PayPal G&S vs F&F for Exchange Purchases

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jeffbird

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There are too many ongoing problems reported with scammers and the rules in the Exchange strongly recommend only using PayPal Goods & Services.

Yet some sellers insist on requiring PayPal Friends and Family under the belief that F&F somehow avoids tax issues after Biden created some IRS rules requiring 1099’s after transactions total $600 in one year.

Pres. Trump in the One Big Beautiful Bill changed the 1099 reporting requirement to $20,000 or 200 transactions.

Here is PayPal’s most current explanation:

Will I have to pay taxes when sending and receiving money on PayPal - what exactly is changing?​

You’ll get a 1099-K if you receive more than $20,000 and more than 200 transactions for goods and services in a calendar year.

You’ll also get a 1099-K if any of your payments were subject to 24% backup withholding, even if you didn’t reach the reporting threshold.

Here’s some more detail on the 1099-K threshold change:

  • Previously, the American Rescue Plan Act of 2021 had lowered the 1099-K reporting threshold to $600. However, in the following years, the IRS issued a series of deferrals and a plan to gradually transition to the reduced threshold. In 2025, the One Big Beautiful Bill Act restored the original reporting threshold of more than $20,000 and more than 200 transactions.
  • This only applies to payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal for dinner, gifts, shared trips, etc.
  • This reporting is required when the sender identifies the transaction as being for goods and services, even if it was a mistake. Although this transaction is reportable by PayPal, it’s possible that the transaction is not taxable. It’s always best to speak with a tax professional for any specific concerns you may have.
  • If you accept payment for goods and services in crypto assets such as PYUSD, as opposed to fiat currency, and meet the reporting threshold, you’ll receive a separate 1099-K reporting those transactions. Fiat is a government-issued currency, like the U.S. dollar, that is backed by the government that issues it.

Will PayPal report my sales to the IRS? | PayPal US

IRS new reporting requirement for payments for goods and services lowers the threshold to $5,000 USD for calendar year 2024, $2,500 for calendar year 2025, or $600 for calendar years 2026 and beyond. PayPal will report these transactions.
www.paypal.com www.paypal.com
 
All true, but the battle lines are drawn on that, and nobody is going to change their minds.
 
Some still have state tax issues
Bottom line the seler can ask to be paid anyway they wish.
And the buyer doesn't have to buy if they don't have or like that payment method
Or can try to negotiate a different method
 
I did not sell $20,000 or have 200+ transactions, and I got a 1099 from PayPal.
 
Just don't buy from f&f sellers yourself. That's what I do. Problem solved.

Unfortunately it still leaves the community at risk of scammers, but Spark and the site have spoken on that
 
jeffbird said:
There are too many ongoing problems reported with scammers and the rules in the Exchange strongly recommend only using PayPal Goods & Services.

Yet some sellers insist on requiring PayPal Friends and Family under the belief that F&F somehow avoids tax issues after Biden created some IRS rules requiring 1099’s after transactions total $600 in one year.

Pres. Trump in the One Big Beautiful Bill changed the 1099 reporting requirement to $20,000 or 200 transactions.

Here is PayPal’s most current explanation:

Will I have to pay taxes when sending and receiving money on PayPal - what exactly is changing?​

You’ll get a 1099-K if you receive more than $20,000 and more than 200 transactions for goods and services in a calendar year.

You’ll also get a 1099-K if any of your payments were subject to 24% backup withholding, even if you didn’t reach the reporting threshold.

Here’s some more detail on the 1099-K threshold change:

  • Previously, the American Rescue Plan Act of 2021 had lowered the 1099-K reporting threshold to $600. However, in the following years, the IRS issued a series of deferrals and a plan to gradually transition to the reduced threshold. In 2025, the One Big Beautiful Bill Act restored the original reporting threshold of more than $20,000 and more than 200 transactions.
  • This only applies to payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal for dinner, gifts, shared trips, etc.
  • This reporting is required when the sender identifies the transaction as being for goods and services, even if it was a mistake. Although this transaction is reportable by PayPal, it’s possible that the transaction is not taxable. It’s always best to speak with a tax professional for any specific concerns you may have.
  • If you accept payment for goods and services in crypto assets such as PYUSD, as opposed to fiat currency, and meet the reporting threshold, you’ll receive a separate 1099-K reporting those transactions. Fiat is a government-issued currency, like the U.S. dollar, that is backed by the government that issues it.

Will PayPal report my sales to the IRS? | PayPal US

IRS new reporting requirement for payments for goods and services lowers the threshold to $5,000 USD for calendar year 2024, $2,500 for calendar year 2025, or $600 for calendar years 2026 and beyond. PayPal will report these transactions.
www.paypal.com www.paypal.com
Click to expand...

I think you should bold type, red color the line I did above in your first post, SPREAD THE WORD!!! Many people do not know this has reverted back to the way it was.

madcap_magician said:
All true, but the battle lines are drawn on that, and nobody is going to change their minds.
Click to expand...
I wouldn't necessarily say that. Many sellers just don't know that the rules have changed back to the way they were.

IMO, it was just convenient excuse for some to screw Paypal out of their fees when the $600 1009 thing happened. I just finished a deal where the seller was asking for FF, and a simple link to the same page J jeffbird linked above with some discussion and G&S was used without issue.

annr said:
I did not sell $20,000 or have 200+ transactions, and I got a 1099 from PayPal.
Click to expand...
I believe this is only for 2026 (and possibly the latter part of 2025 after the bill passed). The other rules for $600 and you get a 1099 were in effect for most of 2025.
 
Oh goody, we've definitely not discussed this to death or anything. Now all we need is another thread from a low post count member demanding to know why Spark doesn't force people to keep their sold prices in sales threads, and it really will be old home week! 😐
 
The real issue is that PayPal does not offer buyer's protection for knife purchases, so G&S gets you nothing.
 
If you set yourself up to accept credit cards, the mods will tell you to get a dealer membership, even though it’s super simple to get something like Square, Clover, or Stripe so you can avoid PP and offer safe transactions. So, we are left with PPFF, PPGS, or sending a check. Zelle and Apple Cash are no better than PPFF. May was well go back to Western Union.
 
SharpBits said:
If you set yourself up to accept credit cards, the mods will tell you to get a dealer membership, even though it’s super simple to get something like Square, Clover, or Stripe so you can avoid PP and offer safe transactions. So, we are left with PPFF, PPGS, or sending a check. Zelle and Apple Cash are no better than PPFF. May was well go back to Western Union.
Click to expand...
It will be ironic if we end up all using USPS money orders again. Full circle!
 
Good news! But I see this additional info on PayPal's website:

Additionally, PayPal and Venmo will issue and file Form 1099-K for any customer who was subject to backup withholding during 2025, regardless of total payments for the year. In the case where an individual state has a lower threshold, PayPal and Venmo will report accordingly.

If you live in the following US states,* you’re subject to a lower reporting threshold:

Vermont, Massachusetts, Virginia, Maryland: $600 USD in gross payment volume from sales of goods or services in a single calendar year, regardless of the number of transactions.
Illinois: over $1,000 USD in gross payment volume from sales of goods or services in a single calendar year and four or more separate transactions.
 
madcap_magician said:
It will be ironic if we end up all using USPS money orders again. Full circle!
Click to expand...

A lot of knives on the Exchange get sold due to the fact that we all have the sickness, and our Paypal loaded with our debit/credit sources means instantaneous payment, which means quick shipping. If we started asking people to consider having to go to the Post Office*, wait in line to get the money order, mail it out snailmail, wait for the seller to get it, wait for them to deposit it in their account, THEN wait for them to sell it....

I think you'd see a lot less knives being sold here.

The fact is, about the safest way to buy/sell knives would be to meet in person with cash in hand. Any other way, and you open yourself to risk. Simple as that. Folks have had their Paypal accounts suspended/locked after it was discovered that they were selling knives (using PPG&S) because Paypal actually has a strict anti-weapons policy and does not want their service used in those types of transactions.


* Heh, and you'll need to buy stamps and envelopes while you're there! I haven't used either of those in many years, and definitely don't have any myself, so I count myself as someone who'd need to buy 'em.
 
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Quiet said:
A lot of knives on the Exchange get sold due to the fact that we all have the sickness, and our Paypal loaded with our debit/credit sources means instantaneous payment, which means quick shipping. If we started asking people to consider having to go to the Post Office*, wait in line to get the money order, mail it out snailmail, wait for the seller to get it, wait for them to deposit it in their account, THEN wait for them to sell it....

I think you'd see a lot less knives being sold here.

The fact is, about the safest way to buy/sell knives would be to meet in person with cash in hand. Any other way, and you open yourself to risk. Simple as that. Folks have had their Paypal accounts suspended/locked after it was discovered that they were selling knives (using PPG&S) because Paypal actually has a strict anti-weapons policy and does not want their service used in those types of transactions.


* Heh, and you'll need to buy stamps and envelopes while you're there! I haven't used either of those in many years, and definitely don't have any myself, so I count myself as someone who'd need to buy 'em.
Click to expand...
I have bought many knives using money orders, which is my go to if the seller won't take G&S. Selling though is much more difficult, and the item needs to be something fairly special to get people to go through the trouble of the PO and the wait.
In the universe of instant gratification, there aren't many that will go the money order route, or even know what they are.
Talking old school
I just checked and you can still send packages COD(collect on delivery). Last time I can remember using that was as a kid in the 60's- prior to having a checking account
 
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Just as old (likely) is money gram, certain select stores would have those, I remember Walmart doing so as well. They would deny a lot of people at mine if the money gram people thought the transaction was a scam
 
Peter Hartwig said:
I have bought many knives using money orders, which is my go to if the seller won't take G&S. Selling though is much more difficult, and the item needs to be something fairly special to get people to go through the trouble of the PO and the wait.
In the universe of instant gratification, there aren't many that will go the money order route, or even know what they are.
Talking old school
I just checked and you can still send packages COD(collect on delivery). Last time I can remember using that was as a kid in the 60's- prior to having a checking account
Click to expand...

30 years at the USPS an I have NEVER delivered a COD! 😆
 
I have bought a lot of things online using USPS and Walmart money orders without issues. And credit cards, etc. I will not use PayPal F&F with people (?) on the internet.
 
Quiet said:
Oh goody, we've definitely not discussed this to death or anything. Now all we need is another thread from a low post count member demanding to know why Spark doesn't force people to keep their sold prices in sales threads, and it really will be old home week! 😐
Click to expand...
That’s a real cute response but you know maybe there’s a reason people keep bringing up points that you think have been “discussed to death”. Maybe it’s important to them. Do you think members here should not discuss issues that you’re tired of hearing about? Do you think the validity of a member’s opinion is based on his “post count”?
 
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