USA Only: Read If You’re Selling Online - IRS Law Change Effect 2022

[TwoTankAmin]

If you are a casual hobby seller then you need not worry:

Internal Revenue Code (IRC) Section 6050W states that all US payment processors, including PayPal, are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal.

PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. In order to help you understand these information reporting obligations, we have prepared the following FAQs. After reviewing the following FAQs, we recommend you consult your tax advisor to assess tax implications of Form 1099-K reporting.

from https://www.paypal.com/us/webapps/mpp/irs6050w

and from the FAQ section there to clarify the above:

How will I know if these rules affects me?
PayPal will track the payment volume of your account(s) to check whether your payment volume exceeds both of these levels in a calendar year:

• $20,000 USD in gross payment volume from sales of goods or services in a single year
• 200 payments for goods or services in the same year

You may be asked to provide your tax ID number, such as a Social Security Number (SSN) or Employer Identification Number (EIN), to your existing account(s), if you don’t already have one on file.

If you cross the IRS thresholds in a given calendar year, PayPal will send Form 1099-K to you and the IRS for that year early in the following year.

Bear in mind that nobody reports cash transactions except for you. But you should assume that all outfits that move money are subject to the law. That would be banks and services like Zelle etc. I do not think that the regulations are up to snuff for crypto, but the way they fluctuate means you could receive $1,000 in Bitcoin and a few minutes later it could be worth $800 or $1,200.

So thinking out load and looking for loopholes, I wonder if one receives say 150 payments totalling $15k from say three sites/services then, none of them will report? That doesn't make a lot of sense to me? But then nobody ever accused of our representaives and senators of being smart. In fact, it seems as if we Americans prefer to choose the exact opposite to govern us.