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Old 12-22-2010, 12:50 AM   #1 (permalink)
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Thumbs down New Paypal changes for 2010! Thoughts?!

I'm sure most of the large dealers/sellers know already, but many others might not know:

"Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:

- receive more than $20,000 in payment volume in a single year; and
- receive more than 200 payments in a single year.

This legislation applies to all payment providers including PayPal and takes effect in 2011, so the first reports will go to the IRS in January 2012. Our goal when the legislation takes effect is to make it easy for PayPal merchants who fall under the provision to report their taxable incomes."


This is taken from here:

https://www.thepaypalblog.com/2008/0...ts-become-law/


I was trying to think of alternatives to avoid the taxation.

Paymate? An alternative payment system very similar to Paypal.

Or simply only accepting Money orders/cash. (Although this will KILL sales!)


The economy is already terrible, and ebay sellers are suffering greatly from low sales across the board, it is evident it is a buyers market. And now the government is enforcing this new taxation which will surely destroy most of the low-mid/high volume sellers on eBay!

Not to mention eBay/Paypal fees are insanely high considering the small margin of profit most sellers make on their product sales.

Your thoughts??
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Old 12-22-2010, 12:56 AM   #2 (permalink)
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My only thought is that the government is going to go after people like you have never seen before in 2011. Thats why they snuck in the law regarding transactions above $600 requiring a 1099 form reported to the IRS in the healthcare bill...yes, the HEALTHCARE bill. They are coming for us all my friends.

Time for a flat tax!
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Old 12-22-2010, 12:56 AM   #3 (permalink)
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This is actually for all of the online payment systems, not just Paypal.

Yeah, lots of interesting things...

Doug Shulman, IRS Commissioner, said that credit card and debit card purchases will be exempt from reporting with the 1099 forms because payment processors will already be reporting the transactions to the IRS.

Last edited by mightbe; 12-22-2010 at 01:06 AM.
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Old 12-22-2010, 01:06 AM   #4 (permalink)
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I mean its not exactly "new taxation," Americans have always been required to pay taxes on income...its just an increase in enforcement of laws that have been in place for years. The IRS is just making it harder for eBay run businesses to cheat the system it seems.

Starting in 2011 it would be in a seller's best interest to keep proper documentation to show profits/losses so that you don't have to pay income taxes on all sales just those which net profit.

As far as accepting money orders/cash, why not give buyers a %age discount for paying through these methods over paypal?
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Old 12-22-2010, 01:06 AM   #5 (permalink)
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Quote:
Originally Posted by paul06901 View Post
I'm sure most of the large dealers/sellers know already, but many others might not know:

"Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:

- receive more than $20,000 in payment volume in a single year; and
- receive more than 200 payments in a single year.

This legislation applies to all payment providers including PayPal and takes effect in 2011, so the first reports will go to the IRS in January 2012. Our goal when the legislation takes effect is to make it easy for PayPal merchants who fall under the provision to report their taxable incomes."


This is taken from here:

https://www.thepaypalblog.com/2008/0...ts-become-law/


I was trying to think of alternatives to avoid the taxation.

Paymate? An alternative payment system very similar to Paypal.

Or simply only accepting Money orders/cash. (Although this will KILL sales!)


The economy is already terrible, and ebay sellers are suffering greatly from low sales across the board, it is evident it is a buyers market. And now the government is enforcing this new taxation which will surely destroy most of the low-mid/high volume sellers on eBay!

Not to mention eBay/Paypal fees are insanely high considering the small margin of profit most sellers make on their product sales.

Your thoughts??
My thoughts well you wouldn't want to hear em I'm pretty sure!! Most of us pay enough taxes already & smell the pork for which the money is spent on. That's my thoughts right there. You can only imagine the rest I can sprew out but I won't!!
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Old 12-22-2010, 01:09 AM   #6 (permalink)
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How about multiple Paypal accounts?
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Old 12-22-2010, 01:14 AM   #7 (permalink)
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How about multiple Paypal accounts?
This is technically only for Business accounts. However...

Is what is going to happen is if Paypal feels you will end up meeting the 200 transactions and $20,000 amount they will make you upgrade your account to a business acount which needs a SSN or Tax ID attached to it.

Interesting that Paypal will FORCE you to add something like a Tax ID or Social Security Number once they request it and you can't do anything with YOUR money until you do.

They have an easy to understand guide here.

https://cms.paypal.com/us/cgi-bin/ma...ng_us/IRS6050W

Last edited by mightbe; 12-22-2010 at 01:17 AM.
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Old 12-22-2010, 01:16 AM   #8 (permalink)
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I mean its not exactly "new taxation," Americans have always been required to pay taxes on income...its just an increase in enforcement of laws that have been in place for years. The IRS is just making it harder for eBay run businesses to cheat the system it seems.

Starting in 2011 it would be in a seller's best interest to keep proper documentation to show profits/losses so that you don't have to pay income taxes on all sales just those which net profit.

As far as accepting money orders/cash, why not give buyers a %age discount for paying through these methods over paypal?

But isn't it going to be that ALL payments are taxed? I didn't see where it said only net profit's were taxed. If that is the case, If someone only bought and sold on ebay, they could just use the ebay records that are kept in "My eBay" in order to total yearly purchases and sales and that would equate the net profit. That is to say if all purchases were made on eBay.
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Old 12-22-2010, 01:24 AM   #9 (permalink)
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Originally Posted by paul06901 View Post
But isn't it going to be that ALL payments are taxed? I didn't see where it said only net profit's were taxed. If that is the case, If someone only bought and sold on ebay, they could just use the ebay records that are kept in "My eBay" in order to total yearly purchases and sales and that would equate the net profit. That is to say if all purchases were made on eBay.
It wouldn't make sense if all sales were taxed as income.


IRS Form 1099-K - Impact of New Tax Law on Small Business Owners - Reporting Revenues From Credit Cards, Debit Cards, Gift Cards, and Paypal

The IRS is just looking for better reporting of sales from small businesses who have practically been on the "honor system" as far as reporting income (until audited), so this is really just to keep small businesses in check and if you aren't making much income selling on eBay then this really shouldn't have an effect on your wallet, I believe.
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Old 12-22-2010, 01:30 AM   #10 (permalink)
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This is the reason I will be done with group breaks after the 2 I have going now. I don't consider myself a business, but would be classified as such. I don't feel like keeping a book that tracks every dime I bring in for group breaks and justifying it at the end of the year. All that would cause me to have to file an extended tax form and pay a CPA to do it for me. Not worth my time or the $$ it will take. Sucks, but it is what it is.
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Old 12-22-2010, 01:32 AM   #11 (permalink)
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It wouldn't make sense if all sales were taxed as income.


IRS Form 1099-K - Impact of New Tax Law on Small Business Owners - Reporting Revenues From Credit Cards, Debit Cards, Gift Cards, and Paypal

The IRS is just looking for better reporting of sales from small businesses who have practically been on the "honor system" as far as reporting income (until audited), so this is really just to keep small businesses in check and if you aren't making much income selling on eBay then this really shouldn't have an effect on your wallet, I believe.
Yes, and obviously they will do some digging into the past once they get some of the numbers for 2011.
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Old 12-22-2010, 01:42 AM   #12 (permalink)
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This is the reason I will be done with group breaks after the 2 I have going now. I don't consider myself a business, but would be classified as such. I don't feel like keeping a book that tracks every dime I bring in for group breaks and justifying it at the end of the year. All that would cause me to have to file an extended tax form and pay a CPA to do it for me. Not worth my time or the $$ it will take. Sucks, but it is what it is.
Yeah I will probably have to consider doing the same
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Old 12-22-2010, 01:48 AM   #13 (permalink)
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Yeah I will probably have to consider doing the same
Yeah, I'm really going to have to slow down after I finish up my NT break. You figure I'll probably have close 50-60 transactions already...and then selling stuff around forums. I'll probably slow down to once GB/year or something like that. I don't sell a lot on ebay, so not worried there, but doing 2 large group breaks like that would end up leaving only about 50 transactions for a year.
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Old 12-22-2010, 01:49 AM   #14 (permalink)
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Yeah, I'm really going to have to slow down after I finish up my NT break. You figure I'll probably have close 50-60 transactions already...and then selling stuff around forums. I'll probably slow down to once GB/year or something like that. I don't sell a lot on ebay, so not worried there, but doing 2 large group breaks like that would end up leaving only about 50 transactions for a year.
Well this doesn't take effect until 2011, thank god!
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Old 12-22-2010, 01:55 AM   #15 (permalink)
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Yeah, I'm really going to have to slow down after I finish up my NT break. You figure I'll probably have close 50-60 transactions already...and then selling stuff around forums. I'll probably slow down to once GB/year or something like that. I don't sell a lot on ebay, so not worried there, but doing 2 large group breaks like that would end up leaving only about 50 transactions for a year.
Hell, I had nearly $10k travel through my account when I ran the 5 case '10 Exquisite break I could estimate that I probably had $40k run through my account this year between group breaks and ebay. May not be a ton, but I'm sure it is something that will raise a lot of eyebrows with the IRS if I were to do it again next year.
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Old 12-22-2010, 02:05 AM   #16 (permalink)
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This is the reason I will be done with group breaks after the 2 I have going now. I don't consider myself a business, but would be classified as such. I don't feel like keeping a book that tracks every dime I bring in for group breaks and justifying it at the end of the year. All that would cause me to have to file an extended tax form and pay a CPA to do it for me. Not worth my time or the $$ it will take. Sucks, but it is what it is.
further proof that government destroys more rather than helps. healthcare, auto industry, banks, your food, internet, group breaks.. we're pretty damn near close to slavery..
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Old 12-22-2010, 02:15 AM   #17 (permalink)
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Nevermind, answered my own question.

Last edited by mightbe; 12-22-2010 at 04:46 AM.
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Old 12-22-2010, 02:21 AM   #18 (permalink)
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further proof that government destroys more rather than helps. healthcare, auto industry, banks, your food, internet, group breaks.. we're pretty damn near close to slavery..
Nvm found sarcasm.

Its really just a balance that is necessary. With no government our country would be in chaos, with too much government our country becomes 1984.
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Old 12-22-2010, 02:23 AM   #19 (permalink)
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Lol yeah without government we'd be much better off
I didn't say that. The more they meddle and take over private entities, the more we become their slaves. Orwell's warning was 100% Correct. He was just off by a few years

If you've never read the book 1984, do so before Barry has them all burned.
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Old 12-22-2010, 02:26 AM   #20 (permalink)
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I didn't say that. The more they meddle and take over private entities, the more we become their slaves. Orwell's warning was 100% Correct. He was just off by a few years

If you've never read the book 1984, do so before Barry has them all burned.
I hope they take over Topps next.
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Old 12-22-2010, 03:10 AM   #21 (permalink)
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So if I sell $19,000 and do only 180 transactions. I don't have to pay taxes right?
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Old 12-22-2010, 03:22 AM   #22 (permalink)
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hell along with paypal and ebay fees, adding the government making sure we're taxed on top of that, sellers may as well just give their product away.
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Old 12-22-2010, 03:42 AM   #23 (permalink)
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cant wait for this. some people are clueless about it and gonna be feeling it.
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Old 12-22-2010, 05:36 AM   #24 (permalink)
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How much are the average taxes?
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Old 12-22-2010, 05:52 AM   #25 (permalink)
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How much are the average taxes?


Whats new: Paypal will now be (in 2011 onwards) reporting your sales activity. The IRS will be cracking down on small business owners who attempt to cheat on their income taxes.

Whats not new: you have to pay income tax to the government (OH RLY?!)

Huh?: Keep all receipts and report+pay proper income taxes on your earnings, but in this business no one makes money so this shouldn't be a problem
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