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.

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[PayPal_Frank]

Hi brewhardware,

Sorry, I misunderstood your original question.  If you paid someone using PayPal and they issue a refund, that refund would not count towards the gross amount received for payments.  Refunds are differentiated from payments received.

It's possible that a seller may not use the "Issue Refund" option and decide to refund you by sending a payment labeled for goods or services.  In that situation, the funds would count towards the gross amount.  I would hope that situation is rare as a seller would want to receive a refund on their fees for the original payment and also prevent the buyer from receiving a fee.

So these types would not be counted:

• Personal payments
• Refunds issued on payments you originally sent as a buyer. The seller would need to use the "Issue Refund" link in the payment details.

All other funds received for the sale of goods or services would be counted.

- Frank

[jt_engines]

I'm going to show 100K + in sales.  I have no problem paying my taxes but I don't want it reported incorrectly.  I'm not the sole owner of this company and I have a business paypal account.  I have my FIN# on file with paypal but when they e-mail me it makes it sounds like it will be reported under my name and not the FIN#.  

If they income is reported under the business FIN that is not a problem.  If I show all this income as mine (under my SSN# which is also on file)  I'm going to have huge problems!

[PayPal_Adrian]

jt_engines -

Welcome to the Community!

If you have a FEIN on file and an SSN, the 1099-K should be issued under the FEIN. 

Thanks!

Adrian

[LSPdotcom]

If you will please go to irs.gov/schedulec then, underneath Current Revision, click on "Instructions for Schedule C (Form 1040).  Now that you're on the page that says, "Department of the Treasury Internal Revenue Service 2011 Instructions for Schedule C Profit or Loss From Business, go down to the first paragraph on the left:  Please read the second paragraph underneath the What's New heading.  It says, "New merchant card reporting requirements.  We added new lines 1a and 1b to implement reporting of gross receipts received via merchant card (credit and debit cards) and third party network payments.  However, for 2011, the IRS has deferred the requirement to report these amounts."

My question for you is this...If the IRS has deferred the requirement to report those amounts, why is Paypal mailing 1099-K forms to us and the IRS?

I just called Paypal and spoke with an agent--who got huffy with me--so I decided to vent on this Paypal community forum.

Thanks for listening,

Lisa

[Smokymist]

 Hello,

I am stressing myself totally out on this issue. I have a regular full time business online. I have sold 3 pair of jeans on Ebay this entire year , and that went poorly, so I am not an Ebay seller.  I file my quarterly taxes like I should. I do not pay alot of taxes, as all of the items I sell are taken into posession over the state line ( as it states on my tax paperwork).

This 1099 from Paypal...confuses me. I use Turbotax to do my own taxes. It takes me hours as I have deductables, business expenses, etc.

If I have already filed my quartly taxes, what will this form from Paypal do?  Will it make it look like I have double the income I do ? I can guarantee I am reporting the correct amount, in fact I report checks and money orders I get as well, but I have already done this with my quarterly  taxes.

Thank you for helping....my poor blood pressure can't take the stress lol.

[code600]

Soo it's the end of the 31st. Did Paypal already send out the forms and will make it available later through the website? I am in CA.

[tshomper]

I would like to know the same thing. I thought by today we would be able to see our forms online.

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@code600 wrote:

Soo it's the end of the 31st. Did Paypal already send out the forms and will make it available later through the website? I am in CA.

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[4Crawler]

Have not seen my copy yet.  Funny how the 1099-DIV forms have been available for almost a month now and I won't need that until April 15th.  Yet the 1099-K forms which I need information off by 1/31 are not available yet. 

Hopefully the number I dug up to use on my state sales tax forms matches the number that Paypal will be reporting on my 1099-k form.  My main problem is that my book keeping does match how Paypal reports my transactions.  We do mostly custom products that are built to a customer's specifications at the time of the order.  So it can take days to weeks to fabricate the customer's order.  In that time, we get lots of changes to orders, cancellations of orders, etc. that result in changes to the original transaction.  So to simplify things, we book the final order amount at the time we ship the product(s).  That time period may (and does) straddle month and year end periods. 

For example last December we had a customer who ordered a part in late Dec. then in early Jan. cancelled that order.  To me, that is no order, we made nothing, we shipped nothing, we refunded the customer's payment.  To Paypal that is reported as 2011 income and then we need to keep track of it all of 2012 as an expense.  But since we refunded to the original transaction in Dec. 2011, not sure where that refund will be shown.  Did Paypal capture that refund in 2011 numbers (not sure what date they do their data capture) or will that show up in 2012 or was it lost?  I don't know any way I can find that information out since Paypal is not sharing any information on when they capture the data or how they process it.  If Paypal could provide a simple set of instructions to follow so that I can duplicate to the dollar the numbers that will be on the 1099-K form, then I can follow those steps and see what I am up against.  That would also allow me to verify the numbers reported by Paypal against what I calculate myself.  Like how about post a preadsheet template that I can import my 2011 history into and have it calculate the 1099-k numbers.  I mean they had to do something like that to tell the 3rd party that is generating those forms how to process the data for each seller.

Since all the folks getting these 1099-k forms are sellers and it is sellers that pay Paypal the transaction fees and most of those sellers also are collecting and paying their state sales taxes, why is Paypal not more cognizant of the plight of their most valued users (the sellers).  Sure, IRS only requires the 1099-k forms get postmarked by 1/31, but I was hoping Paypal could exceed tthat.  Doing the bare minimum to keep from getting an IRS fine rates a D- in my book.  They pass the class, but nothing more. 

In trying to get this information from the support folks, I felt belittled and made to feel incompetent and was rudely treated by the "support" people at Paypal that I dealt with.  They claimed I was the only seller that had contacted them on this issue and they had no clue that my state (California) requires sales tax filings by the end of January, even though I had been telling them this since the middle of last year.  I have been in business for about 12 years now and this is the first time I have had any book keeping issue like this because there is this big unknown number thrown into the mix and I have to do things based upon this number before I know what the number is.  And there are consecquences to me if my guess at that number does not match the number Paypal reports.  Was told that I needed an accountant and a tax professional to give me that number, but if the accountant and tax professional don't know how Paypal is computing that 1099-k number, how will that help me.  And I got time and time again, "Paypal can't give tax advice", and I am not asking for tax advice.  I just want to know what the 1099-k line 1 number is so that I know what I am on the hook to report on my sales tax.  And yes, I know that the state sales tax folks do not get the 1099-k form, but they do talk to the state income tax folks and I do know that California Franchise Tax Board is getting copies of the 1099-k forms for California-based sellers.  The one thing I have always done in my years in business is to make 100% sure that my gross sales reported to the state sales tax folks is the same as reported on the state and federal income tax folks.  This year should be the same if the number I have guessed for the sales tax forms is equal to what I may see if a week or more on the actual 1099-k form.

When I suggested that they might want to post some of the information they had proved me on the paypal.com/irs page, I was told in NO UNCERTAIN TERMS to not contact them again on this matter.  I guess the customer is not right.  I was merely suggesting that some guidance for us sellers would help take some support hassle off of them, but I was told to get lost!!!

So Paypal, how about next January, give us poor sellers a sneak peak of the 1099-k data BEFORE JANUARY 31st?  I mean if you can print all 200,000 (or whatever the number is) 1099-k forms and have them stuffed in envelopes and delivered to the Post Office to be post marked by 1/31, explain to me why the electronic copies can't be made available on the 29th as I was promised by my Paypal support folks?  I mean is it some guy in some 3rd world country uploading the electronic forms on a 56K modem or something? 

My stock broker has my 2011 1099 information on-line as of a few weeks ago and I still don't have the paper copies as I imagine they are postmarked on 1/31 or whatever the deadline is.  I though the idea of electronic documents was to speed up the delivery of the information.  If I get my paper copy through the US Mail before I get the electronic copy, I view that as a total fail on Paypal's part.  Maybe my D- grade above was a bit generous.

[cranger7]

Acrawler,

same situation-I used the gross amount a paypal rep gave me (I had what I thought it should be and it was diff) and went ahead and filed right before the deadline to avoid the late fee. I already knew the sales tax I owed but didnt have the rest figured out yet either-I thought I had it figured out but when they told me what they were going to report - it was different. . So I just reported what they gave me as the gross and filed it, my county has the ability to log back on and reconcile a return real easy. Changing the gross shouldnt matter since I filed the correct tax owed based on the transactions I had to collect it on.

[4Crawler]

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@cranger7 wrote:

Acrawler,

same situation-I used the gross amount a paypal rep gave me (I had what I thought it should be and it was diff) and went ahead and filed right before the deadline to avoid the late fee. I already knew the sales tax I owed but didnt have the rest figured out yet either-I thought I had it figured out but when they told me what they were going to report - it was different. . So I just reported what they gave me as the gross and filed it, my county has the ability to log back on and reconcile a return real easy. Changing the gross shouldnt matter since I filed the correct tax owed based on the transactions I had to collect it on.

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That too is my hope, I filed with the gross  number which I hope matches the 1099-k number or else I need to go back and file an amended sales tax return. I don't know why that "gross sales" number should be so hard to get, just tell me exactly what data to access and when to do so and exactly where to look for it and I can figure it out myself.  The problem is I am told "oh that is easy, just dowload your history and add up all the transactions you paid fees on" but that is easier said than done.  And I have no data column labelled "gross receipts" in that data.  And when do I do this, Dec. 31 at 11:59PM, Jan. 1, Jan. 15, Jan 29, or when?