Ebay and Half dot com start 1099-K reporting
This is something that many online sellers have been waiting for, the idea that Ebay, Amazon, and other selling venues will start reporting income to the IRS for what you sell online. While this will not impact a lot of sellers, it will impact enough sellers on those systems. It will impact more sellers who have been under reporting or not reporting income on their taxes. The entire email from Ebay follows:
We’re writing to let you know that starting with transactions occurring on or after January 1, 2011, new Internal Revenue Service (IRS) regulations require Half.com (and other businesses that process payments) to file a Form 1099-K for all sellers with more than 200 transactions and $20,000 USD in sales per year.
If you’re a high-volume seller who has met or is close to meeting the IRS thresholds, we may need to generate a Form 1099-K for you. If you have multiple accounts, we’ll take all of them into consideration when calculating your volume status. If you exceed the IRS thresholds, we’ll send your first Form 1099-K to you in early 2012. Your Form 1099-K will give you a consolidated report of all payments received through Half.com for 2011. This information will also be reported to the IRS.
Assuming you continue to exceed the IRS thresholds, we will send a Form 1099-K to you annually, and we’ll also report your payments to the IRS. If your Half.com volume does not exceed the IRS thresholds in a particular year, you will not receive a Form 1099-K and we will not report any amounts to the IRS for that year, even if you have given us your Taxpayer Identification Number (TIN) and Social Security Number (SSN).
To prepare your Form 1099-K (when required), we need either your TIN or SSN for our records. Your TIN/SSN will be kept secure in compliance with the applicable laws and our privacy and information security policies.
You’ll be able to give us your TIN/SSN online in the Personal Information section of My Account. We’ll let you know when this feature is available, and we’ll email you to remind you that we need your TIN/SSN number. You’ll never be asked to provide your TIN/SSN over the phone. For security purposes, please don’t call with or email us your TIN/SSN.
If you don’t provide us with your TIN/SSN before you meet the thresholds, payments to your account could be frozen, we may be required to withhold taxes from your payments, your listings could be removed, and your ability to sell on Half.com could be suspended, in addition to other consequences. We want to avoid any disruption to your selling status, so please make sure you give us your TIN/SSN when we request it.
If you are selling online, this is something to be aware of, it you are not keeping good books, if you are not reporting income and you report a lot of income off Ebay, Amazon, or other systems, you know that odds are highly likely that you will be in line for an audit. Start thinking now how you will keep better records of what you are earning online now, to make next year’s taxes a lot easier.