eBay Sends Requests to Sellers for IRS Form W-9

by: iheartjacksparrow

Sounds like a way for eBay to show a bump in revenue for the end of the year, just keep the sellers' money until eBay gets the "correct" paperwork.

by: eBaySince2006

I just got this same notice in the mail from my Bank Of America business account. I've been in business 15 years and never changed anything. I am so confused, and hold times are hours. We definitely need more information what's going on.  

by: plcombs

all part of the Biden Tax crackdown...this has been getting ramped up since last March with very strict enforcement.

The current Administration has been talking about adding over 80,000 new IRS agents for months to boost enforcement, not enforcement for the rich, but for the low-hanging fruit, the small business person, part time seller etc..

Keep good records and expect to spend more time each month on Compliance,this is just the start, .  

by: Shanna

Why would eBay hold payouts in 2021 for tax info needed for 2022? Oh, that's right, any excuse to pump up the float.

by: Ric

eBay just created a new hoop for sellers to jump through and it enables them to keep your money in their pocket until they are satisfied you have jumped high enough.  

by: Rexford

"all part of the Biden Tax crackdown...this has been getting ramped up since last March with very strict enforcement."  

Only tax cheats need to worry about this. Those who pay their taxes do not fear IRS agents.  How about all of the billionaires who don't pay taxes.   Bezos, Musk anyone?

The previous president granted a tax free-for-all to millionaires and billionaires and due to that drove the deficit up 39% while he was in office.  He himself boasted about not paying taxes.  The chickens may come home to roost soon on that boast.

Sorry to get political but you opened the dialog.

by: Marie

@jack

How would that work exactly?  You do know that Ebay doesn't handle the money, right?  Adyen handles the actual money, Ebay does not.

by: Marie

There was a lot of upset on the Ebay threads over this as no one understood what was going on.  I know it certainly did not make sense to me.

But through conversation we learned that IRS released a letter / list of sellers that needed to fill out a W9 because the SSN, TIN, or EIN they filed their 2020 taxes with did not match previous IRS records.  So they needed clarification.

Ebay is NOT currently holding funds on these sellers UNLESS they ignore the request and do not submit the form by the deadline stated on their notification.  Then I'm not sure if they actually hold all their funds or just 24% of them.  

None of the sellers that were part of the conversation took it that far to see what would happen, they all just submitted the form and are now fine.

by: iheartjacksparrow

@Marie - Adyen might be the payment processor, but eBay gets the money from them and passes it on to the sellers. Otherwise, how would sellers be billed for fees? Adyen certainly isn't handling that.

by: stevel

This is because of the new reporting required by Biden's American Rescue Plan Act of 2021. Congress decided there were so many sellers added during the shutdowns that could provide additional tax revenue. A broad net has been cast on all online selling platforms, eBay, Paypal, Facebook, Etsy. Casual sellers who haven't documented the purchase price of what they sell will be surprised when they are taxed on 100% profit!        80,000 new IRS agents to monitor?

by: Marie

@jack

That isn't how it works.  Fees like on most other sites is collected at the time of the sale.  There is no reason for the money to go to Adyen only to come back to Ebay.  Adyen is perfectly capable of initiating the ACH payout.

by: Marie

@stevel

Not really.  If I'm not mistaken, the lowering of the 1099K threshold was on the table during the Trump admin, but they didn't do it then, it came across in the first stimulus plan during the Biden admin.  

I clearly have not read what you read.  I didn't see any articles that Congress said or was even aware of what you stated.  But with all the info out there, I most certainly could have missed it.

This does NOT affect Facebook at least not yet.  It is ONLY for Marketplaces that have their own money processing programs and for Money Processors like PayPal.

Let's not forget that for any size seller that sells stuff for a profit.  They were ALWAYS suppose to be reporting their income on their Federal Tax Returns.  So really this lower threshold only affects those that have not been doing what they were suppose to be doing in previous years.  For those that have always reported their income, they have no concerns about this at all.  For those that have not been doing what they were suppose to do all along, they are they ones that have concerns.

For Casual sellers that ONLY sell their own stuff from around the house, there are protections for them in the IRS rules.  If they get a 1099K they will still have to claim in on their Federal tax return, but that does NOT mean they will owe taxes on it.  These types of sellers need to do their homework on the subject so they know what to do and what to expect.  Along with keeping the best records they can.

https://www.findlaw.com/tax/federal-taxes/do-you-need-to-r
eport-your-online-sales-to-the-irs.html

https://www.irs.gov/businesses/gig-economy-tax-center

by: wca

stevel - The ink is barely dry on this legislation.  After legislation is passed, implementing regs have to be written and passed on to the affected agencies where employees will be trained, forms printed, etc.  This is absolutely NOT an instant process as you present it.  

Tax policy for the US government is an enormously complex topic based on concerns far bigger than targeting online sellers in order to raise what amounts to a very tiny amount of additional tax revenue.  

by: stevel

@Marie
I received the notification from Facebook Marketplace yesterday. I am glad you recognize the Trump Administration recognized this was not a good option. My  CPA/tax Attorney advised casual sellers, save your receipts!

Beginning in tax year 2022, individuals, partnerships, LLCs, and corporations that earn more than $600 through online venues will start receiving Form 1099-K, Payment Card and Third-Party Network Transactions, on which that income will be reported to themselves and the IRS. This change will substantially increase the number of Forms 1099-K required to be filed with the IRS and furnished to recipients in early 2023.

by: MIscetal

I have had the promise of payout of several hundreds of dollars - supposedly, today.  When the funds no longer appeared as available, I called eBay.

The guy told me in nine different ways that I can't have my money until I give eBay my full tax ID - which they have, and which isn't actually required until next year.

It's galling that they hold the funds after announcing payment would be made today. It's also galling that their agent told me, the more I pressed for an answer given that they don't need this information until 2022, various things.

1.  This was a random hold
2. This was to verify who I am
3. This is to get ready for the requirement in 2022
4. No 1099 would be sent for 2021
5. A 1099 will be sent for 2021
6. I can't have my money until I send them my tax ID
7. They have to make sure they know which bank I am using.
8. eBay wants to help me by getting ahead of the reporting for 2022
9 eBay is keeping my money for up to 21 days after I give them my tax ID.

Now, they are keeping my money - why?? The IRS isn't requiring them to submit  1099s for those selling under 10K in 2021.

In any case: they are not sending me my money.

by: ValueAddedResource

@Marie -

Facebook does have a similar payment process on the platform that pays out to sellers' bank accounts and does have the same obligations as far as reporting to the IRS.

https://bit.ly/3yRUWUF

https://bit.ly/32bqaJY

by: Marie

@stevel

"I am glad you recognize the Trump Administration recognized this was not a good option."  I did NOT say that.  You are ASSUMING it was the republicans that kept it out.  That is not necessary the actual truth of the matter.

Your CPA's advice to keep all receipts is a very good one.  But for those that have always claimed their income as they should on their federal tax returns, they have no need to be upset over the lower threshold on 1099Ks next year.  It is simply another piece of paper to deal with.

But those that have not been claiming their internet income as they should have been all along, this will be more problematic for them.  

Everyone needs to keep in mind that just because you receive a 1099K next year does not mean that your income is taxable.  You WILL need to report it on your federal tax return, but there are some exceptions for sellers that ONLY sell their personal items.  So for those sellers make sure you educate yourself on this over the next few months so you will be better prepared.

by: Marie

@ValueAddedResource

Thank you for that information.  I've have only used FB a few times to sell something and it was always cash upon exchange of the item.  I do appreciate you teaching me something new.  Thank you again.