ebay authenticity guarantee limits now 250/750

[BobC]

Originally Posted by jchcollins

I forget the specifics, but my understanding on the sales tax decision was that a court case came down which put the handwriting for that on the wall. I'm not sure if eBay was compelled to put that in place by a certain date or if it was just obvious that they would soon be challenged if they didn't. I will agree between issues like this, and changes to policy such as surrounding authentication - it would seem more difficult to business on eBay than ever before.

When I first joined eBay, you could see full info. on both sellers and buyers, and even message competing bidders. I once contacted a bidder who kept topping me saying "Hey could I persuade you to let me win this (vintage scouting photo...) because my father-in-law is in it, and I would like to give it to him as a gift." The guy wrote back and graciously agreed. Can you imagine anything like that happening today?

John,

Ebay has definitely changed over the years, as you noted. They don't want anyone talking and sharing info so they potentially can have them go and deal off Ebay. They are just as strict and concerned with keeping their business with these other moves they are making as well. That seems pretty clear. I've worked with so many different businesses and business owners over the years, nothing surprises me as to the extent and levels many businesses will go for to see their goals achieved. Ebay does not have a monopoly on being an online sales platform, and they know it. Yet, they are the biggest and most well known platform out there, and stay there by being pre-emptive and taking care of things before they become a potential problem. This is all part of them staying #1.

[jchcollins]

Originally Posted by Exhibitman

We all know that eventually this will just be another skimming center for eBay fees.

Exactly. At best the current setup is a disproportionate solution that doesn’t really fit the problem. Oh, and it’s easily turned into a fee generating service…


Sent from my iPhone using Tapatalk

[BobC]

Originally Posted by Snapolit1

https://pages.ebay.com/authenticity-guarantee-seller/

Exactly Steve, I think the authentication programs are to fend off customer concerns for fakes and bad sellers, and possibly weed out at least some of the bad/fake sellers at the same time. Keeps customer confidence strong, and helps the legit sellers want to stick around as well since this can potentially help them against scam buyers trying to rip honest sellers off.

And if Ebay eventually gets to make a little bit in doing so, they aren't going to turn it down obviously. I'm just not so sure, as some others seem to be, that profit is one of their main motives in doing this, unless you're talking about the continuing profit from having sellers and buyers on their platform. I'm referring to the idea of this authentication program for the cards necessarily being a new profit center for them as the main reason for doing it.

[Snapolit1]

Seems to me that if eBay imposes a fee for this at some point it would have to be something the buyer elects (check the box) and shoulders the cost of. How could you force this upon a buyer and seller who decline to get involved? Doesn't seem possible.

Ebay is Satan's spawn because of the fraud and they don't seem to give a crap.

Ebay is Satan's spawn in trial testing a system to try to deal with fraud.

Some of youse guyze ain't easy to please.

[Jewish-collector]

I've always been surprised Amazon never really gotten more heavily involved in sports cards auctions & sales. They could run ebay out of business if they wanted to.

[sreader3]

Originally Posted by Exhibitman

Probably because in their recent earnings call, eBay cited Gross Merchandise Volume (GMV) down 17% in the first quarter of 2022, year-over-year. Revenue down 5%. And the number of active buyers dropped 13% from 163 million in Q1 2021 to 142 million in Q1 2022. They are scrambling for revenue and imposing a new service and skimming yet another processing fee is a way to get it.

I believe (my opinion of course) that a lot of this decline in eBay sales and sellers has to do with the new 1099 requirement imposed on eBay, PayPal, Zelle, Venmo, etc. to report aggregate annual gross transaction revenues per seller over $600 -- which was part of the 2021 American "Rescue" Plan. The new service/skimming will ultimately not work and just shoo more sellers (and buyers) away from these platforms. It is fair to say that this new 1099 requirement makes unscrupulous sellers who under-report sales pay what they owe; on the other hand, many sellers (myself included) who report their card income to the IRS simply don't want the hassle of receiving a 1099 and will no longer deal with these platforms.

[BobC]

Originally Posted by sreader3

I believe (my opinion of course) that a lot of this decline in eBay sales and sellers has to do with the new 1099 requirement imposed on eBay, PayPal, Zelle, Venmo, etc. to report aggregate annual gross transaction revenues per seller over $600 -- which was part of the 2021 American "Rescue" Plan. The new service/skimming will ultimately not work and just shoo more sellers (and buyers) away from these platforms. It is fair to say that this new 1099 requirement makes unscrupulous sellers who under-report sales pay what they owe; on the other hand, many sellers (myself included) who report their card income to the IRS simply don't want the hassle of receiving a 1099 and will no longer deal with these platforms.

Scot,

You've hit the nail on the head!

[FrankWakefield]

eBay seems to have commenced a process designed to reduce or minimize fraud from sellers misrepresenting sports cards. Examples would be reprints, altered cards, or altered TPG holders.

So how many items are there on which eBay pay out refunds? If a seller knows that the item he's selling isn't genuine, that's fraud. If he's mistaken as to what the item is, that could create a civil liability, but maybe not criminal liability.

So, what is it eBay is trying to fix? Are they trying to minimize criminal fraud? Are they trying to reduce civil liability? Are they trying to protect buyers? Are they trying to retain buyers rather than have a buyer leave eBay rather than continuing to get burned?? Are they trying to minimize their own potential civil or criminal liability from providing a platform for problematic sellers to market their items to the unaware?

I think this move is geared toward protecting themselves from problems one day when law enforcement commences an inquiry or investigation about the selling of reprinted or altered cards or TPG slabs. Part of the problem with TPG is that people buy stuff not knowing what they're buying. Maybe like buying a diamond... you need to know and trust your jeweler. Most of us here aren't idiots, but how many of us can distinguish diamonds from other stuff with certainty? Most of us are better at spotting a reprint T206 or an altered T206 in amongst some real T206s. But there are lots of people out there who lack that discerning eye that most of us have.

Reckon the day law enforcement takes action is coming soon? Maybe eBay thinks it is.

[perezfan]

Originally Posted by jayshum

They aren't grading the card again, they are just trying to verify that the slab has not been tampered with.

Is PSA more capable of identifying altered slabs than they are at identifying altered cards?

[jayshum]

Originally Posted by sreader3

I believe (my opinion of course) that a lot of this decline in eBay sales and sellers has to do with the new 1099 requirement imposed on eBay, PayPal, Zelle, Venmo, etc. to report aggregate annual gross transaction revenues per seller over $600 -- which was part of the 2021 American "Rescue" Plan. The new service/skimming will ultimately not work and just shoo more sellers (and buyers) away from these platforms. It is fair to say that this new 1099 requirement makes unscrupulous sellers who under-report sales pay what they owe; on the other hand, many sellers (myself included) who report their card income to the IRS simply don't want the hassle of receiving a 1099 and will no longer deal with these platforms.

If you are already reporting card income, why is receiving a 1099 a hassle? Is it because all that is reported is the total amount sold with no indication of costs (and therefore profit)?

[Exhibitman]

Originally Posted by jayshum

If you are already reporting card income, why is receiving a 1099 a hassle? Is it because all that is reported is the total amount sold with no indication of costs (and therefore profit)?

I don't get that logic either. Most of the average person's income is already reported and papered: W2, 1099INT, K1, etc. What difference does it make if there is one one piece of paper in the pile? The tax reporting obligation remains the same regardless.

[jchcollins]

Originally Posted by BobC

John,
This is all part of them staying #1.

Of course. I'm just reflecting on how innocent it all once seemed to be.

[BobC]

Originally Posted by jchcollins

Of course. I'm just reflecting on how innocent it all once seemed to be.

Yeah, it may have seemed innocent to you and me, but to Ebay it has always been serious business to them. It is just that we maybe haven't really been paying attention to everything they're doing until more of these recent moves that seem unusual to many. I would think most everything Ebay does is calculated and with a purpose that they aren't going to just openly tell us about.

[Deertick]

Originally Posted by Exhibitman

I don't get that logic either. Most of the average person's income is already reported and papered: W2, 1099INT, K1, etc. What difference does it make if there is one one piece of paper in the pile? The tax reporting obligation remains the same regardless.

The same reason charitable deductions (not donations) went down when the IRS started requiring documentation. Overstating went down because of documentation and now understating is going to take a big hit.

[jchcollins]

Originally Posted by BobC

Yeah, it may have seemed innocent to you and me, but to Ebay it has always been serious business to them. It is just that we maybe haven't really been paying attention to everything they're doing until more of these recent moves that seem unusual to many. I would think most everything Ebay does is calculated and with a purpose that they aren't going to just openly tell us about.

Bob, the point of all this seems to be that the serious business and profit motive are not necessarily in the best interest of all buyers / collectors. Would you agree? Of course eBay is not going to advertise their motives in detail to their customer base.

I would think that this means that many are looking for ways around such formal platforms with fee structures and tax reporting requirements. To your earlier point, many (N54 is one) still exist, and I would guess that other ways to do business off the cuff would continue to arise.

Interestingly enough, the one thing I saw on Facebook last night related to this authentication model, and the customer was very happy with it. Of course he had just bought a '52 Topps #311, so that might have been worth waiting an extra 2 days for.

[Lorewalker]

The burden for having the documentation or proof to validate your costs or deductions has always been there. Only thing is that might be different now is the impression that just because a 1099 is issued it means you will be asked to provide the proof. One should still have it even if it is never needed.

Accountability is only ever a problem when you really and truly do not want to be accountable...imo.

[Exhibitman]

Originally Posted by Lorewalker

Accountability is only ever a problem when you really and truly do not want to be accountable...imo.

That's true. Again, I don't see how a 1099 is of concern to anyone who has been following the tax laws already. Heck, as a lawyer I get a 1099 from anyone who pays me. Stacks of them every year. Just a waste of paper since I keep proper books. Same with eBay sales: just keep proper books and the 1099 is just a piece of junk mail.

My uncle was a tax attorney in DC for decades. His advice: pay your taxes. Just pay your taxes.

[BobC]

Originally Posted by Exhibitman

I don't get that logic either. Most of the average person's income is already reported and papered: W2, 1099INT, K1, etc. What difference does it make if there is one one piece of paper in the pile? The tax reporting obligation remains the same regardless.

Although I believe that the main issue and reason for reduced Ebay business in 2022 is because most sellers who previously weren't reporting their Ebay sales on their tax returns don't want to risk getting a 1099 and having to report those sales for income tax purposes going forward, there is possibly another issue/reason that may influence those who were already reporting their sales for tax purposes.

By receiving a 1099, that seller's activity is now formally entered into the IRS' system and subject to additional scrutiny and review as part of their automated system. ALL 1099's the IRS ever receives are matched to the recipient's respective income tax returns, and ANY perceived tax discrepancies or errors are going to result in an automated response from the IRS.

And maybe even more importantly to some, there is the intrinsic belief or perception that receiving a 1099 indicates the recipient is operating a business and acting as a dealer, and is therefore not an investor or collector. It at least opens the door for the IRS to come asking questions as they will likely assume the 1099 recipient is operating as a dealer in business as well. And lacking any direct evidence or documentation to the contrary, the IRS ALWAYS assumes the most negative impact to the taxpayer, until it is proven to them otherwise. All for which means the 1099 recipient should prepare and be ready for such questions in advance, and have answers and records ready to prove their purpose and intent to the IRS, if and when needed.

At a minimum, the negatives for being treated as a dealer include having all your net income always treated as ordinary income, subject to the highest possible tax rates. There is no potential long term capital gains tax rate limit of 20%/28% on business net income, that is only available if you can claim you are a selling items as a collector or investor. Also, being in business means that in addition to income taxes, the net income you make from selling your cards/items is now also subject to self-employment taxes (social security and Medicare taxes), which can be as high as 15.3% of you net taxable income from such sales, AND THAT IS IN ADDITION TO THE INCOME TAXES YOU'LL OWE ON THAT NET INCOME. On the plus side, you do get to deduct additional business related expenses you don't get as a collector or investor, but I can see many people not wanting to bother with the work and hassle of doing so, and dealing with the additional scrutiny it can bring from the IRS as a result.

So, there are possibly some other very good reasons for people not wanting to receive a 1099, other than just not wanting to have to report the sales income on their tax returns.

[BobC]

Originally Posted by jchcollins

Bob, the point of all this seems to be that the serious business and profit motive are not necessarily in the best interest of all buyers / collectors. Would you agree? Of course eBay is not going to advertise their motives in detail to their customer base.

I would think that this means that many are looking for ways around such formal platforms with fee structures and tax reporting requirements. To your earlier point, many (N54 is one) still exist, and I would guess that other ways to do business off the cuff would continue to arise.

Interestingly enough, the one thing I saw on Facebook last night related to this authentication model, and the customer was very happy with it. Of course he had just bought a '52 Topps #311, so that might have been worth waiting an extra 2 days for.

John,

I absolutely agree some business, like Ebay, isn't necessarily doing things for the benefit of their buyers and sellers, they are doing it for their own bottom line. Don't forget, Ebay is a publicly traded company since 1998, and answers to their shareholders, not their buyers and sellers. It just works out that in some instances, what is good for Ebay, is to be doing good things for their buyers and sellers so they keep coming back.

Ebay didn't start collecting sales taxes on behalf of all sellers because they wanted to. Same with things like these authentication programs. Ebay was doing well and making lots of money before instituting such changes, why would they suddenly decide to go through all the additional time, effort, expense, and hassle to do these new things if they didn't think it made sense to them from a business standpoint in the long run?

And as you noted, some of these new changes they've made are actually going to work against Ebay's business. Like sales taxes being collected on all sales now. Buyers hate that they are now getting hit with sales tax on everything. Just go back and read posts from some members on here in threads right after that new rule was put into effect by Ebay. So Ebay may lose some buyers from making that change. But in doing so, Ebay is likely also thinking about the additional hassle and work their sellers are going to have to now deal with in regards to sales taxes, and how that may drive many of them to stop selling on Ebay. So by taking on the sales tax collection, remitting and reporting obligation for all sellers, it removes that burden from them and makes them more likely to continue selling on Ebay. And something else many people probably didn't even consider, it also appeases many of the bigger sellers on Ebay who would have had to start collecting sales taxes in various states due to that Supreme Court decision back in 2018 regarding sales taxes for online sellers, South Dakota vs. Wayfair. Because of their larger sales volume, many of these bigger Ebay sellers would be forced to start charging sales taxes in many states, whereas the smaller Ebay sellers wouldn't reach those thresholds requiring them to collect sales taxes, and wouldn't ever have to charge sales taxes on sales made to other states. This would give an unfair advantage to smaller Ebay sellers over the big sellers, which would piss the big sellers off. By Ebay deciding to just handle the sales tax themselves on all Ebay transactions, it appeases all the sellers, and especially their biggest sellers, by not giving some of their competitors who otherwise wouldn't have to charge a sales tax, a price advantage over them due to the sales tax. Ebay may lose some customers who don't want to pay the sales tax, but they won't lose them all. But if you lose the sellers, there are no Ebay customers at all because nothing is being sold.

See the logic behind such a business decision? I'm guessing there is similar thinking and logic behind these other decisions and changes Ebay has been making as well.

[Exhibitman]

Then don't be a business on eBay. eBay is no longer meant for scofflaws who want to hide taxable income or for dealers who want to pretend that they are hobbyists or investors rather than dealers.

Personally, I love selling on eBay because they determine, collect and remit the damned sales taxes for me. No muss, no fuss. Makes reporting my sales taxes each quarter a snap.

As for taxation, without getting into the specifics, filing as a business gives you a lot of flexibility in terms of timing, realizing and offsetting losses and claiming expenses.

[BobC]

Originally Posted by Exhibitman

Then don't be a business on eBay. eBay is no longer meant for scofflaws who want to hide taxable income or for dealers who want to pretend that they are hobbyists or investors rather than dealers.

Personally, I love selling on eBay because they determine, collect and remit the damned sales taxes for me. No muss, no fuss. Makes reporting my sales taxes each quarter a snap.

As for taxation, without getting into the specifics, filing as a business gives you a lot of flexibility in terms of timing, realizing and offsetting losses and claiming expenses.

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

[Lorewalker]

Originally Posted by BobC

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

I understand what you are saying Bob but don't taxpayers have to meet certain qualifications to be deemed being in business? I did not think how the income is reported dictated that but maybe only played a part in whether someone was in business or not.

[perezfan]

Originally Posted by BobC

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

I've never paid taxes on stuff I've sold at garage sales (not that it amounted to much money). But then again, I never knew that we were required to... especially since virtually everything gets sold at a "bargain basement" style loss.

And what about the guy who sells his cards for cash, to a guy working the booth at a trade show? Or even the guy renting the booth, who sells the cards? I have a feeling these types of sales go largely unreported.

[jchcollins]

For people who have done mostly "casual" stuff, the threshold drop from $20K to receive a 1099 to $600 is a rather dramatic one. I'm not saying it's unfair, just saying in reality that is a big change. With the pandemic and more people than ever sitting at home and getting back into selling this that or the other, it was probably time for at least some shift in the laws; they were outdated at best for the state many forms of online commerce find themselves in today.

[jchcollins]

Originally Posted by perezfan

And what about the guy who sells his cards for cash, to a guy working the booth at a trade show? Or even the guy renting the booth, who sells the cards? I have a feeling these types of sales go largely unreported.

Or the LCS owner who offers a wan smile and doesn't charge you sales tax when you fork over a couple Franklins for something that caught your eye on a Saturday afternoon? Cash sales that go unreported and unreported income under certain thresholds will likely always be a thing.

[tschock]

Originally Posted by BobC

What about the person that uses Ebay maybe a couple times a year to sell off a collectible they've upgraded, to generate some money for another purchase, or to cash in because they feel the market is right? Are they all dealers just because they used Ebay? See, this is one of the issues with dropping the 1099 reporting sales threshold from $20,000 down to $600. Someone who truly is just a casual seller and not really a dealer may now get targeted as being in an ongoing business because of the low sales reporting threshold amount.

Is someone who has a garage sale every year in a legal business? I don't believe so. So what is the difference if they use Ebay as their garage sale format instead, especially over these past couple of years due to the Covid issues? Using Ebay in and off itself does not a business make, which it sounds like you are kind of alluding to.

And that's likely ties in with, and is not surprising that, ebay sent out emails titled "Tell Congress their new 1099-K rules are confusing and unnecessary" with details like:

"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."

Contrary to some opinions here, there are a lot of people selling stuff that are not a business on ebay, nor will likely become one.

[BobC]

Originally Posted by Lorewalker

I understand what you are saying Bob but don't taxpayers have to meet certain qualifications to be deemed being in business? I did not think how the income is reported dictated that but maybe only played a part in whether someone was in business or not.

Yes, but there is no specific, black and white list or measure to definitively say you are in business or are not. It is a grey area, to be determined by facts and circumstances in each unique situation. As I was saying, getting a 1099 can initially give the impression that you are operating a business on Ebay, and if you get one but fail to include the info from it on your tax return, when the IRS comes calling, do you think they'll view the income you may have earned from selling a card as a long term capital gain automatically? I don't think so. LOL That 1099 doesn't tell the IRS what you were selling. For all they know, you were selling widgets. So they generally assume the worst case scenario for taxpayers (and the most tax being owed to them), figuring that will get a response and explanations and answers back from the taxpayer.

The IRS actually follows a list of nine different factors they will look at to help determine if you are operating as a business, or if you are really in a hobby. The additional idea of being an investor for tax purposes is fairly new, and hasn't really been formally addressed by the IRS, yet, as sports cards being considered as true investments, like stocks and bonds. The following article lists the nine factors the IRS and their agents follow, which as you'll quickly see, are not yes or no, or black and white, questions or measures.

https://www.thebalancesmb.com/is-thi...a-hobby-397675

These factors are really more for situations where someone in a hobby is trying to be able to deduct the costs and expenses of it against their other income. With the way card prices, especially vintage, have gone up in recent years, most people with vintage collections they've had for years will not be worried about selling at losses. However, look at a modern collector who spent a ton of money on a modern rookie, that ended up being a bust. He ends up dumping it for a big loss, and tries to use that loss to offset his other income on his tax return. Here's where those nine factors can come into play.

[Lorewalker]

Originally Posted by BobC

Yes, but there is no specific, black and white list or measure to definitively say you are in business or are not. It is a grey area, to be determined by facts and circumstances in each unique situation. As I was saying, getting a 1099 can initially give the impression that you are operating a business on Ebay, and if you get one but fail to include the info from it on your tax return, when the IRS comes calling, do you think they'll view the income you may have earned from selling a card as a long term capital gain automatically? I don't think so. LOL That 1099 doesn't tell the IRS what you were selling. For all they know, you were selling widgets. So they generally assume the worst case scenario for taxpayers (and the most tax being owed to them), figuring that will get a response and explanations and answers back from the taxpayer.

The IRS actually follows a list of nine different factors they will look at to help determine if you are operating as a business, or if you are really in a hobby. The additional idea of being an investor for tax purposes is fairly new, and hasn't really been formally addressed by the IRS, yet, as sports cards being considered as true investments, like stocks and bonds. The following article lists the nine factors the IRS and their agents follow, which as you'll quickly see, are not yes or no, or black and white, questions or measures.

https://www.thebalancesmb.com/is-thi...a-hobby-397675

These factors are really more for situations where someone in a hobby is trying to be able to deduct the costs and expenses of it against their other income. With the way card prices, especially vintage, have gone up in recent years, most people with vintage collections they've had for years will not be worried about selling at losses. However, look at a modern collector who spent a ton of money on a modern rookie, that ended up being a bust. He ends up dumping it for a big loss, and tries to use that loss to offset his other income on his tax return. Here's where those nine factors can come into play.

And I read ya loud and clear. There is no place on the tax forms to supply answers to those questions and it likely would not be until an audit that most people would even think about the 9 factors. I understand the implication of the 1099 and how it would make most people feel getting one.

[BobC]

Originally Posted by perezfan

I've never paid taxes on stuff I've sold at garage sales (not that it amounted to much money). But then again, I never knew that we were required to... especially since virtually everything gets sold at a "bargain basement" style loss.

And what about the guy who sells his cards for cash, to a guy working the booth at a trade show? Or even the guy renting the booth, who sells the cards? I have a feeling these types of sales go largely unreported.

Exactly correct, and why you shouldn't pay taxes on a garage sale. The government tax authorities realize that over time people may just sell off old things for a few bucks. They don't have the time and resources to go after such people, and realize that virtually everything being sold is old and used, and not selling for what was originally paid for it. Therefore, most garage sale/flea market sales are for a loss, so you would end up owing no income taxes on it anyway. Plus, you aren't normally running a garage sale all the time, maybe just once in a great while. So the tax authorities don't want to deal with all that info and detail, and just leave it alone.

But then we end up getting the internet, and online platforms like Ebay, Etsy, Craig's List, and so on. The initial idea behind these was really more of an online flea market or garage sale concept for people to get rid of their stuff on, by having a wider market. Heck, IIRC Ebay was started as a place for some collectors to sell their Pez dispensers among themselves. But times have changed and these former online garage sales have become big businesses, Amazon, Wayfair, etc. And then throw in an item like old sports cards, that used to be sold/traded for next to nothing for decades, and fast forward to today where they are suddenly going for hundreds and thousands of dollars. The rules and thinking are still changing and morphing. It is kind of like the situation with regard to sales taxes where the internet completely changed the idea of what really constitutes tax nexus and who should be responsible for collecting and remitting sales taxes. It wasn't until the recent 2018 SCOTUS ruling in South Dakota vs. Wayfair that we finally recognized a firm, specifically defined, measure to finally say for certain when someone should or should not be subject to having to collect sales taxes from online sales to other states they are not physically in.

People can still sell at a garage sale or flea market occasionally, and not have to worry about taxes. And they can also do the same thing using Ebay, Etsy or so on. But does doing so and using an online platform automatically change their intent and turn them into a dealer in a legitimate business? See how this can get grey and hazy real fast? There is currently no perfect, set answer that covers every possible situation. People selling for cash at shows and such will, at least for now, not have anyone chasing after them for tax reporting. Again, the tax authorities don't have the time, resources or the inclination normally to chase after them. Using an online platform though gives tax authorities the unique benefit of there now being a specific and precise record and detail of what someone is selling, and what they sold it for. It is changing the tax enforcement landscape and thinking by many state and federal (and local) tax authorities.

[BobC]

Originally Posted by jchcollins

For people who have done mostly "casual" stuff, the threshold drop from $20K to receive a 1099 to $600 is a rather dramatic one. I'm not saying it's unfair, just saying in reality that is a big change. With the pandemic and more people than ever sitting at home and getting back into selling this that or the other, it was probably time for at least some shift in the laws; they were outdated at best for the state many forms of online commerce find themselves in today.

Yup!

[BobC]

Originally Posted by jchcollins

Or the LCS owner who offers a wan smile and doesn't charge you sales tax when you fork over a couple Franklins for something that caught your eye on a Saturday afternoon? Cash sales that go unreported and unreported income under certain thresholds will likely always be a thing.

Double yup!

[BobC]

Originally Posted by tschock

And that's likely ties in with, and is not surprising that, ebay sent out emails titled "Tell Congress their new 1099-K rules are confusing and unnecessary" with details like:

"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."

Contrary to some opinions here, there are a lot of people selling stuff that are not a business on ebay, nor will likely become one.

Exactly, makes the landscape for many on Ebay and other platforms totally confusing.

And don't think this reduced 1099 sales reporting threshold makes the IRS happy at all either. Just like the people who now get these 1099s, it is going to mean a ton more work for the IRS as well, which is already severely underfunded and understaffed. And a lot of that work, at least initially, is going to be dealing with people who really shouldn't be paying any taxes on used things they are selling, but now have to bother reporting. And all this additional paperwork creates more opportunities for mistakes and errors, even by the IRS. Trust me, the IRS, and every other tax authority out there are not infallible and do make mistakes and errors.

Why do you think you often hear those commercials for all those different outfits that will come to your aid if you owe the IRS thousands of dollars, and don't know what to do? They exist for just these kinds of tax issues and situations, to help (and also take advantage of) the taxpayers that didn't know better.

[BobC]

Originally Posted by Lorewalker

And I read ya loud and clear. There is no place on the tax forms to supply answers to those questions and it likely would not be until an audit that most people would even think about the 9 factors. I understand the implication of the 1099 and how it would make most people feel getting one.

And exactly why I keep saying that when you have questions or are in doubt, talk to a qualified tax professional. Even if it is just asking me something here on the forum!

I do not have all the definitive tax answers to every question and situation that can come up. Nobody does, not even the IRS. And even when everyone finally thinks they've got certain tax laws and situations nailed down, they'll change those tax laws, technology, or something else affecting those specific situations, to radically alter them. Never fails. LOL

[Exhibitman]

I really think people are overthinking this. If I am selling an investment and I have documented the cost basis for the item and the net I receive from the sale, characterizing it is my choice on my tax return (investment or business). As long as I accurately report my profit, in whatever form, there should be no problem in the end. I get a 1099 from Vanguard and Schwab for my investment income. That doesn't mean I am a stock brokerage, even if I trade every damn day.

Now, I could see the states getting pissed if there was no sales tax remittance from frequent selling 'investors', but eBay collects the sales tax for the sellers, so that isn't an issue either.

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

And don't think for a minute that this won't eventually get to auction houses. The big internet selling platforms were the first, but a multi-billion-dollar business is certainly going to attract the attention of the revenue agencies.

if you want to cheat the tax man, you have to go with cash and that cash can never, ever formally enter the financial system. And that is when you visit the cross-bar hotel if you get caught. Just pay your taxes. It's easier.

[perezfan]

What if you cannot recall what you paid for items 25 years ago (decades before they taxed these things?)

Guesstimate the amount you paid, or take it up the a$$?

[tschock]

Originally Posted by Exhibitman

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

I think it's because you view selling on ebay as a business for most people. And for most sellers, it is not. Now they will get a 1099 indicating sales income where many of them have no real proof of what they paid for a cost basis. So if/when the IRS comes calling, how do they prove what they claim when they have no records/proof because they didn't intend selling what they bought in the first place? I know a couple people who I doubt are "tax scofflaws" who are leaving because they don't want the hassle of now keeping records and retro-actively assessing what they paid for items. Since they were never "in business" as it was a hobby for them, they don't have records (ie proof) of what they paid.

Your assumption that everyone who leaves ebay is a tax scofflaw because they are now issued 1099 is unfounded if not downright silly.

[perezfan]

And can you offset your net losses against net gains?

[ullmandds]

Originally Posted by perezfan

And can you offset your net losses against net gains?

if you are an investor...yes...collector...no! That's f'ed up isnt it!

[G1911]

Originally Posted by tschock

I think it's because you view selling on ebay as a business for most people. And for most sellers, it is not. Now they will get a 1099 indicating sales income where many of them have no real proof of what they paid for a cost basis. So if/when the IRS comes calling, how do they prove what they claim when they have no records/proof because they didn't intend selling what they bought in the first place?

This is the boat I am in. Is it realistic to expect me to have kept documentation of what I paid for a card 18 years ago at a show when I was 13? Was it $100, or $125? Maybe it was $200. I don't know, and if I do know (I can't recall what I had for breakfast last Monday but I do recall what a lot of my cards cost exactly for some reason), I sure as hell can't provide any evidence. The burden of proof has largely shifted with this change.

If I can't recall what I paid or can't document it at all, I can risk the IRS coming after me or just pay full income taxes for what the 1099 states even though my cost surely wasn't $0. Which for me is almost 50% (9.3-10.3% state + 35% federal= 44.3-45.3% total) income tax (plus 10% sales tax on whatever I paid originally) on the full sale price if I don't know the exact figure I paid for it.

Even the most honest tax-payer realistically has to make guesstimates sometimes. I highly doubt anyone here has gotten receipts for every single item they've ever purchased. It's simply not practical, or realistic. Try asking a dealer at your local show for an itemized receipt of all 100 cards you just bought from him for your tax records if you sell a dupe in 20 years, and let us know what they say.

I don't think one has to be a scofflaw to question or not enjoy this shifting of the burden of proof and not being a fan of half their money going to the state every year as income tax, sales tax, property tax, and a dozen more.

[perezfan]

Originally Posted by ullmandds

if you are an investor...yes...collector...no! That's f'ed up isnt it!

Not just f’ed up… it’s criminal. They even let you deduct gambling losses (or at least they used to).

So if you sell 10 items… lose a combined total of $5K on nine of them, but net a profit of $1K on one of them…. You’re on the hook for $1K in taxable income? Even though you’re down $4K for the total sale? I can see why people want to avoid reporting, if the system is really that rigged against you!

[perezfan]

Originally Posted by G1911

This is the boat I am in. Is it realistic to expect me to have kept documentation of what I paid for a card 18 years ago at a show when I was 13? Was it $100, or $125? Maybe it was $200. I don't know, and if I do know (I can't recall what I had for breakfast last Monday but I do recall what a lot of my cards cost exactly for some reason), I sure as hell can't provide any evidence. The burden of proof has largely shifted with this change.

If I can't recall what I paid or can't document it at all, I can risk the IRS coming after me or just pay full income taxes for what the 1099 states even though my cost surely wasn't $0. Which for me is almost 50% (9.3-10.3% state + 35% federal= 44.3-45.3% total) income tax (plus 10% sales tax on whatever I paid originally) on the full sale price if I don't know the exact figure I paid for it.

Even the most honest tax-payer realistically has to make guesstimates sometimes. I highly doubt anyone here has gotten receipts for every single item they've ever purchased. It's simply not practical, or realistic. Try asking a dealer at your local show for an itemized receipt of all 100 cards you just bought from him for your tax records if you sell a dupe in 20 years, and let us know what they say.

I don't think one has to be a scofflaw to question or not enjoy this shifting of the burden of proof and not being a fan of half their money going to the state every year as income tax, sales tax, property tax, and a dozen more.

Excellent “real world” perspective. I would bet most collectors are in the same exact boat!

[Lorewalker]

Originally Posted by ullmandds

if you are an investor...yes...collector...no! That's f'ed up isnt it!

I don't think this is accurate...I understand that one can deduct hobby expenses to the extent of their hobby income. Bob would know MUCH better but if the sales are hobby related, cards sold at a loss can be offset against the gains on the sales of other cards. It just cannot result in an overall loss. I would think that a loss on a sale would be construed as an expense???

[BobC]

Originally Posted by Exhibitman

I really think people are overthinking this. If I am selling an investment and I have documented the cost basis for the item and the net I receive from the sale, characterizing it is my choice on my tax return (investment or business). As long as I accurately report my profit, in whatever form, there should be no problem in the end. I get a 1099 from Vanguard and Schwab for my investment income. That doesn't mean I am a stock brokerage, even if I trade every damn day.

Now, I could see the states getting pissed if there was no sales tax remittance from frequent selling 'investors', but eBay collects the sales tax for the sellers, so that isn't an issue either.

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

And don't think for a minute that this won't eventually get to auction houses. The big internet selling platforms were the first, but a multi-billion-dollar business is certainly going to attract the attention of the revenue agencies.

if you want to cheat the tax man, you have to go with cash and that cash can never, ever formally enter the financial system. And that is when you visit the cross-bar hotel if you get caught. Just pay your taxes. It's easier.

Adam,

I'm not talking solely about just tax cheats, and yes, there are those. There are also people who are deathly afraid of sharing anything with the IRS, and it isn't always because they are tax cheats and/or not paying their taxes. You should see what happens on occasion when asking someone if they want their tax refund check direct deposited into their bank account, rather than having to wait for a paper check in the mail, and the possibility of it being lost, stolen, or whatever. Suddenly having another piece of paper regarding some aspect of their life and/or business now going into the hands of another government agency does not sit well for many more people than you may realize. I have come to respect such people's sentiments over the years and not be quick to judge them. You should try doing the same!

Go talk to your Uncle if you can. Maybe he can better explain the potential nuances to you. Of course, being a tax attorney, as you said he was, doesn't necessarily mean he was always doing personal tax returns for individuals and small businesses, and therefore was maybe talking to you in more general terms and not about specific instances or circumstances that are definite grey areas of the tax law, and subject to different interpretations and treatments. I don't know his exact background and experience, so I can't speak to that.

I obviously know that tax evasion is a crime, but I also know for a fact that tax avoidance is your constitutional (and God given) right! LOL And pretty much all of the tax related comments and statements I make are to point out the potential differences and nuances (and grey areas) that do exist in the tax laws, and to hopefully show other members on this forum many of those potential legal differences and interpretations for which a taxpayer may have to make choices, based on each one's unique set of facts and circumstances. You seem to have your own personal tax situation figured out and settled as to how you want things handled to your satisfaction, which I think is absolutely fantastic. But please remember that what may make sense and be right for you, isn't necessarily always the best, most accurate choice, for others. Have a great evening.

[BobC]

Originally Posted by perezfan

What if you cannot recall what you paid for items 25 years ago (decades before they taxed these things?)

Guesstimate the amount you paid, or take it up the a$$?

Go with the former, and document as much other info as you can. Believe it or not, the IRS does not disallow reasonable estimates in cases where the exact info may not always be found.

For example, when deducting business mileage from use of one's auto, the best thing to do is keep a written log. So how does an IRS agent know you didn't just stay up the night before to create a log for your audit today, they don't. But the fact that you have a written log, for which there really is no other reasonable way to definitively document your business mileage, will generally satisfy the IRS agent.

[Snapolit1]

Seems like half the threads now end up as a discussion of not so recent changes in tax law. Getting a little stale.

No offense intended to Bob and the other tax professionals on the board. Who are all trying to offer valuable input. But how many times do we need to rehash the same basic points?

[BobC]

Originally Posted by perezfan

And can you offset your net losses against net gains?

Depends on whether or not you are treating your sales, and resulting losses, as a Dealer, Collector/Hobbyist, or possibly as an Investor.

If a Dealer in business, you can fully offset all your loss sales against your gain sales, in determining your resulting net income or loss from the business as a whole. Any resulting net loss is then fully deductible against all your other taxable income for that year.

If a Collector/Hobbyist, your loss sales are not supposed to be deductible against your gains from any other sales, or any other taxable income, ever. Specifically read the paragraph titled "Losses realized on disposition of collectible assets", from the attached Tax Advisor article link provided.

https://www.thetaxadviser.com/issues...lectibles.html

If an Investor, you can offset the losses from sales of your collectible investment assets against gains from other sales, and potentially have overall net losses be deductible against other income as well.

The linked tax article goes over many of the things I've been posting about all along. It also reiterates how confusing and complex these issues and questions can be, and how thinking and planning ahead can be very helpful.

[BobC]

Originally Posted by Snapolit1

Seems like half the threads now end up as a discussion of not so recent changes in tax law. Getting a little stale.

No offense intended to Bob and the other tax professionals on the board. Who are all trying to offer valuable input. But how many times do we need to rehash the same basic points?

Sorry Steve, I just never know who may, or may not, have seen some of mine, or other people's, prior posts. Put yourself in their shoes for a second. You come on the forum and have a tax related issue/question, but haven't seen all the prior tax threads and posts. Nor do you realize to go looking for them. I see it and try to answer, based on the specific facts and circumstances you have, so as to give the most accurate advice/answer I can. Hell, I don't remember all the posts I've made on all the different tax topics. So rather than my trying to go back and find and link them, I figure it is easier to just answer them right then and there. And invariably we get a couple people posting some additional things that aren't exactly accurate or pertinent, so I have to expound on that to make sure you, and possibly anyone else reading the posts with similar questions, doesn't then take and use/follow the not so accurate or pertinent information. And to my credit, I have actually explained to one poster with tax questions how to do a search of all my posts, which I then advised him to go back and just start reading. LOL (That probably kept him busy for a while, huh?)

I've stated on here before when others have questioned some of my long, detailed posts, that I would gladly stop posting then to help out with tax questions and issues. Others then posted in response, and also reached out to me privately, to not stop doing so, as they find the information extremely helpful and thanked me for offering to help.

if there were some easy way to accumulate all my tax related posts in regards to our hobby, and then put them in one place so a newbie asking tax questions could be simply pointed to that resource, I'm all for it. If you can tell me how to do it, great. Otherwise, I'm stuck answering questions as they're asked, or I can just quit providing info and answering tax questions all together. I'm really easy to work with, and honestly just trying to help people.

[BobC]

Originally Posted by Lorewalker

I don't think this is accurate...I understand that one can deduct hobby expenses to the extent of their hobby income. Bob would know MUCH better but if the sales are hobby related, cards sold at a loss can be offset against the gains on the sales of other cards. It just cannot result in an overall loss. I would think that a loss on a sale would be construed as an expense???

See post #96.

[BobC]

Originally Posted by perezfan

And can you offset your net losses against net gains?

See post #96.

[BobC]

Originally Posted by ullmandds

if you are an investor...yes...collector...no! That's f'ed up isnt it!

No, not really f'ed up. See post #96.