Tax / social services reporting limit drops from $20K to $600 on U.S.A ebay site

[chameleon54]

Just stumbled across this little gem. Tax / social services reporting limit drops from $20K to $600 on U.S.A ebay site starting this year. So if a U.S. ebay seller sells more than $600 in a year, they will need to report it to the U.S. internal revenue service ( equivalent to our ATO ) and also to their version of Centrelink.

With technology tracking our every move, I wonder how long it will be before we see similar moves in Australia to crack down on tax evasion and under reporting of eBay earnings regards social security payments ?

https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html 

[glenbankloel]

Wow that is some drop!

Wonder what they will do here if anything. 

Thanks for the heads up.

[chameleon54]

" Wow that is some drop! "

That was exactly what I thought when I read it. I never would have expected the threshold to be so low, so quickly either, but with the rapid move to digital payment methods and data matching / tracking technology I,m sure it is only a matter of time before we see something similar everywhere.

[k1ooo-slr-sales]

ouch!

[chameleon54]

The problem with cracking down too hard on things like ebay sales is it drives normal people further into the black economy.

Recently I have come across a number of examples where the cash economy seems to be booming and with transactions of much higher value than I have seen before. This included a new part time farm manager offered $30K - $40 K per year in wages off the books and a Centrelink recipient who is paid $200 per day cash for working part time in the building industry. In the second case the guy IS reporting his earnings to Centerlink, but plenty of others wouldnt.

Another example is a rural fencing contractor who offers his employees cash. He does a lot of cash jobs worth tens of thousands of dollars for city lifestyle farmers and has more cash than he knows how to spend.

[domino-710]

One has always had to delare income.

Q: Haven’t I always had to declare my income from the sale of goods and services transactions? What's different?

Reporting and declaring any income, either personal or through a business, has always been a requirement when filing your taxes with the IRS.  The change broadens the scope of reporting such that all TPSOs, like PayPal and Venmo, need to collect tax information once you near or reach $600 in goods and services transactions (instead of the prior threshold of $20,000 and 200 transactions), so that we can remain compliant with our regulatory requirements and share those details with the IRS.

This change impacts every financial institution and TPSO that you might use to transact for goods and services, not just PayPal and Venmo. This includes your bank accounts, and other ways you send and receive money.

Be it $600 or $60,000.

While the claim is based in reality, it gets many of the facts wrong. The claim’s assertion is a proposal by the Biden administration, not a decision set in stone. The Treasury cannot “declare” any changes to law, as that is a legislative power that belongs to Congress. And even if the proposal is adopted banks would not provide access to individual transactions, just the total amount flowing in and out of an account annually. 

From USA today.

We rate the claim that the Treasury Department 'declares' the IRS will monitor transactions in all U.S. bank accounts over $600 as PARTLY FALSE, based on our research. The Biden Administration has proposed monitoring accounts over $600, but the only figures reported to the government would be the total inflows and outflows for the year – not the size and nature of each transaction. And the Treasury can't simply "declare" this measure, it must be approved by Congress.

[chameleon54]

" One has always had to delare income. "

That's true and it wont affect me as I am already declaring my ebay sales to the ATO. 

I must admit though I have always had some sympathy for those who are struggling particularly on Centrelink payments who try to make a few extra dollars by selling a bit of stuff on ebay. Often it can make the difference between having just a few of lifes little extras or living in complete poverty, particularly with housing costs the way they are at the moment.

I guess if the Government was to crack down hard on every last dollar of ebay type sales, there would need to be a serious ( and expensive ) discussion on the rates paid to those on Centerlink payments as well as the thresholds for earnings before payments are cut.

Another discussion would need to be the cost of policing and compliance as opposed to any perceived benefit to the budget. Its not easy making large amounts of money on ebay and the ATO / Centrelink may be better served by directing their efforts into areas where the bigger dollar rorts are occurring such as the building and construction industries and hospitality sector.

[domino-710]

Q: Will the updated 1099-K Threshold Change apply if I sell personal property, like a couch or an item at a garage sale, for $600 or more if it was sold for less than its original value? Will I be issued a Form 1099-K?

Form 1099-K is an IRS informational tax form that is used to report goods and services payments received by a business or individual in the calendar year. While banks and payment service providers, like PayPal and Venmo are required by the IRS to send customers a Form-1099K if they meet the $600 threshold amount, there are certain amounts that may be included on the form that are generally excluded from gross income and therefore are not subject to income tax. This includes:

• Amounts from selling personal items at a loss
• Amounts sent as reimbursement
• Amounts sent as a gift

So, for example, if you purchased a couch for $1200 and sold it for $800, this amount would not be subject to income tax.

We encourage customers to speak with a tax professional when reviewing their 1099-Ks to determine whether specific amounts are classified as taxable income.

[twyngwyn]

still in America:

eBay Will Require Full Social Security Numbers in 2022 - EcommerceBytes

[domino-710]

December 31

The Biden administration on Tuesday backed down on a controversial proposal to direct the IRS to collect additional data on every bank account that sees more than $600 in annual transactions, after widespread criticism from Republican lawmakers and banking industry representatives, who said the tax enforcement strategy represented a breach of privacy by the federal government.

Instead, the administration and Senate Democrats are proposing to raise the threshold to accounts with more than $10,000 in annual transactions, and any income received through a paycheck from which federal taxes are automatically deducted will not be subject to the reporting. Recipients of federal benefits like unemployment and Social Security would also be exempt.

The IRS would collect the total sum of deposits and withdrawals from bank accounts with more than $10,000 in non-payroll income. Information on individual transactions would not be collected.

The changes were announced Tuesday by the Treasury Department.

"In response to considerations about scope, it [Congress] has crafted a new approach to include an exemption for wage and salary earners and federal program beneficiaries. Under this revised approach, such earners can be completely carved out of the reporting structure. This is a well-reasoned modification: for American workers and retirees, the IRS already has information on wage and salary income and the federal benefits they receive," a Treasury Department fact sheet on the changes said.

The changes would exempt millions of Americans from the reporting requirement, and help the IRS target wealthier Americans, especially those who earn money from investments, real estate, and other transactions that are more difficult for the IRS to track.

"Under the current system, American workers pay virtually all their tax bills while many top earners avoid paying billions in the taxes they owe by exploiting the system. At the core of the problem is a discrepancy in the ways types of income are reported to the IRS: opaque income sources frequently avoid scrutiny while wages and federal benefits are typically subject to nearly full compliance. This two-tiered tax system is unfair and deprives the country of resources to fund core priorities," Treasury Secretary Janet Yellen said in a statement.