eBay, PayPal, and the IRS


In another forum I peruse, I saw this interesting comment about eBay, PayPal, and the IRS. I thought this group might find the observations intriguing.


While Ebay and other similar venues have fought having to report online sales to the IRS via a 1099 form, that day has finally come. If you have more than $20,000 in sales and 200 transactions, Paypal is required to report the dollars to the IRS via a 1099 starting in 2011 – Ebay itself has not yet been mandated to report transactions – yet. I have attached links to the IRS website on online sales and to a Wall Street Journal article from last summer. The Wall Street Journal says $10,000 in sales, but that is not correct, it is $20,000.


Now you all know why Ebay is trying to funnel all of their payments through Paypal – so Ebay can continue to avoid having to report the transaction information to the IRS.


I will also clarify one other thing for you. Capital gains on collectables are taxed at 28%. Consignment sales are self employed income, not collectables, and fall under different tax. I won’t even get into the sales taxes and state income tax consequences……..that is a whole other can of worms.


IRS link
Wall Street Journal link


Perhaps this isn’t any significant news for most of us since only big dealers would have over $20K in sales and they’re probably already paying the appropriate income and sales taxes. But how can PayPal necessarily determine that each transfer of money inbound is a taxable event?




$20k at ebay! wow… wish i made $20k at ebay…

Does it say ‘how’ PayPal is to determine if it’s an online sale other than ebay?? I work online and about 95% of my income goes through PayPal…. and a lot of non-taxable income as well….

By hiker on December 20th, 2008 at 1:36 am

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