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Sat Jan 28 2012 08:55:30

Amazon Sellers Can Now View IRS Tax Form 1099K

By: Ina Steiner

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Many readers have questions about the impact of the new IRS Form 1099-K on their tax returns - and Amazon sellers are now reporting they can view their reports when logged in to Amazon.

We've written about the 1099Ks extensively (tax guru Barbara Weltman wrote earlier this month about how the new forms impact your tax return, and Kenneth Corbin wrote some good background in October, for example).

I also came across a video on YouTube that raises an interesting point - does the name of your company on file with Amazon, PayPal, Google Checkout and credit card companies exactly match the name that's on file with the IRS?

This is the first year online sellers have to deal with the new IRS reporting requirement. We'll continue to report on developments in EcommerceBytes. In the meantime, we're eager to hear from readers about what you're experiencing.

Let us know if you've received 1099-Ks from any of the payment processors (Amazon, PayPal, etc.), and what questions you have about the new form.




Comments (22) | Permalink

Readers Comments

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

by: walker

Sat Jan 28 09:13:16 2012

I called PayPal last night and the rep said they would be mailed out on Monday but it would take a few days for them to show up on-line.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Nan
Web Site

Sat Jan 28 09:35:02 2012

Nice.  When I checked my Amazon Tax reports I got the following message:
''According to our records, your seller account did not meet both of the Form 1099-K threshold requirements of $20k of unadjusted gross sales and 200 transactions. No Form 1099-K is available''

This matches my records, but it's nice to have a confirmation. So I can stop wondering about Amazon.  

Now I have to wait on PayPal, and hope they didn't count every instance of backup funding as a 'sale'.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

by: Walker

Sat Jan 28 10:13:09 2012

When I called PayPal, the rep was of no help telling me if certain transactions were counted or not.  I am not sure what the 1099 will show.  I have my own spreadsheets though.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

by: Rich

Sun Jan 29 18:25:33 2012

What has to match on different 1099's and tax return is the tax id number and/or the social security number.

The law as I knew it was that 1099's had to be mailed out before Feb 1st

Total paypal receipts would be what the 1099 is based on.  Many ebay sellers might not realize it's the paypal receipts, so it's the total of both the winning purchase and the shipping cost. Ebay sellers who didn't know this and tried to stay under the $20,000 won't be happy when they find out the shipping costs are part of the $20K.

Anyone who's never done self employment tax might want to consider an accountant.  At least for the first year to be set up with all the right info

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

by: matt

Mon Jan 30 02:55:14 2012

Now the totals given by Amazon on the 1099 for each month....do these include fees we paid to Amazon or are those totals before Amazon fees? Also, do the totals count refunds?

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Ina

Mon Jan 30 11:33:01 2012

It is "unadjusted" annual gross sales - the total dollar amount of aggregate reportable payment transactions for each participating payee without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Ina

Mon Jan 30 11:41:20 2012

The IRS final rule is published in a PDF file, it says:

"The plain language of the statute requires reporting the gross amount of transactions rather than the net amount of transactions or payments. The information reported on the return required under these regulations is not intended to be an exact match of the net, taxable, or even the gross income of a payee."

http://1.usa.gov/AlZwXg  

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Anonymous Annie

Mon Jan 30 17:46:02 2012

My 1099K from Elavon (my merchant credit card processor) arrived in today's mail. Everything appears to be in order.

I'd be in panic mode if I had to figure out my taxes on my own. For me an my partner, the cost of having a professional prepare our taxes is a worthwhile investment.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Philip Cohen
Web Site

Mon Jan 30 18:24:23 2012

So, let me get this straight. You now get a 1099K from your “merchant credit card processor” (ie Elavon, being net receipts received via your credit card merchant account, presumably), and you get a 1099K from PreyPal (being net receipts credited to your unlicensed and prudentially unregulated PayPal “bank” account, presumably), and you get a 1099K from Amazon (being net receipts that make it into your real banking account, presumably), …

Well, I can’t imagine how good is IRS data matching in flagging delinquent tax payers but I suspect that there could be many “please explain” letters issuing later this year.  

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Al G

Mon Jan 30 18:34:10 2012

Ohhhh - the IRS is VERY good in matching things up. Especially if your TIN/SS #s are what you (the taxpayer) say they are.

It may take a few months/years, but when the letter shows up it will have the interest already calculated in.

That happened to me on 2 occasions, one was a "brain fart" where I missed including an income source, and the other was a 401K transfer where the institution made a mistake in classifying the transfer type (as income, but should have be part of my IRA).

In other words, don't For Unknown Carnal Knowledge with the IRS. They have nothing better to do with their time.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Anonymous Annie

Mon Jan 30 18:50:38 2012

Philip: I've received nothing from PP. (Does it arrive automatically in the postal mail? As a download link in email?)

Or... because my eBay sales were low enough (truly) perhaps I didn't meet the mark that requires one to be submitted for PP.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Philip Cohen
Web Site

Mon Jan 30 20:33:35 2012

There does not seem to be any discussion about the aggregate value of a number payments sources exceeding $20,000. Does that mean that if you can keep your receipts from each of your “payments processing” sources under $20,000, and you don’t therefore receive a 1099K from any of them, you then can (continue to) ignore the IRS? At your peril I guess.

Which brings us back to the “chameleon” PreyPal. PreyPal has previously claimed, in a letter to the US Fed circa May 2011, that “not only is it [PayPal] not a debit card or payment network – it is a large merchant of sorts”:

http://www.cnbc.com/id/42916668/

And, indeed, for a change, there is a sliver of truth in this statement—but only a sliver. PreyPal, indeed, does all their online “payments processing” not via their own system or directly by the banks’ system but simply by riding, precariously, on the back of the banks’ existing systems, in the main via a retail bank credit card merchant account with Wells Fargo Bank.

Does this make the clunky PreyPal NOT a “payments processor” in the eyes of the IRS? I doubt it. Receipts collected by PreyPal are lodged in a prudentially unregulated “bank” account with PreyPal. I’m sure that the IRS has told PreyPal that they want to know about such receipts.

Frankly, the sooner Visa’s V.me drives PreyPal back into its eBay-only coffin box the better for all, except for those still desperately trying to sell on eBay, of course …

@Annie, hard to imagine anything from PreyPal arriving by snail mail, that would involve a small amount of human resources and expense. No, I would expect that, regulations permitting, it would arrive as an emailed PDF or more likely—heaven forbid—be accessed via a link in a PreyPal email.

eBay / PayPal / Donahoe: Dead Men Walking

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

by: julie This user has validated their user name.

Mon Jan 30 20:34:01 2012

''and you get a 1099K from Amazon (being net receipts that make it into your real banking account, presumably''

The 1099K from Amazon is GROSS receipts, canceled orders amounts are included if you, the seller, canceled them and if you later refunded an order, that amount is not deducted from the total Amazon sends you. It is simply every transaction total ever made to Amazon for the year for every order that a buyer placed.

I just received mine and am still entering Dec sales into my accounting software so I have no idea if the amount shown by Amazon is going to match what I have entered yet. Some have reported that the amounts are close to what they've recorded... I know this year IRS is not requiring any amounts to be on the Schedule C but they will next year.  I'm still confused as to how that is going to work out, as the actual sales will always differ from what total Amazon gives.

Perhaps changes will be made in the reporting requirements next year... these amounts that are reported should be actual amounts paid to the seller, not the gross before refunds and cancellations.

Still awaiting our PayPal 1099K....

I guess the important thing is to keep accurate records, so if there are descrepancies, you can explain why Amazon or PayPal says this and your books say another.  

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

by: julie This user has validated their user name.

Mon Jan 30 20:43:18 2012

Hi Anonymous Annie,

I received an email from PayPal today that at the end of this month, they will be sending me and the IRS a copy of my 1099K.

But nothing about how it will be sent.... :P  

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Philip Cohen

Mon Jan 30 23:16:23 2012

@Annie, it seems that the 1099K must be received by snail mail because it is IRS scannable form whereas a downloaded digital version apparently would not be.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Philip Cohen

Mon Jan 30 23:29:38 2012

But, then, maybe it is only the top copy that the Filer sends to the IRS, that has to be scannable, and maybe not the copy that goes to the payee; or do all copies have to be scannable? Oh, who knows. I don't even care, I'm in Australia and they don't have this sort of reporting here, yet.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Philip Cohen

Mon Jan 30 23:31:58 2012

@Julie

“Box 1. Gross amount of merchant card/third party network payments.
“Enter in box 1 the gross amount of the total reportable merchant card/third party network payment transactions for the calendar year. Gross amount means the total dollar amount of total reportable payment transactions for each participating payee without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts or any other amounts.”

You are right. Gross apparently means the absolute gross, which in many cases may be totally misleading as to a seller’s actual sales. It appears that you had better have been keeping track of all your legitimate business deductions, including such items as refunds to buyers and even how much in fees the processor deducted before you even received the proceeds of such transactions.

Sounds like it going to an interesting tax year for many people selling on the internet.

eBay / PayPal / Donahoe: Dead Men Walking

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Anonymous Annie

Tue Jan 31 08:25:30 2012

Well, I just logged-in to PP... hovered the mouse pointer over the ''History'' menu option and selected ''Tax Documents''.

A new page appears that says:

Tax documents (Bold heading)
Tax year: 2011 (Drop-down selector)
Here are your 2011 tax documents. (Intro)
Document: (empty column)
Description: You have no 2011 tax documents.

I had over 200 transaction on eBay, but the dollar value was one of my lowest years ever. (EVER!)

So it appears that I didn't reach the magic number for PP to even BOTHER generating a 1099K.

Oddly enough, the total amount of my Elavon (merchant credit card processor) transactions was ALSO less than the $20K value... but they *did* provide me with the form.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

This user has validated their user name. by: Philip Cohen

Tue Jan 31 15:07:38 2012

Indeed, would it not be better to receive the 1099K form from each and every one of your payments processors, regardless of the $20,000/200 qualification, becaue then you would better know what your aggregate "gross" would be.

Amazon Sellers Can Now View IRS Tax Form 1099K   Amazon Sellers Can Now View IRS Tax Form 1099K

by: Anne This user has validated their user name.

Tue Jan 31 23:51:09 2012

Regarding Evalon.. did they state why they sent a form for less than 20k? Was it sent to both you and the irs?
How did you receive it? Digitally or mail? Thanks!

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