It is far more stepped process, I would not hold my breath as you likely will see nothing on that front until a new administration.

Those 1099s are not disappearing.

[Snowman]

While this isn't a story specific to selling cards, I was audited by the IRS before and can share what that experience was like for me.

Back when I played poker professionally, I used to get all sorts of random 1099s of various types. I would back other pros as well, and taxes were always complicated as nobody has receipts for any of that stuff. Particularly the agreements between players where they "piece swap" percentages of each other in tournaments (it's common practice for pros to exchange say 5% or 10% of each other to decrease their variance, or to back other players' entire entry fees). I got audited one year by the IRS for my poker winnings, and I had a sizeable 1099 that I had to explain. The agent I dealt with just required me to get a notarized statement from the other player that said the proceeds were from gambling and that the winnings were split between us. It wasn't the nightmare everyone had warned me it would be, but it was a lot of work digging up documents. I'd prefer not to have to do it again though.

Also worth pointing out is that while they did lower the reporting threshold, assuming it stands, that doesn't mean they're coming for you over $600 worth of earnings. Audits are not random. They use machine learning algorithms to flag high-risk returns. Having a few hundred or even a few thousand or probably even ten thousand dollars worth of eBay sales is not going to flag an audit. And if you're doing 6-figures worth of eBay sales, you should be keeping some pretty damn good records already, and should probably have a business license.

[Snowman]

Originally Posted by nwobhm

If it’s all just false BS then why was it lowered to $600?

Not saying you’re wrong… certainly not saying you’re right either. Whole lotta experts running their mouth yet it hasn’t happened yet.

Only way to know what will play out is watching it happen. When has trusting that .gov has nothing but honorable intentions played out well?

Just sayin’….

I think they're just trying to force more people to report earnings. Telling us to report something is one thing. Auditing us for it is another. I'm sure this whole mess will lead to *some* additional audits, but they're still going to go after the higher earners first when making determinations about who to audit. If the only thing you have to report from 2022 is $60,000 from retirement earnings and $1300 from eBay, I promise, you're not getting audited.

That said, this program is still BS for so many reasons. What a trainwreck. Sometimes I hate my own party. This is one of those times.

[Exhibitman]

Originally Posted by nwobhm

If it’s all just false BS then why was it lowered to $600?

Not saying you’re wrong… certainly not saying you’re right either. Whole lotta experts running their mouth yet it hasn’t happened yet.

Only way to know what will play out is watching it happen. When has trusting that .gov has nothing but honorable intentions played out well?

Just sayin’….

It wasn't just lowered. $600 has been the figure business reporting starts at for many years. The initial 1099 expansion was $20K. It has been phased in to eventually match the business threshold.

Don't get me wrong; I would rather they get rid of 1099s altogether. They are a PITA for my bookkeeper every January. They are not a reason to worry if you pay your taxes because all of the questions will flush out in the return.

[BobC]

Originally Posted by nwobhm

If it’s all just false BS then why was it lowered to $600?

Not saying you’re wrong… certainly not saying you’re right either. Whole lotta experts running their mouth yet it hasn’t happened yet.

Only way to know what will play out is watching it happen. When has trusting that .gov has nothing but honorable intentions played out well?

Just sayin’….

You are confusing and mixing different things up. The BS Adam was referring to had to do with the response he was making to some about the IRS coming after them, about having to pay tax on the total amount of a 1099 they receive and not being able to deduct what they paid for the items they sold, and about the IRS not realizing you may not always have a receipt for cash purchases and not allowing a taxpayer to estimate what they may have paid and be able to deduct it.

The lowering of the reporting threshold to $600 is a completely different and separate issue. And I've gone into that and explained to everyone on this forum before the real reason behind the lowered $600 threshold. In an earlier post I suggested doing a search of all my old tax related posts in numerous other threads, to find where I've already explained this in great detail. The Cliff Notes version is that the reduced reporting threshold to $600 for 1099-K forms is so that it aligns and agrees with the same reporting threshold that already for years was being required for people/businesses filing 1099-NEC and/or 1099-MISC forms to report the amount of non-employee (independent contractor) compensation they may be paying someone, or some unincorporated business, they hire to do something for them. The problem the government (not the IRS) realized is that a lot of people started paying these individuals and unincorporated businesses through platforms like Paypal, and weren't always properly sending in the appropriate 1099 forms to report this income they were paying them. Remember, it is Paypal Goods and SERVICES. The lowered threshold was to get after the SERVICES side of such Paypal and other third-party platform payments, to make sure the IRS was being informed about them. The lowered threshold wasn't primarily to get after people selling stuff on Ebay, it was to get after the people not reporting payments they were making to those doing work for them that aren't their employees. Unfortunately, payment platforms like Paypal don't differentiate between Goods (like things being sold on Ebay) and Services (payments made to a non-employee for work they do for you). So, the government in fixing the reporting threshold for service payments so it is consistent across all the different types of 1099 reporting that may be required, unfortunately ended up affecting the reporting of sales of goods as well. If you have any suggestions you can give the government, Paypal, or anyone else involved in this, how anyone can easily and without a ridiculous amount of work and effort, differentiate and segregate the reporting threshold of these third-party payment platforms so they would only apply the $600 threshold to just non-employee payments for services through them, while at the exact same time leaving the threshold for payments for goods through them at the old $20,000 level, I bet they'd be all ears. Good luck in that though

There are no real bad intentions here, the government was just trying to make the reporting requirements consistent across all the different 1099 forms. The real villains are those that have abused the system and law by not properly reporting like they were supposed to all along. Faced with our government having to pay the bills, would you rather our government enact and add even more taxes we have to pay, or, would you rather they actually start getting after those people and businesses that aren't reporting all their income and properly paying their taxes?

[sreader3]

Originally Posted by Exhibitman

First of all I have dealt with IRS and state auditors. You do not need paper proof to prove basis. Testimony is evidence. I've had clients face down the IRS with direct testimony. I paid $500 for a Warren Spahn card that I sell for $1,000 on eBay and I get a 1099, I report it as such and that will stand up in a court or in an audit. The only things you absolutely must have receipts to prove on your personal return are charitable deductions.

Why should one not worry about the situation you are describing where deducting basis from the revenue shown on the 1099 triggers an audit and forces one to pay an attorney and testify to prove one's innocence? That sounds like a nightmare. Except for the attorney.

[Exhibitman]

Originally Posted by sreader3

Why should one not worry about the situation you are describing where deducting basis from the revenue shown on the 1099 triggers an audit and forces one to pay an attorney and testify to prove one's innocence? That sound like a nightmare. Except for the attorney.

Now that is a textbook case of catastrophizing. The IRS audits roughly 0.3% of returns (3 of every 1000). The IRS initiates criminal investigations against fewer than 2 percent of all American taxpayers. Of that number, only about 20 percent face criminal tax charges or fines. Yet 1099s go out by the hundreds of millions. Getting a 1099 and reporting your income and expenses based on it does not trigger an audit. Not reporting anything is more likely to trigger one. All the 1099 does is give the iRS computer a baseline to test the return against. if an anomaly comes up, the IRS asks questions. It may be as little as a letter informing you that there is a discrepancy that you need to address. I've gotten a few of those and have cleared them up pretty quickly with the help of my CPA or my firm payroll processor.

[BobC]

Originally Posted by sreader3

Why should one not worry about the situation you are describing where deducting basis from the revenue shown on the 1099 triggers an audit and forces one to pay an attorney and testify to prove one's innocence? That sound like a nightmare. Except for the attorney.

C'mon, are you really being serious?!?!?!

Reporting what you have received as gross income/revenue, as shown on a 1099 you receive, and then deducting the expenses and costs you had in acquiring the items you sold, and/or other costs involved in marketing and selling them, are NOT going to trigger an audit by the IRS. Do you really not believe the IRS knows the 1099s only report the gross amount someone receives, and that in virtually almost every instance that does NOT reflect the actual taxable net income or taxable net gain someone ends up with and that they actually owe tax on? You do not pay and owe taxes on gross income/revenue, you due owe it on net taxable income/revenue.

The IRS is not stupid and looking to create even more senseless work for themselves. They have Congress and the rest of the government to do that for them.

[Dead-Ball-Hitter]

Originally Posted by Exhibitman

Bogus. False. Complete BS hyperbole. We've been over this before but apparently some people aren't paying attention.

First of all I have dealt with IRS and state auditors. You do not need paper proof to prove basis. Testimony is evidence. I've had clients face down the IRS with direct testimony. I paid $500 for a Warren Spahn card that I sell for $1,000 on eBay and I get a 1099, I report it as such and that will stand up in a court or in an audit. The only things you absolutely must have receipts to prove on your personal return are charitable deductions.

Second, all a 1099 does is alert the IRS that you received money, not net income. I get them every year in the millions because any payment to an attorney is 1099'd and any settlement money paid to an attorney's trust account is 1099'd, all under the law practice's tax ID. The settlements and my deductible costs and the proceeds all are flushed through on my tax return and never hits my net income.

The people panicking over this are worrying about nothing, unless they are tax cheats who didn't intend to declare their incomes from card transactions. Don't do that. Just pay your taxes. If you made huge profits, be happy you did. Profits are a nice problem to have.

Thanks for the balanced perspective on this Adam. A little knowledge can be dangerous, if not shared with the proper context.