F&F and IRS income limits

[Random Dan]

The part that concerns me most is that until someone gets audited and reports here what happened, we really have no idea what the IRS expects as "proof" that items were sold at a loss.

So if I have a nameless paypal transaction for +$150 and I tell them it's for a knife I bought 2 years ago for $200 or they just gonna believe me? Most people don't put any sort of comments in the paypal payment. If I take a screenshot of the post where I listed it for sale will that be enough? What if the price is edited out? Depending on how antagonistic the IRS is that could be real PITA.

If we're supposed to keep records in case of an audit then they should at least make it clear what records are sufficient.

 

[madcap_magician]

The part that concerns me most is that until someone gets audited and reports here what happened, we really have no idea what the IRS expects as "proof" that items were sold at a loss.

So if I have a nameless paypal transaction for +$150 and I tell them it's for a knife I bought 2 years ago for $200 or they just gonna believe me? Most people don't put any sort of comments in the paypal payment. If I take a screenshot of the post where I listed it for sale will that be enough? What if the price is edited out? Depending on how antagonistic the IRS is that could be real PITA.

If we're supposed to keep records in case of an audit then they should at least make it clear what records are sufficient.

That would presume that Congress thought through this law before they passed it, and we know they don't even read them before they pass them, so how could they think through them?

But you won't need to document the income, PayPal is doing that with the 1099. You'd need to document the expense. If you've bought mainly online like I think probably most of us do, and you've been getting e-mail receipts, you could just search through your inbox and grab them.

 

[Peter Hartwig]

So if I have a nameless paypal transaction for +$150 and I tell them it's for a knife I bought 2 years ago for $200 or they just gonna believe me? Most people don't put any sort of comments in the paypal payment. If I take a screenshot of the post where I listed it for sale will that be enough? What if the price is edited out? Depending on how antagonistic the IRS is that could be real PITA.

If we're supposed to keep records in case of an audit then they should at least make it clear what records are sufficient.

Just guessing, but I doubt your example would be audited for this alone. I think they will expect items to depreciate. Where you could have trouble is with an older knife that you bought at a highly appreciated price and are now claiming a loss. Say knife originally sold for $425, you paid $2000 and now selling for $1800.
Other concerns may be large number of transaction all at loss(they may not understand our habit of constantly losing money and still buying more). And of course there is the random audit. Any form of proof of value is going to be better than none.
I have never been a fan for leaving the prices in ads, but this may be a valid reason to leave them up, so members can later refer to the sale for tax purposes.
Those that paid by PP may be able to find the payment(buy) and link it by time to the sales ad, even if the ad no longer has the price.

 

[choombak]

I want to buy and sell, but I don’t want to pay income tax an an item I made no profit on. How is that affecting transactions, with us small time sellers ? I won’t do F&F! So now what?
Thanks

USPS Money Order, personal check (if you are comfortable), or cash. Who said PayPal was the only game in town? Well, it was the most convenient... which is why we all used it... though there are good options as I suggested. USPS MO is pretty solid.

 

[Quiet]

USPS Money Order, personal check (if you are comfortable), or cash. Who said PayPal was the only game in town? Well, it was the most convenient... which is why we all used it... though there are good options as I suggested. USPS MO is pretty solid.

Seems to me that everyone beating their chest about how they'd never do business with people who ask for Friends & Family because OMG there's no protection for the buyer with G&S, probably aren't going to want to use money orders either because there's no protection for the buyer.

That said, this is where we're at. Almost all choices that sellers can choose in order to minimize a possible tax hit, will mean using a method of payment that doesn't provide easy protection for the buyer. PPFF, money orders, cash sent by mail, Venmo, CashApp, etc. it is what it is.

 

[choombak]

Seems to me that everyone beating their chest about how they'd never do business with people who ask for Friends & Family because OMG there's no protection for the buyer with G&S, probably aren't going to want to use money orders either because there's no protection for the buyer.

That said, this is where we're at. Almost all choices that sellers can choose in order to minimize a possible tax hit, will mean using a method of payment that doesn't provide easy protection for the buyer. PPFF, money orders, cash sent by mail, Venmo, CashApp, etc. it is what it is.

Using PayPal F&F for goods sold is a breach of PayPal's TOS that you agreed to when getting an account. A friend who works for PayPal says they have implemented AI (artificial intelligence) to flag these violations - built models based on past history, number of times payment is made F&F to a particular person, and so on, to make an approximate determination. I do not wish to have my account frozen/limited, and I wish to abide by the TOS. It isn't about buyer protection, not for me at least.

USPS MO (indirectly) protects both buyer and seller, since any fraud involving a postal MO is categorized as "financial fraud", and considered a felony. You can report it to the USPS Inspector General's office. Yes, it is likely that frauds involving smaller amounts may not yield immediate results, but the important part is there is recourse. And sellers' who abuse postal MO are more likely to abuse it repeatedly resulting in prosecution.

While buyer and seller protection is important, most important is the wisdom of who you deal with, that can either come with experience (expensive), or reading the GBU section and some of the excellent advice in many of these threads to protect oneself either as a buyer or as a seller. I'll add a few here:
* Lookup the feedback for a member who you are dealing with.
* Use the search facility to understand where the member posts.
* Search the internet for the member username. Scammers generally jump forum to forum and aren't smart enough to use a different username. Google search for the username turns up any bad reviews or GBU threads from bladeforums as well.
* Use good judgement when dealing with a new member. This means looking for clues in the email or PM exchange, asking questions, and building an overall idea of the person before agreeing for the deal. Don't hesitate to ask for references on the forum, or in real life, or even their real name. Then google for the real name and info provided to build a mental model of the member's character.
* In short, do your homework before sending money to anyone, and more likely than not, it will turn out okay. There won't be any need for artificial buyer and seller protection gibberish. ;-)

 

[Quiet]

Using PayPal F&F for goods sold is a breach of PayPal's TOS that you agreed to when getting an account. A friend who works for PayPal says they have implemented AI (artificial intelligence) to flag these violations - built models based on past history, number of times payment is made F&F to a particular person, and so on, to make an approximate determination. I do not wish to have my account frozen/limited, and I wish to abide by the TOS. It isn't about buyer protection, not for me at least.

USPS MO (indirectly) protects both buyer and seller, since any fraud involving a postal MO is categorized as "financial fraud", and considered a felony. You can report it to the USPS Inspector General's office. Yes, it is likely that frauds involving smaller amounts may not yield immediate results, but the important part is there is recourse. And sellers' who abuse postal MO are more likely to abuse it repeatedly resulting in prosecution.

While buyer and seller protection is important, most important is the wisdom of who you deal with, that can either come with experience (expensive), or reading the GBU section and some of the excellent advice in many of these threads to protect oneself either as a buyer or as a seller. I'll add a few here:
* Lookup the feedback for a member who you are dealing with.
* Use the search facility to understand where the member posts.
* Search the internet for the member username. Scammers generally jump forum to forum and aren't smart enough to use a different username. Google search for the username turns up any bad reviews or GBU threads from bladeforums as well.
* Use good judgement when dealing with a new member. This means looking for clues in the email or PM exchange, asking questions, and building an overall idea of the person before agreeing for the deal. Don't hesitate to ask for references on the forum, or in real life, or even their real name. Then google for the real name and info provided to build a mental model of the member's character.
* In short, do your homework before sending money to anyone, and more likely than not, it will turn out okay. There won't be any need for artificial buyer and seller protection gibberish. ;-)

I appreciate the refresher on things that have been stated about a thousand times throughout these threads, so I'll respond in kind: none of this speaks to the main reason why people are arguing against PPFF, which is that it doesn't provide protection to the buyer. Secondly, calling the USPS IG's office has been mentioned many times before...usually by people who've done it, and gotten nowhere. Thirdly, plenty of longtime members in good standing have one day decided to sell several knives, then pull a disappearing act. So, nothing is foolproof. Yes, people should be looked at, that's true, but again, has been covered before.

That's the only point I'm making, that if folks here want ironclad protections when buying a knife, their best bet is Ebay, buying direct from a dealer, or sticking with the (dwindling) number of people who use G&S. As is, I fully expect a bunch of people who continue to use G&S to have to pay out next year at tax time, which means that you're probably going to see a reduction on the number of sales posts overall on the Exchange, or you're going to see EVERYONE moving to methods of payment that don't involve a method whereby Uncle Hands-Out gets a cut. And sorry, but that means that we're right back to where we are now. You want protection? Buy from a business.

Also, let me be very clear, as I know some folks have tried to dance around it: I don't care in the slightest about the TOS I agreed to. If you actually read it, you'll see that Paypal is free to edit, retract, or otherwise change the conditions of that agreement at their leisure, so what is that agreement really worth? Paypal users have agreed to something that's only ironclad on one side, so I don't see why people are arguing so vehemently against those who've decided to do what they want to do. If people here are using PPFF to sell some knives, and put some money in their pocket without having to give a portion of it to the Government under these ridiculous new rules, hey, good for them, get the bag. As is, the Administrators of this site have already stated that it's not something they'll be enforcing, so this is very much a "get used to it" situation for all involved.

 

[choombak]

I appreciate the refresher on things that have been stated about a thousand times throughout these threads, so I'll respond in kind: none of this speaks to the main reason why people are arguing against PPFF, which is that it doesn't provide protection to the buyer. Secondly, calling the USPS IG's office has been mentioned many times before...usually by people who've done it, and gotten nowhere. Thirdly, plenty of longtime members in good standing have one day decided to sell several knives, then pull a disappearing act. So, nothing is foolproof. Yes, people should be looked at, that's true, but again, has been covered before.

That's the only point I'm making, that if folks here want ironclad protections when buying a knife, their best bet is Ebay, buying direct from a dealer, or sticking with the (dwindling) number of people who use G&S. As is, I fully expect a bunch of people who continue to use G&S to have to pay out next year at tax time, which means that you're probably going to see a reduction on the number of sales posts overall on the Exchange, or you're going to see EVERYONE moving to methods of payment that don't involve a method whereby Uncle Hands-Out gets a cut. And sorry, but that means that we're right back to where we are now. You want protection? Buy from a business.

Also, let me be very clear, as I know some folks have tried to dance around it: I don't care in the slightest about the TOS I agreed to. If you actually read it, you'll see that Paypal is free to edit, retract, or otherwise change the conditions of that agreement at their leisure, so what is that agreement really worth? Paypal users have agreed to something that's only ironclad on one side, so I don't see why people are arguing so vehemently against those who've decided to do what they want to do. If people here are using PPFF to sell some knives, and put some money in their pocket without having to give a portion of it to the Government under these ridiculous new rules, hey, good for them, get the bag. As is, the Administrators of this site have already stated that it's not something they'll be enforcing, so this is very much a "get used to it" situation for all involved.

Just don't use PayPal. No point being upset at those who wish to play by the rules. Really.

 

[Quiet]

Just don't use PayPal. No point being upset at those who wish to play by the rules. Really.

Actually, I think you meant to say that there's no point in being upset at those who don't require your approval (and are unconcerned with your disapproval) to use whatever they want to use. Really.

I'll use Paypal Friends and Family if I wish, as will....(checks the Exchange)...like, 90% of everyone else. So, it is what it is.

Have a great day!

 

[stonproject]

I appreciate the refresher on things that have been stated about a thousand times throughout these threads, so I'll respond in kind: none of this speaks to the main reason why people are arguing against PPFF, which is that it doesn't provide protection to the buyer. Secondly, calling the USPS IG's office has been mentioned many times before...usually by people who've done it, and gotten nowhere. Thirdly, plenty of longtime members in good standing have one day decided to sell several knives, then pull a disappearing act. So, nothing is foolproof. Yes, people should be looked at, that's true, but again, has been covered before.

That's the only point I'm making, that if folks here want ironclad protections when buying a knife, their best bet is Ebay, buying direct from a dealer, or sticking with the (dwindling) number of people who use G&S. As is, I fully expect a bunch of people who continue to use G&S to have to pay out next year at tax time, which means that you're probably going to see a reduction on the number of sales posts overall on the Exchange, or you're going to see EVERYONE moving to methods of payment that don't involve a method whereby Uncle Hands-Out gets a cut. And sorry, but that means that we're right back to where we are now. You want protection? Buy from a business.

Also, let me be very clear, as I know some folks have tried to dance around it: I don't care in the slightest about the TOS I agreed to. If you actually read it, you'll see that Paypal is free to edit, retract, or otherwise change the conditions of that agreement at their leisure, so what is that agreement really worth? Paypal users have agreed to something that's only ironclad on one side, so I don't see why people are arguing so vehemently against those who've decided to do what they want to do. If people here are using PPFF to sell some knives, and put some money in their pocket without having to give a portion of it to the Government under these ridiculous new rules, hey, good for them, get the bag. As is, the Administrators of this site have already stated that it's not something they'll be enforcing, so this is very much a "get used to it" situation for all involved.

I appreciate someone finally saying it. Almost no one cares about Paypal's TOS. You can put me in that camp also. When I signed up for Paypal the rules were different. They changed the rules on me, I'll just continue using their services in the way that is most convenient for me. If they don't like it, I guess I'll have to go to any of the other dozen online payment platforms when they give me the boot.

Here's another thing, Paypal may not even protect you if you're selling knives at best, at worst they'll say you're selling weapons and ban you.

 

[jlauffer]

Lol...just got an email from ebay: "Tell Congress their new 1099-K rules are confusing and unnecessary"

 

[Peter Hartwig]

If the majority here don't see a problem with not paying for services rendered, it may be an indicator of a larger than PP problem, and the need for the G&S protection. I pay others for their services, just as I expect to be played for mine. If I don't care to pay I don,t use them. If they weren't giving you a service you value you would have no problem going to an alternative. Hopefully each will think it through rather than just say others are doing it. Others may not be right.
The tax creates a certain problem, but I feel the correct answer is either to continue to use G&S, or go to an alternative to PP.


As for changing the rules being one sided, welcome to the world. Your bank, credit card and even BF reserves the right to do so, and your only right is to move on if you don't like it.

 

[Quiet]

If the majority here don't see a problem with not paying for services rendered, it may be an indicator of a larger than PP problem, and the need for the G&S protection. I pay others for their services, just as I expect to be played for mine. If I don't care to pay I don,t use them. If they weren't giving you a service you value you would have no problem going to an alternative. Hopefully each will think it through rather than just say others are doing it. Others may not be right.


As for changing the rules being one sided, welcome to the world. Your bank, credit card and even BF reserves the right to do so, and your only right is to move on if you don't like it.

If protection is such a huge deal, I'm told that sales from our forum's supporting dealers are a great way to go.

 

[Peter Hartwig]

If protection is such a huge deal, I'm told that sales from our forum's supporting dealers are a great way to go.

That is certainly a reasonable option. Better to pay more than loose all. This is presuming what you want can be found at a dealer.

 

[Quiet]

That is certainly a reasonable option. Better to pay more than loose all. This is presuming what you want can be found at a dealer.

It also implies that the rating system we have here is worthless, and that everyone is going to scammed if a seller demands PPFF, despite the fact that hundreds of sales happen here what, every day? Most of them are through people using FF, and people are getting what they've paid for. It's a good reminder that this section is for calling out those who have decided to scam people, and through the actions of our outstanding Administration/Mod staff, those people are usually quickly removed.

So, as I see it, people will continue to use PPFF (or other non reporting methods*) to do business here, or else people who are tired of the defense of Paypal will wise up and start cranking their prices up in addition to using PPGS, and a lot of folks who are used to getting knives significantly cheaper than dealer or eBay prices are going to find out that the costs of a seller having to do business up there on the moral high horse ground are going to be passed to them. People already cry foul as it is when people give PPGS prices and mention this price includes the fees that, as we all know, the seller is technically supposed to eat, because they want the cheapest price possible.

This is a pretty simple concept. The good thing in all this, is that the Administration of BF allows PPFF, so people have a choice. I think it's a win/win, personally.

About the only way this turns around is good ole Unka Joe reversing this nonsense and reinstating some common sense limits on this reporting requirement. Until then...whelp, it is what it is, which is why most of the Exchange is now PPFF.




* None of which provide "protection"

 

[Peter Hartwig]

I am not calling F&F users(as a lot) scammers, but do feel they are compromising values for convienance. This has accelerated do to the tax. I don't believe 10 years ago I would see many defending F&F, so I have to wonder if more than the tax has changed.
I use money orders, which aren't as easy or quick but align with my views.
But regardless if someone uses F&F or not, I can deal with it from my end.

 

[choombak]

Actually, I think you meant to say that there's no point in being upset at those who don't require your approval (and are unconcerned with your disapproval) to use whatever they want to use. Really.

I'll use Paypal Friends and Family if I wish, as will....(checks the Exchange)...like, 90% of everyone else. So, it is what it is.

Have a great day!

Resorting to "argumentum ad populum" is a fallacious defense.

Have a good one!

 

[choombak]

I am not calling F&F users(as a lot) scammers, but do feel they are compromising values for convienance. This has accelerated do to the tax. I don't believe 10 years ago I would see many defending F&F, so I have to wonder if more than the tax has changed.
I use money orders, which aren't as easy or quick but align with my views.
But regardless if someone uses F&F or not, I can deal with it from my end.

I generally consider them ill-informed of the consequences. Most of the time they do it because everyone else seems to be requesting funds that way.

Changes to taxation may have pushed even more people to request FF, but as I stated they are at a greater risk of their account and funds frozen, since this has not escaped PayPal's attention too. But everyone has a different risk assessment of any situation, this being no different.

 

[Boattale]

Just FYI none of you guys selling knives are going to get audited by the IRS. They have a lot and by a lot I mean a LOT bigger fish to fry. That and they have the same staffing problems as the private sector. So relax.

 

[Quiet]

Resorting to "argumentum ad populum" is a fallacious defense.

Have a good one!

Oh, I wasn't arguing, I was simply telling you that you aren't going to get your way with your attempt at moralizing against people (like me) who don't care about your opinion.