The End of Auction Sites for the Little Guy?

[michiganmuzzy]

Sounds like you'll just have to weigh the benefits and costs to do business on Ebay.

Times are rapidly changing and the days of anonymous buying and selling anything are just about over. Cash doesn't have much of a future either, as more and more places will refuse to accept it or charge a fee. They'll always be a small untaxed black market, but it will be barter based. Death and taxes...

I did not think a business could refuse cash. I will always be part of the cash or barter black market. As for ebay, i will still buy there but im about done selling there.

 

[jcnull2305]

Let's pump the brakes a bit, fellas.

I do a lot of contract work for which I get 1099'd. On the surface, it looks bad because the tax rate is ridiculous. However, when filing your taxes with the 1099, the itemized deductions are your friend.

See, Uncle Scam and the United States Gub'ment can only tax your gains on sales - after your liabilities.

Example: You buy a Renegade in rough shape for $150. You do some refurbification on it, then sell it to @Idaholewis - because he just can't resist them old T/C's - for $300. The Gub'ment can only tax you on the $150 you made on the sale. That is, until you consider the costs of the Tru-oil you bought to refinish the stock, maybe the brushes and Kroil you used to remove rust. There's even less you're making on the sale.

Plus, there's the usual scenario for all of us - buy it, don't like it or get bored with it, sell it for a loss. Then you write off the loss.

I keep track of everything related to my 1099 stuff - even the mileage I run up on my personal vehicle getting to and from job sites. You could keep track of your mileage buying supplies. Give it all to your tax preparer.

Just ensure the supplies you use for your business are kept separate from the stuff you use for hobbies, and you'll be fine.

With these sites withholding taxes, you'll just wait until you file to get it back - which is less than ideal - but it'll also save you the hassle of quarterly withholdings and you'll get a bigger refund.

You can also write off auction site fees, as well. Costs of doing bid'ness.

I'm sure there's folks here who run shops that can give you more on itemizing.

Ain't I a ray of sunshine!!!

 

[jcnull2305]

The harder they try to regulate and tax me the farther underground i will go

You may put down the shovel, Muzzleman.

On another note, just so's you guys know, I'm a Libertarian, so I believe all taxation is a legalized form of Government Theft - but I digress from the subject of this thread.

 

[brad502a]

The 1099K law was signed by George W Bush (R) in 2008. It's not a problem for the little guy. $20,000 in sales or 200 transactions.

What Ebay is doing now is requiring sellers to link their bank accounts, so buyers can directly pay them through Ebay's system. Ebay has sold PayPal and isn't using them as their exclusive means of funds transfer.

In 1909 William H Taft (R) proposed the modern income tax which became law. Every state in the US has adopted a use tax law that requires buyers to pay sales tax for out of state purchases. Enforcement was voluntary, so most never paid.

South Dakota v Wayfair Inc. was the nail in the coffin that forced all online sellers to collect sales tax.

The real problem is abuse of the commerce clause due to the disastrous Wickard vs Filburn ruling.

Actually it is a problem for the little guy. If you live in a handful of states IL being one of them they 1099K for 1000 and/or 10 transactions. To my surprise I had to claim that **** for basically cleaning up my gun room. Doesn't matter that you sold a $200 scope for $125 it is all treated as income.

 

[1874sharpsshooter]

[/QUO the iternet has ruined everything...antique market ...and ammo market ...then theres people that cut up guns for ebay ..erasing history because they want a few bucks.WE ARNT DUMB. i see you on the other auction sights buying to chop up the guns for parts...END THE INTERNET..END ALL AMMO SALES.SUCKS BUT PROFITEERS HAVE SCREWED THE INTERNET SALES INTO THE GROUND.ANY WITH credit card can buy ammo if there 21...they buy and fill up there cupboards and dont shoot or then I SEE THEM RE-SELLING IT ON AUCTION SIGHTS TO MAKE A GAIN FINANCIALLY... ...i CAUGHT ONE FROM TOWN DOING IT WITH 22 AMMO YEARS AGO when 22 shells were non-existant...ALL BECAUSE he was re-selling and he was in wally world every morning when i went there to pick up my wife...i SHAMED HIM...PLUS HE HAD A JOHM KERRY BUMPER STICKER A ANTI GUN POLITICIAN ON HIS CAR.DONT COME HERE LOOKING FOR SIMPANTHY YOUR THE PROBL;EM

And you are a complete idiot ... thats putting it mildly.

 

[HandyAndy]

I had a fun hobby that Ebay helped to fund before the 1099k law. I used to collect coins from banks and such. I kept all the silvers, but would sell non silvers on Ebay. I like Ike dollar coins and kept some, but would sell most on Ebay. I had scored a lot of the hard to find new paper rolls and would sell them rolled up with an extra new roll. The bicentennial ones would easily go for $3 or more if there were nice. Common ones would go for at least $1.50 and larger lots would usually bump up the price.

Not a big profit considering my time invested, but it was fun. The 1099k law killed it for me. Could you imagine trying to file taxes for something like that? Or trying to get receipts from banks or businesses when "buying" coins at face value?

ETA I also sold some half dollars and had scored a bunch of new $20 "double shotgun" paper rolls. Those were popular on Ebay filled with nice condition coins.

 

[fishhawk2700]

Let me see if i got this right. You just told a guy that has been a member here for at least 9 years not to post about a Ebay selling issue? Sorry but you are a bit difficult to read with all the typos. So i want to make sure im understanding this correctly.

WOW, I've been on here nine years? I gotta get a life.

 

[1874sharpsshooter]

WOW, I've been on here nine years? I gotta get a life.

You and me both. I been here 12 years under my current name. Was here before under a different name but left then came back . Gee how time flies.

 

[fishhawk2700]

[/QUO the iternet has ruined everything...antique market ...and ammo market ...then theres people that cut up guns for ebay ..erasing history because they want a few bucks.WE ARNT DUMB. i see you on the other auction sights buying to chop up the guns for parts...END THE INTERNET..END ALL AMMO SALES.SUCKS BUT PROFITEERS HAVE SCREWED THE INTERNET SALES INTO THE GROUND.ANY WITH credit card can buy ammo if there 21...they buy and fill up there cupboards and dont shoot or then I SEE THEM RE-SELLING IT ON AUCTION SIGHTS TO MAKE A GAIN FINANCIALLY... ...i CAUGHT ONE FROM TOWN DOING IT WITH 22 AMMO YEARS AGO when 22 shells were non-existant...ALL BECAUSE he was re-selling and he was in wally world every morning when i went there to pick up my wife...i SHAMED HIM...PLUS HE HAD A JOHM KERRY BUMPER STICKER A ANTI GUN POLITICIAN ON HIS CAR.DONT COME HERE LOOKING FOR SIMPANTHY YOUR THE PROBL;EM

I, uh,...................Nope not gunna do it. This speaks for itself.

 

[D55]

I started on this and other boards moving, weather selling or giving it away +shipping, by pm. No one but them and I know what went on. Shouldn't have to be that way but I don't see things getting better, I hope they do, that has not been seen by me in my short 65yrs.

 

[michiganmuzzy]

I, uh,...................Nope not gunna do it. This speaks for itself.

Hey, youre not cwwenterprises? Are you?jk

 

[fishhawk2700]

Hey, youre not cwwenterprises? Are you?jk

You'll never know.

 

[Caniborrowsomeammo]

Let's pump the brakes a bit, fellas.

I do a lot of contract work for which I get 1099'd. On the surface, it looks bad because the tax rate is ridiculous. However, when filing your taxes with the 1099, the itemized deductions are your friend.

See, Uncle Scam and the United States Gub'ment can only tax your gains on sales - after your liabilities.

Example: You buy a Renegade in rough shape for $150. You do some refurbification on it, then sell it to @Idaholewis - because he just can't resist them old T/C's - for $300. The Gub'ment can only tax you on the $150 you made on the sale. That is, until you consider the costs of the Tru-oil you bought to refinish the stock, maybe the brushes and Kroil you used to remove rust. There's even less you're making on the sale.

Plus, there's the usual scenario for all of us - buy it, don't like it or get bored with it, sell it for a loss. Then you write off the loss.

I keep track of everything related to my 1099 stuff - even the mileage I run up on my personal vehicle getting to and from job sites. You could keep track of your mileage buying supplies. Give it all to your tax preparer.

Just ensure the supplies you use for your business are kept separate from the stuff you use for hobbies, and you'll be fine.

With these sites withholding taxes, you'll just wait until you file to get it back - which is less than ideal - but it'll also save you the hassle of quarterly withholdings and you'll get a bigger refund.

You can also write off auction site fees, as well. Costs of doing bid'ness.

I'm sure there's folks here who run shops that can give you more on itemizing.

Ain't I a ray of sunshine!!!

I sell on ebay continuously as I'm clearing out a hoarder house that I inherited. I also sell Browning A5 parts (NEW). I don't make a whole lots of moola and the ebay 1099 doesn't hurt me as I have a lot of other ventures going on (we have 3 rentals and I have a small excavator/tractor business and I repair small engines too. I write off everything except claiming a part of our house as an office. Tools, postage, parts, tires, oils, patches, "cleaning rods" and misc. supplies, cameras, binoculars, computers, paper, etc. . Too bad I haven't found a way to write off powder and lead. IRS just requires you to attempt to make money in your endeavor to claim deductions. I pay good monies in taxes, have to, to support all the leeches in Kalifornia, but if I didn't deduct all that stuff I imagine I would be paying much more.
My CPA dreads me coming in, I try to send the wife but she insists I go in to meet the CPA with her.

 

[Bad Karma]

WOW, I've been on here nine years? I gotta get a life.

But only 856 posts.... not bad!

 

[cvco]

To fishhawk the OP,

Im not clear or sure you are understanding the problem correctly so lets sort this out.

Being subject to income tax and income tax isnt the same thing. FYI, ebay and others have been reporting to the IRS for quite some time now. If you are saying you want to sell, and sell at a profit, with no tax liability and no reporting to the IRS, that hasnt been possible since at least 1913. Sales income to a self-employed person is taxable from the first dollar and thats it and nothing here is new.

But ALL income/sales being taxable doesnt mean you will necessarily ever pay a dime in tax. $100 in sales - 100 in expenses = 0 profit and therefore 0 tax. That $100 was taxable, yet no tax was owed. So whats the problem? But, $100 in sales - 0 expenses = $100 profit which is subject to 15% tax which includes Social Security. So you paid $15. Is that so bad? If you want to avoid all work and had $7,000 in sales, just say $7,000 on your tax return and pay $1,050 income tax and its done. WORK on this and maybe pay NOTHING. Up to you.

Lets continue. A lot of people want to sell stuff tax free, no bookkeeping, no tax returns, no nothing and thats called tax fraud and that can mean prison. Its the law, you HAVE to report it so what difference if you do or Ebay does? Its not fair to come here and whine about lack of ability to be a fraud. Until the IRS is abolished, we have to comply. So what are the best ways? THATS the question.

Example. We make rifle slings and sell on Ebay and also Ecrater.com which has no reporting system (doesnt mean you dont owe tax, its that they are based out of US and dont comply with US laws. I highly recommend Ecrater.com because they dont seem to care what people sell and charge much less than Ebay and others. I think we pay 2.5% at our desired level of service). We keep strict books and account for every cent. We accurately report all online sales and pack in every possible and allowable expense. We have much experience at taxation and self-employment issues and know what we can and cant do. Our taxes are minimal, if any. We dont cheat or lie and we dont have to.

Given that i will assume you will want to do the same and be honest, its a matter how to go about your work with the goal of lowest possible taxes which is a very legit mission but requires work on your part. In the new Ebay Managed Payments, google that in youtube and follow everything thats being said about it. As one channel says, its time for people to start keeping books and there are explanations about how to do it.

OUR problem with Managed Payments isnt the SS#, its that they want total control over your personal bank account for credits and debits whenever they like. We got a notice that they would cancel the account if we didnt sign up by February. I got nervous and began to sign up, getting half way through and then stopping. I stopped to read the fine print in the agreement which to me is devastating for the control they want. No way. So I called them last week and went over the complaints and said I dont want this, i dont agree. They said too late, you already signed up. Really? I never entered any bank info. I hung up and called again, getting an agent who said, "well, its just an invitation, not a requirement." Really? So Ebay lied to get people signed up? Sounds nefarious. So I said, you cant have my personal bank account, I will have to get a new account somewhere, some bank and let you know later. We are going back and forth in emails now. Im thinking that its time to stop selling on Ebay simply because of the control they want over your bank account. Nevermind any reporting of sales they do because you are going to report the same number on your tax return but with expenses and "cost of goods sold" to drive that potential tax as low as possible, possibly to zero.

That said, sales of personal household items are not a taxable event, in general. SOME places in the country, cities say that garage sales are taxable but i have yet to find anyone who ever paid income tax on the sale of their 30-year old lawn mower. But on this question, please do call Ebay and ask if they intend to report to IRS such a transaction on your account. If so, then they will report $10,000 total money through your account, and you will report $3,000 in merchandise sales with a letter explaining that the other $7,000 that Ebay reported was for "cleaning out the attic" by you. In theory anyway, Ebay is interested in reporting of regular merchandise in the normal course of business, not an old broken clock you found in your closet. Call them for clarification.

Also, for now, start checking out other competitors like Ecrater, Bonanza, Esty, there are many, and you can also explore setting up at Proxibid.com for auctions.

The upshot here is to plan to be honest, create a system and not give up so easily.

 

[Caniborrowsomeammo]

^^^^^ Excellent explanation.

 

[fishhawk2700]

To fishhawk the OP,

Im not clear or sure you are understanding the problem correctly so lets sort this out.

Being subject to income tax and income tax isnt the same thing. FYI, ebay and others have been reporting to the IRS for quite some time now. If you are saying you want to sell, and sell at a profit, with no tax liability and no reporting to the IRS, that hasnt been possible since at least 1913. Sales income to a self-employed person is taxable from the first dollar and thats it and nothing here is new.

But ALL income/sales being taxable doesnt mean you will necessarily ever pay a dime in tax. $100 in sales - 100 in expenses = 0 profit and therefore 0 tax. That $100 was taxable, yet no tax was owed. So whats the problem? But, $100 in sales - 0 expenses = $100 profit which is subject to 15% tax which includes Social Security. So you paid $15. Is that so bad? If you want to avoid all work and had $7,000 in sales, just say $7,000 on your tax return and pay $1,050 income tax and its done. WORK on this and maybe pay NOTHING. Up to you.

Lets continue. A lot of people want to sell stuff tax free, no bookkeeping, no tax returns, no nothing and thats called tax fraud and that can mean prison. Its the law, you HAVE to report it so what difference if you do or Ebay does? Its not fair to come here and whine about lack of ability to be a fraud. Until the IRS is abolished, we have to comply. So what are the best ways? THATS the question.

Example. We make rifle slings and sell on Ebay and also Ecrater.com which has no reporting system (doesnt mean you dont owe tax, its that they are based out of US and dont comply with US laws. I highly recommend Ecrater.com because they dont seem to care what people sell and charge much less than Ebay and others. I think we pay 2.5% at our desired level of service). We keep strict books and account for every cent. We accurately report all online sales and pack in every possible and allowable expense. We have much experience at taxation and self-employment issues and know what we can and cant do. Our taxes are minimal, if any. We dont cheat or lie and we dont have to.

Given that i will assume you will want to do the same and be honest, its a matter how to go about your work with the goal of lowest possible taxes which is a very legit mission but requires work on your part. In the new Ebay Managed Payments, google that in youtube and follow everything thats being said about it. As one channel says, its time for people to start keeping books and there are explanations about how to do it.

OUR problem with Managed Payments isnt the SS#, its that they want total control over your personal bank account for credits and debits whenever they like. We got a notice that they would cancel the account if we didnt sign up by February. I got nervous and began to sign up, getting half way through and then stopping. I stopped to read the fine print in the agreement which to me is devastating for the control they want. No way. So I called them last week and went over the complaints and said I dont want this, i dont agree. They said too late, you already signed up. Really? I never entered any bank info. I hung up and called again, getting an agent who said, "well, its just an invitation, not a requirement." Really? So Ebay lied to get people signed up? Sounds nefarious. So I said, you cant have my personal bank account, I will have to get a new account somewhere, some bank and let you know later. We are going back and forth in emails now. Im thinking that its time to stop selling on Ebay simply because of the control they want over your bank account. Nevermind any reporting of sales they do because you are going to report the same number on your tax return but with expenses and "cost of goods sold" to drive that potential tax as low as possible, possibly to zero.

That said, sales of personal household items are not a taxable event, in general. SOME places in the country, cities say that garage sales are taxable but i have yet to find anyone who ever paid income tax on the sale of their 30-year old lawn mower. But on this question, please do call Ebay and ask if they intend to report to IRS such a transaction on your account. If so, then they will report $10,000 total money through your account, and you will report $3,000 in merchandise sales with a letter explaining that the other $7,000 that Ebay reported was for "cleaning out the attic" by you. In theory anyway, Ebay is interested in reporting of regular merchandise in the normal course of business, not an old broken clock you found in your closet. Call them for clarification.

Also, for now, start checking out other competitors like Ecrater, Bonanza, Esty, there are many, and you can also explore setting up at Proxibid.com for auctions.

The upshot here is to plan to be honest, create a system and not give up so easily.

Yes, lets sort this out.

First, I don't think YOU understand my issues with Ebay possibly issuing 1099K on individual accounts. As it stands now, on the federal level, Ebay is not REQUIRED to report on individual accounts unless they are over 200 transactions, or 20,000(state laws may differ). This doesn't mean That Ebay doesn't offer ALL the info to the IRS. To issue a 1099K you need a SS# You can't issue a 1099K to an IP. I also fully understand that any "profit" I make is subject to Federal Income Tax, having owned my own business.

Now lets address my Ebay transactions for 2020. I had 21 sales for a total of around 2,000.00 just to keep the numbers round. The items I sold were a byproduct of my hobby, consisting mostly barrels, stocks, and some old fishing tackle. If 200 bucks of these sales were profit, I would be surprised. The problem with most of these items is there is no paper trail. Sone of the MLs are purchased online and I have receipts, but most are bought FTF, at gun shows and a various other places that don't or won't give receipts. The receipts from the old tackle are long gone. Without these receipts, it's hard to deduct the original cost. If I made something up and tried to take the deduction that would be tax fraud.

Now this is what I'm "WHINING" about. To start with, these sales are not through a business, which means they get attached to my personal income. My wife and I file jointly and are at a 24% tax bracket. Per my accountant our primary income is listed first with any other income is listed after that. Now, if I have receipts for everything, my 200 bucks gets taxed at 24% and possibly more if the 200 bumps me into the next bracket. Now for 2020, Ebay was charging 10% fee for most sales. Thats 200.00 in fees on the whole 2000.00 to Ebay. Now lets say I have receipts for a 1000.00 of my sales, I would have to claim 1000.00 as profit/income that means I'm on the hook for 240.00 in FICA(not sure if I owe 6.2% for SS, med). It's probably more complicated that but I would owe Ebay and the Fed 440.00 of my 2000.00 in sales and I would be way in the red. Now I will tell you that I don't have to do this little hobby/business. It just kept me busy and I enjoyed it, and believe me, I wasn't getting rich.

Maybe this clarifies my whine, which is having to deal with detailed records so I can pay taxes on 200 bucks and Ebays ever increasing fees makes selling there just not worth the hassle.