Have Tax Information questions? Post here!

[PayPal_Adrian]

Welcome to the Tax Information thread!

Should I post my question here?

Starting in 2011, all U.S. payment providers, including PayPal will be required by the IRS to report sales information about merchants who exceed $20,000 and 200 transactions to the IRS. If your question is related to this topic, please reply with a question or to assist another member.

We will  be merging existing questions in the Community into this board.  More information will be made available later.  Until an update is provided, please check out the previous IRS Workshop and www.paypal.com/irs. 

What questions don't go here?

All other tax-related questions, such as Profile settings for Tax, adding tax to invoices, adding tax to payments, whether or not you should charge your buyers tax, what tax rates to charge, are considered Off Topic and will be moved.  These questions are better placed in the About Business board instead.

Why can't I start a new Topic?

To facilitiate productivity in this board, and to keep questions and answers in one place, members can only post questions in this thread.  You will be able to reply to this topic, but not start a separate, new thread.

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[fdavidm]

PayPal totally **bleep**. If you call the Customer Support line and ask any representative this question, they have no idea what you're talking about.

[MisterEd]

Don't forget, you have to have had $20,000 in payments to your account ***AND*** 200 tranactions to get a 1099K.  If you don't meet **both** of those factors you will not get a 1099K (and then lucky you 🙂 ).

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@sweetmelissa43 wrote:

I'd really like to know myself.  I keep waiting and waiting with all my other tax documents in hand.  Everyday I check the tab to see if today's the day I get to get my taxes in the works.

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[thecrewuno]

I agree.  Called today (1/28/11) and rep. didn't know where to find it.  Took me to Money Market Funds and said to find it there which they got rid of for us years ago.  It's under History > Tax Documents.. to which they don't have updated because its going to be a cluster **** for them to get it all updated and sent out by the end of January.  We just have to wait for it to update or sent via snail mail.

[fdavidm]

thanks for the reply. What a totally inept operation PayPal is. FRANC

[MisterEd]

You can't find it yet because it doesn't have to be "sent out" until 1/31.  Like most banks and other organizations they wait until the last minute.  Also, they can simply notify the IRS it will be "late" if they want and get another 2 weeks.  If you are keeping good records (or use the PayPal reports) you can basically "roll your own."  The 1099K is just the gross amount of every single payment you received from your buyers or other customers.

[4Crawler]

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@MisterEd wrote:

You can't find it yet because it doesn't have to be "sent out" until 1/31.  Like most banks and other organizations they wait until the last minute.  Also, they can simply notify the IRS it will be "late" if they want and get another 2 weeks.  If you are keeping good records (or use the PayPal reports) you can basically "roll your own."  The 1099K is just the gross amount of every single payment you received from your buyers or other customers.

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Yep, that is the case, they are just doing the bare minimum to comply with IRS regulations to avoid being fined.  But if you look at their customers who are getting the forms.  By the very fact they are getting the form, they are sellers/merchants/vendors or whatever you want to call them.  If those sellers operate out of a state that charges sales tax, they likely will have to file sales tax.  I qualify and live in such a state and my state requires me to file my sales tax return on 1/31.  On that form I need to report "gross sales" and the one thing I have learned in my 12 years of doing this is that gross sales on state sales tax form had better match gross sales on the state income tax form and that better match gross sales on the fed. income tax form.  So I need to put A NUMBER on my sales tax form that needs to match A NUMBER that I won't find out for a week or more and I need those two numbers to match. 

So if Paypal knows that the folks getting these forms are likely to need then a couple of days BEFORE the IRS deadline, would it not make sense, if they indeed value our business (we pay all the fees ater all), to get us that data earlier than the absolute deadline?  As is, I and all other CA paypal sellers are just winging it and hopefully I grabbed the right number.

Or if getting the official form a few days early is too hard, how about a report generator on the reports tab that prints out the data that will be on the 1099-k form?  After all, there should be at least one way to process the data in each vendor's account and come up with the 1099-k data.  If there is less than one way to do that, they have a serious problem.  And if there is indeed at least one way to generate that data, create a report that grabs that data and processes it in the same way that the 1099k form is generated and make it available to us.  That would eliminate 1000s of support calls for Paypal and make everyone happy.  And again, if they are worried that the data in that report may not be correct, there must be a serious issue with their data integrityand they had better get that sorted out right away.  It is not like we are talking about multi-variable differential equations here, just basic grade school math.  But the key is doing the right math on the right data in the right way to generate the exact data being reported to the IRS. 

Once I actually see my 1099k form this year, the first thing I am going to do is see if I can figure out for myself exactly how to do this for next year. 

[dee2036]

Hello, Now with the new IRS laws I need all my purchase statements for 2011, I tried with Pay pal and had no success, can anyone help me.

[brewhardware]

As a vendor/merchant, I know I'm going to be 1099'd for 2011. What I don't know is if a refunded payment shows up as income.

What I mean is, I paid someone $175 for goods so it showed up as a -$175 on my account. They were out of stock so it then came back to my account as +$175. I'm thinking I can delete both records like it never happened but I'm concerned that the $175 is going to be included in my gross reciepts figure on the 1099. Anyone know?

Also, what about chargebacks and reversals? Example, someone buys something for $20 so I get a payment. Before I ship, Paypal puts a temp hold on it and then ultimately grants a reversal. Of course my account change is net ZERO, but does the initial $20 show as income on the 1099 for which I need to deduct as -$20 reversal on my own?

Basically I need a summary of all transaction "TYPES" that figure into the the 1099 gross amount and which positive values are inherently debited prior to that calculation.

[PayPal_Frank]

brewhardware,

From https://www.paypal.com/irs :

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How is the $20,000 calculated? Will it be calculated based on net or gross transaction earnings?

As required by IRC 6050W, the $20,000 will be calculated by looking at a seller’s gross payment volume for sales of goods or services. Gross amount means that any adjustments for credits, cash equivalents, discounts, fees, refunded amounts or any other amounts will not be netted out.

In addition, the reported amount will include any shipping and handling, sales tax or other fees which are included in payments you receive. We realize that these amounts may or may not be included in your taxable income, but we are required to report them. You should work with your tax advisor to determine how these items should be treated for tax purposes.

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I hope this helps! 🙂 - Frank

[brewhardware]

Frank, I'm aware of that blurb from the FAQ. My question is a little more nuanced than that.

My questions is not related to whether gross payment amounts count towards the reported amount. That is obvious. The question is whether or not OTHER types of positive dollar amount line items also acrue to that same amount such as when I PAY someone out of the account and that amount is refunded. Does the refund back to my account add to the gross reported amount?