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Posted By: Byron Tripp
Tuesday March 9th, 2010 - 1:38PM
The IRS is attempting to squeeze every ounce of money it can steal from the American people. Tax rates and new forms of tax will increase dramatically as Americans feel the pressure of over taxation and the destruction of the middle class. In a new form of taxation, 3rd party accounts such as the ones hosted by PayPal that are primarily used for Ebay sellers and buyers will be taxed starting in 2011.
Written by Barbara Weltman - Courtesy of: www.auctionbytes.com
IRS to Track Online Sellers' Payment Transactions Beginning Next Year
Internet sellers who don't report their sales will no longer be under the radar. Starting next year, any bank or other payment settlement company that processes credit cards, debit cards, and electronic payments such as PayPal will have to issue information returns telling the IRS what merchants receive. The new returns are Form 1099-K, Merchant Card and Third-Party Payments.
Purpose of Reporting
The IRS believes that many online sellers fail to report their transactions. Some don't report because they mistakenly believe that Internet sales are invisible. Others do so because they are trying to evade taxes.
The IRS has found that using information returns, such as W-2 forms for employees, Form 1099-MISC for independent contractors, and Form 1099-INT for bank interest, goes a long way toward improving the reporting of income. IRS computers can match income reported on these information returns with the income reported on tax returns.
Who's Subject to Reporting
All merchants who accept payments through credit cards, debit cards, gift cards and PayPal will receive information returns telling them - and the IRS - the gross amount of the merchant card transactions. This will be broken down month by month. While the form uses the word "card," the IRS has made it clear that this is interpreted broadly to include third-party network transactions (i.e., PayPal).
