Thoughts on the new Paypal rules for 2012 ?

[Rev]

I keep getting a popup everytime i log into paypal. i finally read it. do you guys get the same thing? it says you have to agree in january of 2012.

 

i dont like this part in particular: "federal and state tax statements we are required to make available to you"

What if my paypal isnt used for a business but just to buy and sell a few items on the side that i already paid tax on.....

 

what you guys think?

 

 

 

Here it is:

 

 

This policy describes how PayPal delivers communications to you electronically. We may amend this policy at any time by posting a revised version on our website. The revised version will be effective at the time we post it. In addition, if the revised version includes a substantial change, we will provide you with 30 days’ prior notice by posting notice of the change on the “Policy Updates” page of our website.

 

Electronic delivery of communications

You agree and consent to receive electronically all communications, agreements, documents, notices and disclosures (collectively, “Communications”) that we provide in connection with your PayPal account (“Account”) and your use of our services. Communications include:

 

• agreements and policies you agree to (e.g., the PayPal User Agreement and the PayPal Privacy Policy), including updates to these agreements or policies;
• annual disclosures, including prospectuses and reports for PayPal Funds;
• transaction receipts or confirmations;
• Account statements and history;
• federal and state tax statements we are required to make available to you; and
• any other Account, PayPal Funds account, or transaction information.

We will provide these Communications to you by posting them on the PayPal website and/or by emailing them to you at the primary email address listed in your PayPal profile.

 

Hardware and software requirements

In order to access and retain electronic Communications, you will need the following computer hardware and software:

 

• a computer with an Internet connection;
• a current web browser that includes 128-bit encryption (e.g. Internet Explorer version 6.0 and above, Firefox version 2.0 and above, Chrome version 3.0 and above, or Safari 3.0 and above) with cookies enabled;
• Adobe Acrobat Reader version 8.0 and above to open documents in .pdf format;
• a valid email address (your primary email address on file with PayPal); and
• sufficient storage space to save past Communications or an installed printer to print them.

We will notify you if there are any material changes to the hardware or software needed to receive electronic Communications from PayPal. By giving your consent you are confirming that you have access to the necessary equipment and are able to receive, open, and print or download a copy of any Communications for your records. You may print or save a copy of these Communications for your records as they may not be accessible online at a later date.

 

How to withdraw your consent

 

You may withdraw your consent to receive Communications electronically by writing to us at "Attn: Electronic Communications Delivery Policy, P.O. Box 45950, Omaha, NE 68145-0950", or by contacting us via the “Contact Us” link at the bottom of each page of the PayPal website. If you fail to provide or if you withdraw your consent to receive Communications electronically, PayPal reserves the right to either deny your application for an Account, restrict or deactivate your Account, close your Account and any sub-account (such as a Student Account), or charge you additional fees for paper copies.

 

After you consent to receive Communications electronically, you may withdraw your consent to receive IRS Form 1099-K electronically by contacting us as described above. You will continue to receive all your other Communications electronically, but we will send your Form 1099-Ks to you by U.S. mail.

 

Requesting paper copies of electronic Communications

 

If, after you consent to receive Communications electronically, you would like a paper copy of a Communication we previously sent you, you may request a copy within 180 days of the date we provided the Communication to you by contacting us as described above. We will send your paper copy to you by U.S. mail. In order for us to send you paper copies, you must have a current street address on file as your “Home” address in your PayPal profile. If you request paper copies, you understand and agree that PayPal may charge you a Records Request Fee for each Communication. The Records Request Fee will not be charged if you request a Form 1099-K in paper form; for all other Communications, the Records Request Fee is set out in Section 8 of the User Agreement.

 

Updating your contact information

 

It is your responsibility to keep your primary email address up to date so that PayPal can communicate with you electronically. You understand and agree that if PayPal sends you an electronic Communication but you do not receive it because your primary email address on file is incorrect, out of date, blocked by your service provider, or you are otherwise unable to receive electronic Communications, PayPal will be deemed to have provided the Communication to you.

 

Please note that if you use a spam filter that blocks or re-routes emails from senders not listed in your email address book, you must add PayPal to your email address book so that you will be able to receive the Communications we send to you.

 

You can update your primary email address or street address at any time by logging into the PayPal website, going to “My Account”, and selecting the “Profile” tab. If your email address becomes invalid such that electronic Communications sent to you by PayPal are returned, PayPal may deem your Account to be inactive, and you will not be able to transact any activity using your PayPal Account until we receive a valid, working primary email address for you.

 

 

 

[bojay1997]

I'm sorry, but whether you already paid tax on something when you bought it or not, you still owe tax on any gain or profit you make from selling something whether it's on Ebay, at a garage sale, etc...I believe they are still not going to send out tax forms if you sell less than $20,000 and have less than 200 transactions in a year.

 

I keep getting a popup everytime i log into paypal. i finally read it. do you guys get the same thing? it says you have to agree in january of 2012.

 

i dont like this part in particular: "federal and state tax statements we are required to make available to you"

What if my paypal isnt used for a business but just to buy and sell a few items on the side that i already paid tax on.....

 

what you guys think?

 

 

 

Here it is:

 

 

This policy describes how PayPal delivers communications to you electronically. We may amend this policy at any time by posting a revised version on our website. The revised version will be effective at the time we post it. In addition, if the revised version includes a substantial change, we will provide you with 30 days’ prior notice by posting notice of the change on the “Policy Updates” page of our website.

 

Electronic delivery of communications

You agree and consent to receive electronically all communications, agreements, documents, notices and disclosures (collectively, “Communications”) that we provide in connection with your PayPal account (“Account”) and your use of our services. Communications include:

 

• agreements and policies you agree to (e.g., the PayPal User Agreement and the PayPal Privacy Policy), including updates to these agreements or policies;
• annual disclosures, including prospectuses and reports for PayPal Funds;
• transaction receipts or confirmations;
• Account statements and history;
• federal and state tax statements we are required to make available to you; and
• any other Account, PayPal Funds account, or transaction information.

We will provide these Communications to you by posting them on the PayPal website and/or by emailing them to you at the primary email address listed in your PayPal profile.

 

Hardware and software requirements

In order to access and retain electronic Communications, you will need the following computer hardware and software:

 

• a computer with an Internet connection;
• a current web browser that includes 128-bit encryption (e.g. Internet Explorer version 6.0 and above, Firefox version 2.0 and above, Chrome version 3.0 and above, or Safari 3.0 and above) with cookies enabled;
• Adobe Acrobat Reader version 8.0 and above to open documents in .pdf format;
• a valid email address (your primary email address on file with PayPal); and
• sufficient storage space to save past Communications or an installed printer to print them.

We will notify you if there are any material changes to the hardware or software needed to receive electronic Communications from PayPal. By giving your consent you are confirming that you have access to the necessary equipment and are able to receive, open, and print or download a copy of any Communications for your records. You may print or save a copy of these Communications for your records as they may not be accessible online at a later date.

 

How to withdraw your consent

 

You may withdraw your consent to receive Communications electronically by writing to us at "Attn: Electronic Communications Delivery Policy, P.O. Box 45950, Omaha, NE 68145-0950", or by contacting us via the “Contact Us” link at the bottom of each page of the PayPal website. If you fail to provide or if you withdraw your consent to receive Communications electronically, PayPal reserves the right to either deny your application for an Account, restrict or deactivate your Account, close your Account and any sub-account (such as a Student Account), or charge you additional fees for paper copies.

 

After you consent to receive Communications electronically, you may withdraw your consent to receive IRS Form 1099-K electronically by contacting us as described above. You will continue to receive all your other Communications electronically, but we will send your Form 1099-Ks to you by U.S. mail.

 

Requesting paper copies of electronic Communications

 

If, after you consent to receive Communications electronically, you would like a paper copy of a Communication we previously sent you, you may request a copy within 180 days of the date we provided the Communication to you by contacting us as described above. We will send your paper copy to you by U.S. mail. In order for us to send you paper copies, you must have a current street address on file as your “Home” address in your PayPal profile. If you request paper copies, you understand and agree that PayPal may charge you a Records Request Fee for each Communication. The Records Request Fee will not be charged if you request a Form 1099-K in paper form; for all other Communications, the Records Request Fee is set out in Section 8 of the User Agreement.

 

Updating your contact information

 

It is your responsibility to keep your primary email address up to date so that PayPal can communicate with you electronically. You understand and agree that if PayPal sends you an electronic Communication but you do not receive it because your primary email address on file is incorrect, out of date, blocked by your service provider, or you are otherwise unable to receive electronic Communications, PayPal will be deemed to have provided the Communication to you.

 

Please note that if you use a spam filter that blocks or re-routes emails from senders not listed in your email address book, you must add PayPal to your email address book so that you will be able to receive the Communications we send to you.

 

You can update your primary email address or street address at any time by logging into the PayPal website, going to “My Account”, and selecting the “Profile” tab. If your email address becomes invalid such that electronic Communications sent to you by PayPal are returned, PayPal may deem your Account to be inactive, and you will not be able to transact any activity using your PayPal Account until we receive a valid, working primary email address for you.

 

 

 

[Rev]

"I'm sorry, but whether you already paid tax on something when you bought it or not, you still owe tax on any gain or profit you make from selling something whether it's on Ebay, at a garage sale, etc...I believe they are still not going to send out tax forms if you sell less than $20,000 and have less than 200 transactions in a year"

------------

im not a tax attorney by any means , but what you are saying sounds crazy. not you , but if that is really the law...it is crazy!

if i buy a wii game for 50.00 with my taxed income and also pay sales tax and then i turn around and resell it for 30.00 on ebay or a garage sale or even to a friend...i must report that as income?

[atari181]

The problem with any of this is Who bought what, when and for how much?

You bought your Atari Pac Man for $30.00 in 1982 now you sell it for $1 on Ebay , Thats a loss of 29.00 not taxable income of $1

The IRS has been trying to get in on taxing people on PP, but how do they know what is sold for a profit or a loss? what is just the old shit in your house your selling off. In the end I can't see this affecting most Ebayers.

[kheffington]

"I'm sorry, but whether you already paid tax on something when you bought it or not, you still owe tax on any gain or profit you make from selling something whether it's on Ebay, at a garage sale, etc...I believe they are still not going to send out tax forms if you sell less than $20,000 and have less than 200 transactions in a year"

------------

im not a tax attorney by any means , but what you are saying sounds crazy. not you , but if that is really the law...it is crazy!

if i buy a wii game for 50.00 with my taxed income and also pay sales tax and then i turn around and resell it for 30.00 on ebay or a garage sale or even to a friend...i must report that as income?

 

In that case, you would need to report the $50 as gross income and the $20 loss along with other expenses such as PayPal fees, eBay fees, and shipping as deductions from income. On the one specific item it would be a loss.

 

If you are selling other items and are making a profit, the rest of the income is taxable.

 

If you don't have both $20,000 and 200 transaction, PayPal will not fill out a tax form but even if you are making less than $20,000 and it is profit, you are required to pay tax on the profit.

 

It is not PayPal that decided to report this on their own; there is a new law requiring that any online payment service fill out a tax form and report it for anyone receiving more than $20,000 and 200 transactions in the year.

Edited April 20, 2011 by kheffington

[Dino]

The problem with any of this is Who bought what, when and for how much?

You bought your Atari Pac Man for $30.00 in 1982 now you sell it for $1 on Ebay , Thats a loss of 29.00 not taxable income of $1

The IRS has been trying to get in on taxing people on PP, but how do they know what is sold for a profit or a loss? what is just the old shit in your house your selling off. In the end I can't see this affecting most Ebayers.

Its your problem not the IRS'. If you bought Pacman for $30 in 1982, then you need a receipt to prove it to claim the $29 loss. Otherwise you need to pay tax on the $1.

 

I'm amazed there is no "personal use asset" exemption in the US tax laws to stop ridiculous outcomes like this....

[kheffington]

The problem with any of this is Who bought what, when and for how much?

You bought your Atari Pac Man for $30.00 in 1982 now you sell it for $1 on Ebay , Thats a loss of 29.00 not taxable income of $1

The IRS has been trying to get in on taxing people on PP, but how do they know what is sold for a profit or a loss? what is just the old shit in your house your selling off. In the end I can't see this affecting most Ebayers.

 

 

Probably not much problem at this point; but this reporting requirement is just round 1 from the IRS. If they don't get the revenue they expect to see from this, there will be more requirements.

 

Maybe round 2 will be tax withholding from PayPal payments for individuals. You will need a receipt to prove cost of items for loss.

[Dino]

The problem with any of this is Who bought what, when and for how much?

You bought your Atari Pac Man for $30.00 in 1982 now you sell it for $1 on Ebay , Thats a loss of 29.00 not taxable income of $1

The IRS has been trying to get in on taxing people on PP, but how do they know what is sold for a profit or a loss? what is just the old shit in your house your selling off. In the end I can't see this affecting most Ebayers.

 

 

Probably not much problem at this point; but this reporting requirement is just round 1 from the IRS. If they don't get the revenue they expect to see from this, there will be more requirements.

 

Maybe round 2 will be tax withholding from PayPal payments for individuals. You will need a receipt to prove cost of items for loss.

Yep, which will make the side-deal/no paypal option all the more lucrative

[+wood_jl]

Technically, at least here in TN, if you buy something from out of state and do not pay sales tax - that is, the seller doesn't collect sales tax and send it to TN, you still owe the tax. In this case, it's called a "use tax."

 

http://www.tn.gov/revenue/faqs/salesandusefaq.htm#15

 

This may be the case in many states; I do not know. Do you think people really do this? So what's technically legal must be stated. What happens in practice is something else.

 

This was in a story some years ago, when a guy bought a fur coat (for his girlfriend) from another state. The other state (Georgia, Mississippi, wherever it was) audited the seller of the fur coat. They found the record of the sale to TN. They called up the state of TN and asked them to check if sales tax had been collected on that purchase, and it was not. The state of TN contacted the buyer - and that's how his wife found out about the girlfriend...HA HA HA.

 

They're not able to do this for all of the transactions, but it's possible (although not probable) they'll do it on big-ticket items. But you're supposed to pay a sales tax or a use tax!

[Buyatari]

I believe they are still not going to send out tax forms if you sell less than $20,000 and have less than 200 transactions in a year"

 

So which of these conditions result in a form.

 

Seller A sells 1000 $5.00 items

 

Seller B sells 190 $1000.00 items

 

Do neither of them or both. If both conditions must apply the small time seller might be better off using 2 accounts (he and his if they file seperate etc) one for most of the small items and another if he comes across something a bit more expensive.

[AtariLeaf]

Is this a US thing. Haven't had any of these messages here in Canada.

[kheffington]

I believe they are still not going to send out tax forms if you sell less than $20,000 and have less than 200 transactions in a year"

 

So which of these conditions result in a form.

 

Seller A sells 1000 $5.00 items

 

Seller B sells 190 $1000.00 items

 

Do neither of them or both. If both conditions must apply the small time seller might be better off using 2 accounts (he and his if they file seperate etc) one for most of the small items and another if he comes across something a bit more expensive.

 

Neither one according to PayPal. You have to meet both requirements. It is 200 and $20,000 not 200 or $20,000. Dumb huh?

 

So 199 items at $1,000 each is $199,000 and no report to IRS. 200 items at $100 each is $20,000 and a form to report to IRS.

 

Here is the PayPal FAQ

Tax Form FAQ

[SpendTooMuchOnAtari]

So, if you have more than 200 transactions but they do not equal $20,000 or over, then you shouldn't have a problem? Also, do the 200 transactions include the "gift" option?

[HatefulGravey]

This is going to get so confusing that no one understands it fast. I think that might even been the intention. Taxes are hard to figure out no matter what. My family owns a small business, getting everything right is hard for them, and they have been at it for years and years. If you make every person selling on eBay and sites like it a small business things are going to get bad on the tax end faster. To me it looks like this is what they are doing.

 

Funny, if you take "the IRS" and smash it all together you get "THEIRS". All you money are belong to them!

 

Let them tax you on this and then take out all the fees, shipping cost, inventory space (your closet) and your home office (because if you are a small business you have to have one right?) etc as write offs. You'll be fine. Play ball like they do, it works pretty well actually.

[kheffington]

So, if you have more than 200 transactions but they do not equal $20,000 or over, then you shouldn't have a problem? Also, do the 200 transactions include the "gift" option?

 

 

No per the PayPal FAQ. Personal payments are not counted against totals just sales payments.

 

And from the IRS website it gets even more confusing.

 

"If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable. Losses on personal use property are not deductible, either."

 

IRS Online sales tax tips.

IRS TAX TIPS

Edited April 20, 2011 by kheffington

[krae_man]

Makes sense to me. If you sell stuff for profit, you're supposed to report it as income. You have noone to blame by yourself if you didn't keep proper records.

[Rev]

why 200 transactions?

 

that isnt even 4 per week.

 

looks like ebay will start to die in 2012.

[kheffington]

why 200 transactions?

 

that isnt even 4 per week.

 

looks like ebay will start to die in 2012.

 

 

More than 200 transactions do not matter unless the money amount is over 20,000. It is $20,000 AND 200 transactions; not one or the other. I doubt most eBay sellers do $20,000 worth of transactions. This will not have any effect on them.

 

If anyone is selling $20,000 worth of stuff on eBay a year and not reporting it as income, they are already taking a big chance by not reporting it.

[Rev]

why 200 transactions?

 

that isnt even 4 per week.

 

looks like ebay will start to die in 2012.

 

 

More than 200 transactions do not matter unless the money amount is over 20,000. It is $20,000 AND 200 transactions; not one or the other. I doubt most eBay sellers do $20,000 worth of transactions. This will not have any effect on them.

 

If anyone is selling $20,000 worth of stuff on eBay a year and not reporting it as income, they are already taking a big chance by not reporting it.

 

i hope you are right about that.

[Dino]

["If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable. Losses on personal use property are not deductible, either."

 

IRS Online sales tax tips.

IRS TAX TIPS

 

So would this mean that Tanman doesnt have to pay tax on the sale of his boxed Air Raid? It was a personal use asset that he had bought years ago...

[bennybingo]

looks like ebay will start to die in 2012.

 

That sounds like a new "2012 prophecy", if ever I heard one! Does anyone know if Nostradamus already had predicted this one? What about the Mayans??

 

I think you are on to something here revolutionika!

[bojay1997]

["If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable. Losses on personal use property are not deductible, either."

 

IRS Online sales tax tips.

IRS TAX TIPS

 

So would this mean that Tanman doesnt have to pay tax on the sale of his boxed Air Raid? It was a personal use asset that he had bought years ago...

 

No, because per the second to last sentence, he clearly sold it for more than he paid, so the sale would be reportable.

[SpendTooMuchOnAtari]

why 200 transactions?

 

that isnt even 4 per week.

 

looks like ebay will start to die in 2012.

 

 

More than 200 transactions do not matter unless the money amount is over 20,000. It is $20,000 AND 200 transactions; not one or the other. I doubt most eBay sellers do $20,000 worth of transactions. This will not have any effect on them.

 

If anyone is selling $20,000 worth of stuff on eBay a year and not reporting it as income, they are already taking a big chance by not reporting it.

 

i hope you are right about that.

 

 

He is right, I read the Paypal thing and it clearly says that you have to meet both criteria....200 transactions AND $20,000 and over.

 

If you sold one auction for $100,000 and that it's for the whole year, you would be fine although may worry about that as that would be crazy to not report but anyway. At the same time, if you sold 1,000 auctions and only brought in $19,000, you would also be fine. Both criteria have to be met as far as I have read.

[Lendorien]

Technically, at least here in TN, if you buy something from out of state and do not pay sales tax - that is, the seller doesn't collect sales tax and send it to TN, you still owe the tax. In this case, it's called a "use tax.

 

Wisconsin has an internet tax. It's like a voluntary tax. I'm not kidding. They have a spot on the tax return that asks you to input the amount you bought on the internet. I don't keep track of that kind of thing, so I always guess, but frankly, I'm guessing that a lot of people put zero because it's hard for anyone to track that without looking at your credit records... and no-one likes paying more taxes than they have to.

Edited April 22, 2011 by Lendorien