Selling on Ebay and collecting State Taxes?

Only if you have income that was not taxed, i.e. no withholding, and are considered a private contractor.

 

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1099's are only for income tax reporting. They are called informational reporting because the Feds require them to be filed and reported so the IRS can better track income.

However, it will not be a concern to you since currently it is only for labor and services, not for the purchase of goods. Therefor, you would never need to create them, nor should you receive them, for buying and selling coins.

This was the issue a couple of years ago where the administration tried to change 1099 rules to pay for Obamacare. Thankfully Congress repealed this law, but I am afraid someday the politicians will be broke enough to pass it again. That will be a nightmare for sellers.

 

Cool, I appreciate the information. Does anyone know how I can find out how many sales I've already had on ebay or how much in dollars I have made? Maybe I'm not even close to $20,000, I don't know. If you know a way I can find out please let me know. Gracion.

 

You can get weekly and monthly sales reports created by ebay. I can't remember if I had to sign up for the selling manager(free version) to get them. I will check and get back to you.

 

Ok, so if you subscribe to the Selling Manager free version
Selling Manager Here
It will give you a new Summary page, that has more sales info than the regular MyEbay page. You will still have your normal MyEbay page, but will add a new page to your dropdown menu.
Or you can just subscribe to Sales Reports +
Here This one will add a menu item called sales reports to your "account" tab on your Myebay summary page
Which will give you more detailed weekly/monthly reports that include net ebay fees, paypal fees, sales growth, average price per item and repeat buyers. I like them both. Maybe overkill for a small to medium time seller, but they are both free.

 

an easy way to see what you have done in last 12 months.

click on your feedback rating (the number by your I.D.)
then to the right ,click on "view your seller dashboard"
then click on (powerseller level).

even if you are not a power seller it should show you your current performance in the last 12 months. amount sold and number of transactions.
but that would be from august 2011 to july 2012. and so on.

 

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Dumb question -

If you want legal advice why don't you get it from an attorney licensed in the appropriate jurisdiction?

Just asking.

 

good question.

 

He's not asking for legal advice, only about collecting sales tax from his eBay customers.

 

I don't know what $20,000 represents. There is no magical thing that happens at $20,000. At $10,000 you have to report any cash transactions.

If you make a sale and a profit you are required to pay income taxes on it for any amount of profit. If you are determined to have nexus and a professional seller in a state you are required to collect and remit sales taxes. There are no minimum thresholds really.

Btw, I see Fretboard asking more accounting advice. I would encourage him to talk to a local CPA, but I am a CPA as well. That is why I am giving him this advice.

The only instance in which a lawyer would be necessary would be nexus determination possibly.

 

Only in the most severe cases have I ever heard an attorney be involved in such determinations Doug. I have made them, and now have my CPA firm make them. Dealing with all aspects of tax departments, from local, state, and IRS are nearly always done by accountants or CPAs. Maybe one-tenth of one percent of any determinations like this are ever to arbitration.

I was not meaning to give any "legal advice", only nexus information and general information how the taxation system in the US works.

 

Here is some free advice, from the PayPal website:

Starting in 2011, Internal Revenue Code (IRC) Section 6050W states that all US payment processors, including PayPal, are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal.

These new rules apply to sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. In order to help you understand these changes, we have prepared the following FAQs. [more]

 

Oh, its just informational reporting. The seller will not be affected or have to do anything though. THe IRS is just requiring more and more reporting from Paypal, Credit Cards, and the like.

 

For the moment, you are correct. But you KNOW where this is leading; this is the warning shot to every eBayer and garage-saler and vest-pocket dealer in the U.S. And state sales tax officials will be only too happy to ride the Federal coat-tails.

Here's one of the key FAQs:

"...Do I have to include the amounts from Form 1099-K on my tax return?

While the IRS has asked that taxpayers enter zero ($0.00) on the line that says "Merchant card and third party payments." (i.e., amounts from Form 1099-K) they did not change the requirements for payors, such as PayPal, to file Form 1099-K. Please consult your tax advisor or the IRS for additional clarification of your tax obligations." [more]

 

Whether a 1099 is issued is determined on the $20,000 sales mark or 200 sales transactions on ebay. I read that ebay notifications and I think somebody mentioned it here is this thread as well.

BTW, the only questions asked in this thread were ebay or Paypal related questions period. Nothing in this thread was legal advice and the questions I asked were very well answered by ebay sellers on this forum. Why would I go see a lawyer somewhere when I got my questions answered here for free? Doesn't seem dumb to me at all. :thumb:

 

Note, from the PayPal site, that it's not $20,000 OR 200 transactions; it's BOTH. BOTH must be exceeded to generate PayPal's 1099.

 

Close Conder, but not quite. You are correct that Heritage collects tax on items shipped to CA or NY as the law requires since they have offices in those states, but the tax they are collecting is NOT the TX sales tax, it is the local CA/NY taxes due in those respective states. Becasue HA does business with an office in each of them they are considered a local business by those states and items sold there are taxed there.

So if HA opened an office in IA for example they would not collect sales tax on items sold to residents of IA since there is no tax on coin sales there, however if they opened an office in OH they would collect OH state sales tax on coins sold to Ohioans since it is required by the State of Ohio.

Hope that makes sense/helps.

 

You guys have me confused. If you meet both conditions and Paypal generates a 1099, does the E-Bay seller need to do anything?