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Tue Mar 24 2020 09:09:33

How to Determine Sales Tax Figure on PayPal 1099Ks

By: Reader

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Dear Ina,
Since it's tax season and everyone is scrambling to make sense of the sales tax, I thought I would tell you about this YouTube video that I found that may help many out with their PayPal 1099-Ks. 

PayPal does collect the tax and add it into our gross sales amount (which IMO is wrong).

Regardless, there is a spot in PayPal where you can run a report to generate just the sales tax that was collected.  
Martha



Comments (15) | Permalink

Readers Comments

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: justchangecarriers This user has validated their user name.

Wed Mar 25 13:13:48 2020

Um i dont believe they do? My 1099 definitely does npt include sales tax. Ebay witholds that. They do count the paypal fees that you have to deduct out.  

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: justchangecarriers This user has validated their user name.

Wed Mar 25 13:16:50 2020

Just went to p
An ebay transaction on paypal. They deduct sales tax from the numbers. I journsl log every transaction. I use paypals incoming amounts. The difference in paypals 1099 amount and my sales total is the exact 30 cents plus 2.9 percent fees plus my sales figure

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: bb6 This user has validated their user name.

Thu Mar 26 01:00:17 2020

@justchangecarriers  Go to paypal and download a full activity report. There is a column for the tax they collected. They are adding it to your total number (1099). You just need expense that total out as it's not actually money you received.

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

This user has validated their user name. by: Marie

Thu Mar 26 01:35:59 2020

PP's [or any money processor] 1099K is for Gross RECEIPTS.  What that means is any money that came into the account as a payment from a customer [PP fees were involved], it's on your 1099.  

It does NOT take into consideration if that money is for shipping or sales tax and it does NOT reduce for refunds issued.  If you received it from a customer, it is part of your Gross Receipts.

Everyone needs to reconcile the report.  PP has some excellent reports that you can drop into a worksheet program and use to reconcile your Gross Receipts on your 1099K to actual Gross Sales.

BTW, this is NOT new.  This is how 1099k's have worked since the day they started.  Back when sellers collected their own sales tax and remitted it to their state.  The sales tax you collected was in your Gross Receipts on your 1099K.  There aren't any exceptions to that.

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: GotToGetOut This user has validated their user name.

Thu Mar 26 09:59:56 2020

Marie, this may not be new but what is new is the sales tax that is now being collected by Ebay and paid for through PayPal.  When I first got my report from PayPal to  reconcile my state sales tax because part of the year I collected the tax and another part of the year, its was collected by PayPal.  They said they would send a reconciliation but nothing every happened.    

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: GotToGetOut This user has validated their user name.

Thu Mar 26 10:19:09 2020

Marie, just because they've always done something one way doesn't mean they do it right!  Reader Comment, I agree.  PayPal or EBAY, whichever does it, should give us a lump sum of sales tax that has been paid by them, not us.  I called PayPal when I needed to figure out how much sales tax was paid by them for my January 31 sales tax report (mine is done yearly).  They couldn't come up with it and said they would come back.  I finally just put in the amount I paid for the short while I was paying tax for CT.  Put once Ebay has started collecting sales tax and Ebay pays it, it's a much bigger amount.  

PayPal should adjust the total to take out all the sales tax.  Otherwise:

1) If someone is close to the $20,000 they have to get a 1099K for, they will have to pay that when, in fact, they haven't sold $20,000 worth

2) This shouldn't be included in our 1099K income anyway which was the case when we were paying our own state sales tax.  Why don't they just back it out of the 1099K amount?  I've never heard of using sales tax costs in a purchase in the accounting of actual sales made.  

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by: cvsharkey This user has validated their user name.

Thu Mar 26 10:24:18 2020

More concerned with the Etsy sales tax collected.

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This user has validated their user name. by: Marie

Thu Mar 26 10:41:35 2020

@GotToGetOut

The way they do it is per what IRS has determined how they want it done.  PP didn't just decide how they wanted to process stuff and then tell IRS how they would do it.  So they are doing it as instructed by IRS on how the form is to be filled out.

In PP you can get the amount paid in sales tax to Ebay.  The detailed transaction report is a excellent source of this information and a great report to use in the reconciliation process for the 1099.

If we want to see changes in how the 1099 is filled out and filed, the place to lobby is IRS not PP.  PP has no say in the matter.

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

This user has validated their user name. by: Marie

Thu Mar 26 10:42:43 2020

@cvsharkey

Etsy reports are slim to none.  I completely agree with you.  I keep my own worksheet to track this stuff because Etsy is beyond lacking in reports.

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: railady This user has validated their user name.

Thu Mar 26 11:38:21 2020

Would someone please tell me HOW to get the sales tax figures out of a PP report ?  If I download the 2019 full report as a .CSV, is there is a column for it ?

eBay as a marketplace provider is legally required to provide all vendors with a report of the sales on which it collected sales tax for them. Supposedly this is available in ''Seller Hub.''

HOWEVER - I have not been forced into having to use ''Seller Hub'' so I can't get that report.  So how do I get it from PayPal ?



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This user has validated their user name. by: Marie

Thu Mar 26 11:46:59 2020

@railady

It is on the report you downloaded.  You just need to review the report.

The PP report will ONLY have this information from Nov. 4th to the end of the year as that is when Ebay started processing the sales tax through PP.  Prior to that the information is in Ebay.

It is too late to get this information from Ebay reports.  The Ebay reports only go back 90 days. They say they are fixing that sometime this year.

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: railady This user has validated their user name.

Thu Mar 26 12:07:14 2020

Marie, thank you for all of the clarification !!

In New York, there is a requirement in law that the Marketplace Provider must provide each vendor with a list of the sales on which they collected tax on the vendor's behalf. Not just a total amount.  (This LIST is what I can't seem to get anywhere because I have no access to Seller Hub.)

RE NYS sales tax, I also am an annual filer. On the form there has always been a blank for the total amount of my sales on which someone else collected tax for me. I've always input the amount collected by the group shop at which I rent space, since they handle all the sales and tax collection. (The sales made by me, on which I collected tax myself, are broken down by jurisdiction and calculated in another place on the form.)

NOW in that blank for sales tax collected on sales of my items that were handled by others, not me, I am inserting the total for 1) the group shop sales; 2) eBay sales since they began collecting sales tax last June  (NOT PayPal, which only siphons off the sales tax payments and sends them to eBay, which is the ACTUAL SELLER of my items and is responsible for remitting the tax); 3) Ruby Lane sales since they started collecting tax; 4) any other sale in which the seller collected the tax and I did not.  

All the form wants is a total, but I had better have documentation of all the individual transactions that added up to that final amount.

Talk about another issue - New York vendors like me must file by March 20th.  I really prefer not to wait until the last instant.  I got a reminder from NYS not long before the deadline to pay, but if I made any taxable sales between when I file and the March 20th deadline, I am required to file an Amended Return !! (The one time I am really happy for no sales !!!)

IMHO, what an example of bureaucracy at its best - why not give us a week to file AFTER the ''year'' ends on March 20th, so they do not have to waste time and money having to process ridiculously unnecessary amended returns that include possibly only even one additional sale, changing the final result perhaps by only a couple of bucks or even less?

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

by: railady This user has validated their user name.

Thu Mar 26 12:11:55 2020

@marie  - Thank you AGAIN!!

Honestly? I am not desperate, because so few of my eBay sales are to New York residents.  What I have been doing since last June is simply using "View Order Details" and printing out that page, for every New York sale I have made on which eBay is responsible for collecting the sales tax.

I also have always since 1998 printed out all of my eBay sales made for every month, along with all of my purchases for every month.  Lots of paper, but it's comforting to have exact proof right in my hands.

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

This user has validated their user name. by: Marie

Thu Mar 26 16:15:50 2020

@railady

I'm glad I could help you.

It is really important that you keep your own sales records.  In fact all your business records.  Don't depend on any site to create or have reports for you.  Any reports you can get from sites you use should be used as cross check and verifying numbers.  So you can make sure your records are accurate.

Historical numbers out of Ebay is beyond a challenge for all of us.  Ebay does not have the reports we need.  They should, but they don't.

The only report Ebay has goes back 90 days, keep in mind that is NOT 3 months.  We all need to set reminders for ourselves to capture these reports and save them as once they are gone from the site, we can't recover them.

There is a thing called File Exchange on Ebay.  I've never used it.  I'm not sure if that would resolve your issue or not.  Maybe someone that actively uses that program will pop in and explain it a bit.

If you know how to use Excel or some other worksheet program.  Take all those records you have and set up a worksheet to enter them in.  Once you have the report set up you can save it for use in subsequent years too.

Perminate Link for How to Determine Sales Tax Figure on PayPal 1099Ks   How to Determine Sales Tax Figure on PayPal 1099Ks

This user has validated their user name. by: Lightning

Fri Mar 27 01:15:25 2020

@railady

March 20 has gone by, so normally you would have already been a week late filing, as this is March 27.

But good news!  The virus has caused the state to absolve you of penalties and interest.  Announcement here:
https://www.syracuse.com/coronavirus/2020/03/new-york-state-a
grees-to-waive-fines-for-businesses-that-miss-sales-tax-deadline.html

But
I think you misunderstand the reporting process regarding the tax period and when your report and payment are due.  According to what I see online, your annual Sales Tax in NY is for a period that ENDS 2/28 or 2/29.  Then your report and payment are due within 20 days, March 20.  Your report due should not consider sales made after 2/29/20.  From March 1 forward, that is for NEXT year.  Here is an excerpt:

Annual filing
The annual return, Form ST-101, New York State and Local Annual Sales and Use Tax Return, covers the period March 1 through February 28/29. Since sales tax returns are generally due within 20 days after the end of the reporting period, annual returns are due by March 20 each year.

Go to this URL:
https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/filing_requi
rements_for_sales_and_use_tax_returns.htm

Halfway
down the first page you will see the heading ANNUAL FILING (about 4 headings down from ANNUAL FILERS, not to be confused).  You can find the above excerpted statement there, or paraphrased.

So it makes sense - the period ends the last day of February, report and payment due March 20.  No need to adjust for active sales in March, no amended return needed.



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