2022 law change - PayPal transactions over $600 (3 Viewers)

[Poker Zombie]

Exactly. I’m concerned about my group buys going forward. When I pay my invoices, I use PayPal. I don’t want the feds and state coming after me later. The feds would be after the vendor for the income. But the state could try to collect use tax from me for the purchases, which easily run into the thousands of dollars.

You should not be worried.

This is not a new rule, it is just an amendment to an old rule. The old rule set the automatic reporting threshold at $20,000. In 2022, it will be $600.

Numerous group buys here exceeded $20,000. I find it highly unlikely that each of those massive buys resulted in audits, and the GB coordinator just swallowed the tax bill in silence. Much more, that those same people would run other group buys.

Put down your pitchforks, snuff out your torches. The only people that should be getting bent are those people that have been cheating on their taxes all along - and quite frankly, we should be the ones mad at them.

 

[Himewad]

No, this is a new law. The threshold and the reporting requirement by third party payers is the change to the law.

 

[Machine]

Exactly. I’m concerned about my group buys going forward. When I pay my invoices, I use PayPal. I don’t want the feds and state coming after me later. The feds would be after the vendor for the income. But the state could try to collect use tax from me for the purchases, which easily run into the thousands of dollars.

Himewad, make it a condition of the group buy that only FF is used. I would bet we will be fine on minimums and might be less headache for you in the long run.

 

[Himewad]

Himewad, make it a condition of the group buy that only FF is used. I would bet we will be fine on minimums and might be less headache for you in the long run.

The problem isn’t people paying me. I don’t think I have ever had someone place an order in a group buy that exceeded $600. I order dealer buttons, not chips. But if my purchases are reported, which are done using G&S, then I might be on the hook for use tax.

 

[Himewad]

You should not be worried.

This is not a new rule, it is just an amendment to an old rule. The old rule set the automatic reporting threshold at $20,000. In 2022, it will be $600.

Numerous group buys here exceeded $20,000. I find it highly unlikely that each of those massive buys resulted in audits, and the GB coordinator just swallowed the tax bill in silence. Much more, that those same people would run other group buys.

Put down your pitchforks, snuff out your torches. The only people that should be getting bent are those people that have been cheating on their taxes all along - and quite frankly, we should be the ones mad at them.

I wasn’t aware I was organizing a riot by making people aware of a change to the laws regarding PayPal, which almost everyone on this site uses. I didn’t intend to trigger your pitchfork spidey-senses.

Use tax is an incredibly under-reported tax. Hardly anyone pays It, despite the fact that almost everyone owes it.

 

[rjdev7]

I wasn’t aware I was organizing a riot by making people aware of a change to the laws regarding PayPal, which almost everyone on this site uses. I didn’t intend to trigger your pitchfork spidey-senses.

Use tax is an incredibly under-reported tax. Hardly anyone pays It, despite the fact that almost everyone owes it.

I for one appreciate you making this post. I, too, use venmo for poker game payouts, and I find it a huge gamble to assume the IRS won’t flag 100s of payments to me in a given year, or even multiple payments in a single night. Would be hard to explain they’re “reimbursements” on that big of a scale.


Might be going back to good old cash… or crypto?

 

[BearMetal]

Look, there's a simple solution to all of this: slash chip prices. Someone ask Krish to knock 2 digits off his current sales and we're good.

What's that? 2 digits not enough to avoid the tax? Fine, 3, but that's my final offer.

 

[DoubleEagle]

Only commercial transactions are supposed be reported to the IRS, not PayPal Friends and Family transactions. But PayPal monitors all the transactions on the platform in order to comply with government financial regulations. Thus, it can determine if commercial users are exploiting the PPFF option in order to evade the tax obligations.

Idk how they decide. It seems to me that an account with a large amount of friends and family transactions might be determined to be commercial or suspected of being commercial and have their transactions reported. I think volume will have a lot to do with it. I don't think that just labeling transactions as friends and family is going to eliminate the chances of getting a 1099K. Just my opinion.

 

[TheOffalo]

Only commercial transactions are supposed be reported to the IRS, not PayPal Friends and Family transactions. But PayPal monitors all the transactions on the platform in order to comply with government financial regulations. Thus, it can determine if commercial users are exploiting the PPFF option in order to evade the tax obligations.

Idk how they decide. It seems to me that an account with a large amount of friends and family transactions might be determined to be commercial or suspected of being commercial and have their transactions reported. I think volume will have a lot to do with it. I don't think that just labeling transactions as friends and family is going to eliminate the chances of getting a 1099K. Just my opinion.

I think the second paragraph, and the uncertainty, is what most of us are worried about.

 

[Himewad]

I think the second paragraph, and the uncertainty, is what most of us are worried about.

Yup. But instead I’m accused of passing out tinfoil hats and pitchforks.

 

[HaRDHouSeiNC]

So hold up. If I buy a set for 5000 and later decide to sell it for 5000 your suggesting I bite the bullet and pay tax on that income??

You’ll need a spreadsheet and run a PNL honestly
If not then you have to go back and prove if you didn’t make money

Yup. But instead I’m accused of passing out tinfoil hats and pitchforks.

I’m liking USDT more and more

 

[DoubleEagle]

You’ll need a spreadsheet and run a PNL honestly
If not then you have to go back and prove if you didn’t make money

I’m liking USDT more and more

Coinbase will issue 1099k’s also I understand.

 

[HaRDHouSeiNC]

Coinbase will issue 1099k’s also I understand.

You don’t need Coinbase to hold USDT

 

[DoubleEagle]

You don’t need Coinbase to hold USDT

True, but that is how a lot of people buy USDT and transfer to buy stuff.

 

[Saoliver]

Luke 18:11 -- The Pharisee stood by himself and prayed: 'God, I thank you that I am not like other people—robbers, evildoers, adulterers—or even like this tax collector.'

@johnjohn Somehow I knew that I’d get updoots from you on this one. Hahahahaha

 

[CrazyEddie]

The only people that should be getting bent are those people that have been cheating on their taxes all along - and quite frankly, we should be the ones mad at them.

If you sell a collectible figurine on eBay for $50, you are obliged to pay capital gains tax. You are obliged to keep track of the date you originally purchased it and the amount you originally paid for it, so that you can determine both the cost basis and the holding period. You are obliged to calculate the difference between your purchase price and sale price, and then pay either 15% of the difference (assuming it was a gain and not a loss) if you've held it for more than a year, or 28% of the difference if you've held it for less than a year.

Everyone who has had a transaction similar to this on eBay and who did not do the corresponding paperwork has been cheating on their taxes. I suspect this amounts to tens of millions of people, perhaps even hundreds of millions of people, who have been tax cheats for years, perhaps decades.

I'm not the slightest bit mad at them for not knowing that they owed capital gains taxes on what most people would consider inconsequential transactions. Most people don't have the first clue that such things are an issue, and in all honesty I don't believe that they should.

Regardless, they are criminals, tens of millions of them.

They have been saved from the stern gaze of justice by minimum reporting requirements such as the ones that, until this year, applied to transactions made through third-party payment processors such as PayPal. But now that those reporting requirements have been lowered from $20,000 to only $600, tens of millions of people are going to learn what a 1099-K is and discover that they should have been keeping spreadsheets tracking the purchase dates and amounts of all their knick-knacks.

At last, these swindlers will face the consequences of their selfish ways.

 

[CrazyEddie]

Note that the lowered requirements means that more 1099-Ks will be issued. If you get a 1099-K, it doesn't necessarily mean you owe tax; it just means that someone paid you for something (and now the IRS knows it).

It could be business income.
It could be a capital asset sale.
It could be a hobby-related receipt.
It could be a gift.
It could be someone paying you back after you paid for something on their behalf.

Some of these things are taxable and some of them are not. The 1099-K doesn't specify which. But getting one means that you will have to account for it appropriately on your tax return. And if the IRS somehow notices that your tax return doesn't match the 1099-Ks that you got, they might call you up to ask why not.

 

[Budha]

If you sell a collectible figurine on eBay for $50, you are obliged to pay capital gains tax. You are obliged to keep track of the date you originally purchased it and the amount you originally paid for it, so that you can determine both the cost basis and the holding period. You are obliged to calculate the difference between your purchase price and sale price, and then pay either 15% of the difference (assuming it was a gain and not a loss) if you've held it for more than a year, or 28% of the difference if you've held it for less than a year.

Everyone who has had a transaction similar to this on eBay and who did not do the corresponding paperwork has been cheating on their taxes. I suspect this amounts to tens of millions of people, perhaps even hundreds of millions of people, who have been tax cheats for years, perhaps decades.

I'm not the slightest bit mad at them for not knowing that they owed capital gains taxes on what most people would consider inconsequential transactions. Most people don't have the first clue that such things are an issue, and in all honesty I don't believe that they should.

Regardless, they are criminals, tens of millions of them.

They have been saved from the stern gaze of justice by minimum reporting requirements such as the ones that, until this year, applied to transactions made through third-party payment processors such as PayPal. But now that those reporting requirements have been lowered from $20,000 to only $600, tens of millions of people are going to learn what a 1099-K is and discover that they should have been keeping spreadsheets tracking the purchase dates and amounts of all their knick-knacks.

At last, these swindlers will face the consequences of their selfish ways.

Are you really serious with this stuff?

Edited - Sarcasm detection “apparati” set to the “on” position

 

[CrazyEddie]

Are you really serious with this stuff.

I was being partially sarcastic with that post. It's absolutely true that people owe these sorts of nuisance taxes even though nobody pays them. However, I don't think anyone should have to pay them, and I think the new lowered reporting requirements are a big mistake; I was trying to illustrate why it's a big mistake with my examples.

 

[Budha]

I was being partially sarcastic with that post. It's absolutely true that people owe these sorts of nuisance taxes even though nobody pays them. However, I don't think anyone should have to pay them, and I think the new lowered reporting requirements are a big mistake; I was trying to illustrate why it's a big mistake with my examples.

whew - lol. You had me going man.

And for my next act…

 

[HaRDHouSeiNC]

True, but that is how a lot of people buy USDT and transfer to buy stuff.

Buy then transfer off to hardware wallet won’t cause any tax paperwork

 

[Tommy]

I'm launching a PCF coin.

 

[JMC9389]

I'm launching a PCF coin.

To the moon!

 

[CrazyEddie]

Now that payments over $600 will automatically be reported to Big Brother, is there any concern out there about the feds sharing this information with state tax collectors in an attempt to collect sales tax?

I don't think that the new reporting requirements will affect this particular concern, i.e. the new requirements won't affect sales tax collection.

Here's why. The new requirements mean that at the end of the year, people (more people than previously) will get a 1099-K showing the total amount that they received via PayPal. It doesn't show any amounts that they paid, and the amount that they received is a total for the year without showing any itemized transactions.

This means that the IRS won't have specific information about your purchases, and will only have aggregate information about your sales (and everyone else's sales). That means they can't tell what purchases you've made, neither by checking your form directly, nor by trying to get at it backwards by looking at everyone else's forms. Since the IRS can't tell from these forms what purchases you've made, neither they nor the states can use these forms to figure out how much sales tax or use tax you might owe on those purchases.

It's conceivable they could use this 1099-K data to see how much you've received and then try to collect sales tax due on your sales. If you're a vendor, you probably already have mechanisms in place to track, report, and pay any sales tax that you are responsible for collecting, and the issuance of 1099-K forms (even to low dollar amounts) probably doesn't change much here.

I am not a tax expert or accountant, so don't rely on anything I say.

 

[Poker Zombie]

If you sell a collectible figurine on eBay for $50, you are obliged to pay capital gains tax. You are obliged to keep track of the date you originally purchased it and the amount you originally paid for it, so that you can determine both the cost basis and the holding period. You are obliged to calculate the difference between your purchase price and sale price, and then pay either 15% of the difference (assuming it was a gain and not a loss) if you've held it for more than a year, or 28% of the difference if you've held it for less than a year.

If I sell a stock for $50, I am obliged obliged to keep track of the date I originally purchased it and the amount you originally paid for it, so that I can determine both the cost basis and the holding period. I am obliged to calculate the difference between my purchase price and sale price, and then pay either 15% of the difference (assuming it was a gain and not a loss) if I've held it for more than a year, or 28% (actually 22% for my income bracket) of the difference if I've held it for less than a year.

I don't get why I have been paying taxes for 30 years on the same income that a collectable's trader hasn't been.

 

[Poker Zombie]

Now that payments over $600 will automatically be reported to Big Brother

I don't believe for a minute that this will be limited to Goods & Services transactions.

in theory, something like that is not SUPPOSED to be reported. PPFF is SUPPOSEDLY exempt.

I think it's reasonable that they would just report everything.

Nothing other than the aggressive nature of the IRS.

now they will be compelled to cooperate

I don’t want the feds and state coming after me later.

Yeah... I don't see why I thought you were fixin' for a fight with the government.

 

[RivieraDanny]

Note that the lowered requirements means that more 1099-Ks will be issued. If you get a 1099-K, it doesn't necessarily mean you owe tax; it just means that someone paid you for something (and now the IRS knows it).

It could be business income.
It could be a capital asset sale.
It could be a hobby-related receipt.
It could be a gift.
It could be someone paying you back after you paid for something on their behalf.

Some of these things are taxable and some of them are not. The 1099-K doesn't specify which. But getting one means that you will have to account for it appropriately on your tax return. And if the IRS somehow notices that your tax return doesn't match the 1099-Ks that you got, they might call you up to ask why not.

The irs never calls you.

 

[CrazyEddie]

If I sell a stock for $50, I am obliged obliged to keep track of the date I originally purchased it and the amount you originally paid for it, so that I can determine both the cost basis and the holding period. I am obliged to calculate the difference between my purchase price and sale price, and then pay either 15% of the difference (assuming it was a gain and not a loss) if I've held it for more than a year, or 28% (actually 22% for my income bracket) of the difference if I've held it for less than a year.

I don't get why I have been paying taxes for 30 years on the same income that a collectable's trader hasn't been.

People understand and expect to pay cap gains on stocks, and stock trades are large transactions that have material effects on people's net worth. No one is selling a few hundred dollars of stock in a year. They're either active traders who are making a significant chunk of their income by trading, or they're regular people with retirement accounts; in both cases, the treatment of capital gains is essentially baked in to the existing processes. Traders keep track of cost basis and retention period because they know that's part of the trading; people with retirement accounts don't really worry about it because their finance company deals with it for them. In both cases there are omnipresent electronic systems to keep track of the required information automatically.

But effectively no one is expecting to pay capital gains taxes on small sales of physical assets, even though technically it's always been required on such sales, and even though nearly everyone makes such sales.

The small number of people who, like stock traders, have been making a living by buying and selling knick-knacks have already been covered by the earlier, higher reporting requirements. The new requirements will hit everyone with a tax which they previously didn't even know existed. The issue isn't the tax, it's the compliance burden. We're now forcing everyone to understand how to handle capital gains (including tracking original purchase price and date of purchase) for items that are essentially of no material consequence, and effectively no one is prepared to do so.

This is bad policy. Laws and regulations should have thresholds, and those thresholds should reflect both the materiality of the matter at hand (i.e. $10,000 matters but $10 is immaterial) and the normal expectations and habits of normal people who are neither sophisticated nor highly informed on the regulations in question. In short, we shouldn't be requiring people to account on their tax returns for payment flows as low as $600/year because a) that's too small to matter and b) almost nobody is expecting it and c) almost nobody knows how to handle it and d) almost nobody should need to know how to handle it. It's a nuisance, and the government should not be imposing nuisances on the public at large.

 

[ekricket]

the government should not be imposing nuisances on the public at large.

??? Pretty sure this is in their job description, and it’s really the only thing they excel at

 

[CrazyEddie]

??? Pretty sure this is in their job description, and it’s really the only thing they excel at

On the whole, I'm rather pleased with the fire and EMS services, having been an occasional customer...