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.