Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Fri Jan 29 2021 14:47:57

eBay Releases IRS Form 1099Ks but Breaks Payout Report

By: Ina Steiner

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Today, eBay made available IRS Form 1099K for sellers enrolled in Managed Payments, but alas, it seems to have broken Payout reports. According to a seller discussing the issue on the eBay discussion boards:

"As of this morning, the downloadable Payout Reports that are accessed by clicking the link within the payout are not working.

"The CSV file has only this in it: "401 Unauthorized: Temp URL invalid""

Sellers on several industry boards are discussing the 1099Ks, which are now available on eBay in PDF format (file name: 1099-K_2020.pdf). Some sellers said despite the fact they processed payments exceeding $20,000, eBay displayed the following message informing them eBay was not going to issue them a 1099K for 2020:

"No tax forms available. You haven't sold enough on eBay requiring you to submit tax documentation."

We recently noted the discrepancy in how eBay seems to be handling sales tax on 1099Ks. It charges sellers a Final Value fee on the total amount of a transaction, including sales tax, but has said it does not report the sales tax portion on 1099Ks. (Talk about having your cake and eating it too.)

Sellers also began discussing the issue on Ecommerce EKG, where one reader wrote, "A bigger problem I have is when eBay illegally overcharges sales tax (and thus their FVFs) and state DORs sound concerned but do nothing." 

Last month, buyers were upset when eBay seemed to err in how much sales tax it collected on sales of batteries. (Even if eBay fixes mistakes, it's unclear if makes adjustments to the FVFs it charges sellers on such transactions.) Some consumers have sued retailers for incorrect sales-tax collection, it will be interesting to see if that extends to online marketplaces.

Interestingly, some people may be caught off guard this year after realizing that selling some personal things online - which many did on a casual basis during the pandemic - earned them a more significant amount than they had realized, and are now facing the tax consequences.

One eBay user chatted about how casual sales in 2020 triggered a Form 1099 for their state, which has a threshold of only $600 before eBay is obligated to issue them a 1099K. The seller appeared uninformed about the difference between being a business (not even understanding the concept of "sole proprietor") versus a hobby seller.

Staying on the topic of taxes, sellers who want to print reports showing details of their full-year 2020 transactions are out of luck - eBay only makes available 90-days' worth of data, as we recently noted.

Any entity that processes payments on a seller's behalf is obligated to follow state and federal laws about Form 1099K, including PayPal and Etsy. Don't rely on a notification - proactively look for your form and download it.

Tell us what you're experiencing on eBay and elsewhere as you prepare to dive into your tax chores.



Comments (20) | Leave Comment | Permalink

Readers Comments

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: acc756 This user has validated their user name.

Fri Jan 29 15:12:09 2021

Thanks Ina, that's a lot to cover in one blog!

On the issue with overcharging sales tax on batteries, I've been continuing to press eBay to proactively address it but so far they have not.

https://ebay.to/2YpvELR

Tyler says the tax team has said that any buyer who feels there was a mistake in the amount charged can contact customer service for assistance.

We all know how difficult it has been getting through to customer service recently.  Asking buyers to wait on hold for hours or worse, wait for days for a call back, is not an ideal solution.

It also fails to address the implications for FVF as you pointed out. Since both Managed Payments and PayPal assess fees on the total amount including sales tax, affected sellers would have paid more fees on those transactions as well.

I'm working on getting an idea of the scope of this issue so I can continue to press eBay to take action.

If any of the readers here are sellers who sold any kind of battery *except* car batteries in December, feel free to reach out!

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

This user has validated their user name. by: Lightning

Fri Jan 29 18:23:59 2021

I just downloaded my PayPal 1099-K PDF and 1099-K Reconciliation CSV.  The CSV gives a gross amount, with Sales Tax included, if paid.  No column for the actual sales tax paid.  So that will have to be obtained through and All Activity 2020 download and tabulated on a spreadsheet, unless you have been keeping it as you go, as some do.  I haven't been, but it is on the full year CSV, and I can extract it there in a few clicks.

You only get 7 columns on the Reconciliation:
Date (definitely needed)
Transaction ID   (possibly useful)
Payer Email ID   (so NOW they show the buyer's email?)
Payee Account ID (useless 19 digit identifying number)
Received Amount (gross - including item, shipping, SALES TAX)
Received Currency (USD, label only, useless)
Received Amount in USD  (repeats if not a currency conversion)

All the data they have, and this is what they send.  All the months' total gross receipts are listed on the 1099-K, but no breakout of Sales Tax.  Nor in the reconciliation.  Thanks for nothing, PayPal.

Next episode, we'll see how well EBAY presents the info.....

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: ShortSeller This user has validated their user name.

Fri Jan 29 18:46:46 2021

What's the equivalent of 911 in India?

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: Vigilant Eye On eBay This user has validated their user name.

Fri Jan 29 19:59:51 2021

@Lightning

In addition to the 1099-K PDF and 1099-K Reconciliation CSV you must create a custom statement from 1/1/20 to 12/31/20 and download a PDF copy of it.

Just finished downloading my PayPal 2020 custom statement.

Along with all of the individual transactions information, you will find the total "tax collected by partner" amount under the "Payments sent" section that is located near the top of the very lengthy report.

On an annual basis, I create and download a copy of the PayPal custom statement with the year's transactions and summary reports for 1099 reconciliation and in the case of an IRS audit, to provide both summary and individualized transaction documentation.

Been doing this for many years now.

eBay reporting is no where near as advanced or complete as the PayPal custom summery statements are.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

This user has validated their user name. by: Lightning

Sat Jan 30 05:04:45 2021

@Vigilant Eye On eBay

I do use the Custom Statement, as another check.  Usually I have no problem with the PayPal totals, but that was before Sales Tax was charged almost universally.  But it's still early in the battle, so I will see if all lines up.  

I already checked the MP part, and my K from eBay doesn't match - big surprise there.  It seems to be under-reported a bit.  More checking, more spreadsheets open, more confusion.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: acc756 This user has validated their user name.

Sat Jan 30 08:13:34 2021

@Vigilant Eye On eBay

If you are checking the eBay 1099-K against Managed Payments transaction reports, make sure you are looking at the "Gross transaction amount" column only for lines where the "Type" column says "Order".

The transaction report also includes refunds, holds, and claims as possible "types" and those will not be included in how eBay calculated the 1099-K numbers.

I filtered the transaction report by "Type" to just show "Order" and then auto-summed the "Gross transaction amount" column just for those lines only.  It came out exactly to the penny what eBay is showing on the 1099-K.

*Disclaimer: none of that is a comment on whether or not I think eBay is correct or a guarantee that everyone will find the numbers add up as easily.

Hope that helps!


Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: Vigilant Eye On eBay This user has validated their user name.

Sat Jan 30 12:14:41 2021

@Web Site

Although your posting the information on Managed Payments transaction reports is greatly appreciated, I have previously declined all of eBay's demands to sign up for the program and do not intend to join it in the near future.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: acc756 This user has validated their user name.

Sat Jan 30 12:43:02 2021

@ Vigilant Eye On eBay  - sorry about that, that comment was actually meant for @Lightning .

It was early in the morning and obviously I needed more coffee. ;-)  

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

This user has validated their user name. by: Lightning

Mon Feb 1 00:08:39 2021

@acc756
Thanks for the additional info.  I haven't had a chance to prove any of it out, but I do always check the Type column for unwelcome visitors.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: Chicago48 This user has validated their user name.

Mon Feb 1 02:45:31 2021

First year getting a 1099K.  I don't know why I get one, but when I do my taxes I'm sure it will be crystal clear.  Thanks IRS!

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: candy7122 This user has validated their user name.

Mon Feb 1 04:58:04 2021

@Chicago48 I'm guessing from your User ID you're from Illinois.  The state put a requirement for any one in Ilinois that sells 1k and 3 transactions get a 1099.  It's not the IRS.  There are other states doing this to get their cut.  

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: wrslss1222 This user has validated their user name.

Mon Feb 1 10:08:50 2021

I received my 1099 from eBay in the mail.  What I found very interesting, is when I download eBay's sales reports for each month, there are differences in total sales for each month and overall, the 1099 gives a total for the year of several hundred more than their own sales reports.  I guess I shouldn't be surprised as it is eBay as usual, screwed up.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

This user has validated their user name. by: Marie

Mon Feb 1 15:34:19 2021

This link may be helpful for those trying to deal with Ebay's 1099's.

https://community.ebay.com/t5/Payments/Form-1099-K-Deta
iled-Report/m-p/31575590#M106915

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: acc756 This user has validated their user name.

Mon Feb 1 16:25:02 2021

Those who are seeing discrepancies from the Transaction report might be interested in this:  https://ebay.to/2NXqCo4

Apparently the new 1099-K Detailed Report is based off of "settlement date" not "order date".  That could cause some sales at the end of the month to be shifted to the next month on the report.

That could lend some credibility to the idea that the flow of money might be different with Managed Payments than it is with PayPal.

This isn't a comment on whether eBay is right or wrong in how they are doing this, but it would appear they consider the "settlement date" to be when the payment to the seller actually occurs, for tax purposes any way.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

This user has validated their user name. by: Marie

Mon Feb 1 16:35:30 2021

@acc756

It should be based on PAID date.  When the buyer issues payment no matter when Ebay settles it.  The 1099K is a tax report for the monies that move into MP it is not a form for monies that move into a seller's checking account.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: acc756 This user has validated their user name.

Mon Feb 1 16:43:12 2021

@ Marie - like I said, it wasn't a comment on whether eBay is right or wrong.

I'm just passing on a helpful observation from another community member that may be useful for sellers who are trying to make sense out of the 1099-K and the new report *as is* from eBay, not what we wish it was or think it should be.

When sellers speak to their tax professionals, it may be helpful for them to understand and be able to explain what eBay did to arrive at the numbers on the 1099-K - regardless of whether it is ultimately right or wrong.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: isa This user has validated their user name.

Thu Feb 4 14:51:02 2021

"Staying on the topic of taxes, sellers who want to print reports showing details of their full-year 2020 transactions are out of luck - eBay only makes available 90-days' worth of data"
Yep that's me!! I sold items on Ebay.  Not much, but enough to get a 1099K (it was above 600 dollars of gross pay). It was a nightmare trying to match the 1099K... Why? because gross pay included the shipping fees and the sale tax. Thank goodness I had started a spreadsheet to log my sales but it still took me hours to figure out the sale tax.  I had to go to Paypal to figure it out (one transaction at a time... ) because Ebay doesn't provide that (it may be possible if you have an Ebay store but I don't). Ebay is not only charging now 12.5% fees + $0.30 fee but we don't know what they charge for sale tax.  And now there is no way to find out because they stopped working with Paypal.  So are we paying Ebay fees out of the total + shipping fees + the sale tax? or do they base their fees only on total + shipping?  For year 2021, will they include the sale tax in the gross total on the 1099K or not???   If someone knows, let me know. I may just stop selling on Ebay all together to make my life easier because it looks like it will be a nightmare to figure this out.  I also sold on FB marketplace but it was easier to figure out. The FB 1099K also includes the shipping fees and sales tax but I was able to find the info easily (I would suggest to log in all information when you make a sale... save time for the end of the year!). FB keeps the information on item sold for a long time.  At least for now....

I sent an email to Ebay to ask them about the sale tax... I will probably won't receive an answer... Will see!

This is a great blog and very helpful.

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: acc756 This user has validated their user name.

Thu Feb 4 16:37:08 2021

@isa

In Managed payments, eBay fees are calculated on the price+shipping+sales tax (regardless of whether it is seller collected or eBay collected tax)

For the totals on the 1099-K - seller collected sales tax *is* included, but eBay collected sales tax *is not* - or at least that is the most recent thing we have been told by eBay. :)

Hope that helps!

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: acc756 This user has validated their user name.

Fri Feb 5 09:27:00 2021

Now it looks like eBay may be charging sales tax for Florida when the seller does not have physical nexus (or have that state set up in their tax rate table) *and* Florida does not yet have a Marketplace Facilitator law in effect.

Yikes!

https://ebay.to/36IlYAY

Perminate Link for eBay Releases IRS Form 1099Ks but Breaks Payout Report   eBay Releases IRS Form 1099Ks but Breaks Payout Report

by: DraftingLawstostopEbay This user has validated their user name.

Wed Apr 7 13:55:10 2021

Ebay's managed payments really screwed the company long term. Since a seller's funds are not at all related to paypal those same sellers can and do shop for supplies and other things anywhere on the web. Amazon is getting a ton more money because of this greedy ebay mistake. Ebay tried to have their cake and eat it too but it isn't going to work this time.
Our Ebay purchases have been cut by 50% or more since the change last of payments processing last year.
It's amazing how many good deals are out there is you just look. Ebay's greedy Corporate sharks really screwed the company,  the sellers and the stockholders this time. Even us peasants can spot a crooked ecommerce site coming a mile away.



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