THE IRS HAS TAKEN MY TRANSACTIONS VIA PAYPAL AND IDENTIFIED THEM AS TAXABLE INCOME

Pay up asap.

Not sure of your point.   Did you make money buying and selling equipment here and on Audiomart?  If so, it's income.  You don't have to fight the IRS; just tell them the truth, pay up, and move on.  They'll be very accommodating. 

( If you 'lost' money, like most of us have [e.g., you spent money on equipment, which you own, or sold it at a loss], then it's a hobby, and those losses are of course not deductible. )

In order for the IRS to know about these transactions PayPal has to tell them, otherwise it's the honor system and the IRS expects you to report the income. According to PayPal guidelines they are 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. PayPal would also send you a 1099-K in this case. You can also check your PayPal account to see if the 1099-K was issued.

The $20,000 is easy to hit when you're selling audio equipment, but 200 transactions not so much. regardless, if the IRS has contacted you then it's generally best to work with them and not against them.

Render unto Caesar.

Stop talking about it here, and hire a good "tax guy". If you profited on those sales, you'll owe some additional taxes.

Clio09 is spot on. You must hit 200 Transactions and 20K. If you sold 2 pieces on Audio Mart/Audiogon etc and 198 on EBAY thru Paypal and grossed 20K your screwed. Worst is they will require paperwork showing every sale and the +/- dollar value on each.  Saw it happen to the guy in front of me at H+R Block when getting my taxes done last year. He looked like somebody ran over his dog when they told him the news.

There was no Profitmaking, they were all losses, yet PAYPAL sent the IRS a 1099 statement.......There were 4 transactions, 2 Primaluna amps and a pair of Klipsch Forte III's and a Jolida JD9 MKII.

Your going to have to prove those losses with receipts of the initial purchase otherwise your screwed.  Did you call Paypal to ask why your transactions were reported to the IRS?  I mean clearly thats the very first thing you should have done.

eag618 OP75 posts08-06-2021 11:58amThere was no Profitmaking, they were all losses, yet PAYPAL sent the IRS a 1099 statement.......There were 4 transactions, 2 Primaluna amps and a pair of Klipsch Forte III's and a Jolida JD9 MKII.

If they sent the Feds a 1099, they would've sent you one, too.

Yes, if you have receipts for purchase of items and same items were sold st a loss then you can declare the loss. If many was made then must pay tax on profit. I was provided a 1099 by Paypal. Took a loss. To me this is a hobby. I am not in it for profit. Would not have filed loss if I had not received the 1099. Not so sure I want to deal with Paypal any more. 

Attach a note to reply to IRS asking if a Manhatten condo, his and her Mercedes and private school for the kids counts as…. Wait for it…. Income 

you got good advice, claim hobby, document w receipt s the net loss and await a reply.

Its a scam no need to declare. The Russians have infiltrated the IRS.

You probably will pay more tax on your audio sales than Bezos pays in a year!
Someone posted that same thing recently.  I can't believe the irs is hunting down private sales on used items that were already taxed once. 

Only country in the world that taxes its citizens when you live and work in another country ,

If you sold the items at a loss then there is no tax due. If it is a hobby loss then it cant be deducted but as stated you sold at a loss there is no tax due if that makes sense. If this is a business for you then the loss would be deductible. Either way you would just have to report the transactions since paypal has reported and filed the 1099. I am a cpa and would be happy to take a look at the letter and give you some advice free of charge. pm me

Paypal stinks big time leave ASAP!!

eag618 OP76 posts08-06-2021 5:33pm..... and "Builder 3" I'm 66 and have been running the same business locally for close to 30 years, we do over a $Billion with steel.I understand taxes, the economy and how things work...this is Bullshit.
So if one sells their 1 year old Porsche 911 for zero profit and gets out of it, is that "taxable income" I think not.

What are you bitching at me about? The IRS only cares about one thing, taxable income. Show them proof that it's a loss and not a gain, they'll go away.For somebody that professes to know so much, you're the one that came on a stereo forum, of all places, and asked "now what?". Deal with, it's not complicated. If you don't know, hire someone that does.

Tough room...
There are no friends in court eag618 (old hippie saying)
I'm just saying

It seems to me, you are a small business

eag618

Stick it to the IRS.   Happy Listening!

Well they're idiots if they can distinguish a purchase from income. Get a seller to vouch for you.

What I'm still curious about is how the IRS found out about the transactions.

Did you sell your personal stereo gear, and can prove you paid for them? Then there is no tax due if you sold for less than what you paid for. If you sold your personal items for more than what you paid, then it’s a capital gain and taxes are owed. But the biggest trap here is that the items you sold you didn’t plan on selling. If you planned on it, then the IRS can label you a sole proprietorship and that’s a whole different ballgame. Then the locals come sniffing around for sales taxes. Talk to a CPA and be honest.

The irs said I didn't pay my taxes for 5 years, what should I do.🤔

The Form 1099 only reports gross sales proceeds, not gain that is taxable, because eBay (like a broker) doesn't know how much you originally paid for the item sold. Similarly, the IRS does not know, so if you failed to tell them, they assume it's all gain and taxable. That's why any time you receive a Form 1099 (eBay should have sent you one), you should report the amount on your return, show the basis (which is typically more than the sales proceeds, so resulting in a loss, non-deductible for hobby items), and show the loss (or gain, if you have any). That avoids having to deal with the IRS in the future. Above all, don't miss the deadline to reply to the IRS! You can normally get an extension of the deadline (by phone if you can get through) if needed to find your info, or respond with general explanation and expect to need to file evidence of purchase price.

I’m moving off PayPal seems like it’s time.

zappas--If the IRS says that, likely see a tax accountant. Did they say you "did not file returns"? Or that you filed returns showing a tax was due, but did not "pay the tax"? If you filed, you need to work with the IRS to find the lost returns, if you have copies, or your name changed, or whatever. If you did not file, you (or a tax accountant) need to figure out if you actually owed any tax for that year. The IRS only has info on your income, not your possible deductions, so they assume no deductions if you ignore them. Don't let a deadline for responding pass! Sometimes people discover that their withholding was more than any tax would have been, so they could have gotten a refund, but by failing to file on time they not only have to deal with the IRS to show that noting was actually due, and avoid making a payment (with interest and penalties), but the time to get a refund may have expired. Good luck.

Meanwhile one new billionaire every 17 hours. Billionaires' wealth increased 54% during pandemic while 8,000,000 Americans fell below the poverty line. The ordinary person is taxed to the hilt supporting the country while these guys play with their toys.

Sell while you can. Basically all transactions a taxable in 2022. Sleepy Joe sez so.

At least they left your caps lock key.

taxguy,
I think zappas was attempting to be funny. Don't waste good advice. 

At least they left your caps lock key.

lmao

Just wondering how much could the tax on the profits of two Primalunas a pair of Klipsch and some Jolida piece be? I get that it sucks but if you can't prove your loss just pay up. Maybe if the IRS had actual funding they wouldn't need to go after audiophiles.

It happened to me. I would like to know why, if I buy a component or speakers ect. at a local hifi shop, pay sales tax, and then sell that item later on, how is recouping some of the money I paid for the item (at a loss) considered income and what happened to the tax I paid at the time of purchase?

@eag618 I guess the good news is that you may be able to take a home office deduction and deduct other expenses involved in selling audio gear. I guess those of us who may get a 1099K, we are now all dealers?! Disclaimer: I am not a CPA, EA or other tax professional. Check this out: https://www.cnbc.com/2021/03/26/its-going-to-get-harder-to-avoid-telling-the-irs-about-income-from-o...

Viridian,That was funny as hell!

I'm meeting an IRS rep on Wednesday morning in Providence!

You would only owe tax in excess of your cost basis.  If your the average person that bought a new piece of equipment and sold it a couple years later for less than what you paid for it originally then you owe nothing because there is no taxable income.  What your saying would only apply to people or businesses that buy and sell used gear for a profit.

It depends on size, substance and intention.
Did you buy the items that you sold just to sell them?
Or did you just sell off a few items you had upgraded?

If the former then it's a business.
If you are doing that then make sure you claim the losses on the items you bought new and used in your system before selling them at a loss.
Others have said such losses are not allowable but if you are already carrying on a taxable business IRS cannot have it both ways.  Make sure they pay their pound of flesh.

What if the OP does not have receipts for some of his original purchases? How does he then establish the cost basis, especially if he bought the gear many years ago?  Is the IRS likely to accept reasonable, good faith estimates that indicate the original purchase prices were higher than the sale prices?  

watching this i can only say -- see an accountant. This is basic accounting. You need costs/bases, revenues and the difference.  Clio noted the threshold, which you may or may not have met.
G

This country is broke . when are you guys going to realize that. were seeing massive inflation right now because its the only way they can handle the debt problem , its not transitory like the secretary of the debt said , you haven't seen nothing yet , this is not the forum to talk politics or economics but since you brought it up here we are. Buy your HIFI gear now and save because tomorrow you'll pay double. Biden is your man he will fix everything he's so great !! I cant wait for him to keel over on live tv im going to get the popcorn out. Just enrolled my child into private school cause of the absolute BS there teaching these children. The masses think everything is normal because they dont know any better , things are NOT ok wake up you idiots. The IRS needs money and they will be cracking the whip your just getting a little taste of what's to come. 

The irs can only see the transaction that was reported to them. If this is for the sale or equipment you can apply the basis rule. Lets say you bought a piece of equipment for $10,000 and sold it for $8,000. The irs sees the $8000 sale not the purchase of $10,000. All you need to do is report said sale as a $2000 loss and produce the receipt of original purchase. If you have also sold equipment where you made money from your original purchase you will be able to use the loss from other sales to offset this gain. What if you don’t have receipts? Just report what you think it was and best rule with the irs ( which is the criminal collection division of the dc cartel) report at least a small gain say $250 and pay the tax on that amount. Just make sure the amount you report does not move you into the next bracket and impact your cap gains on investments or you social security taxation.

@nickaboy1

you are just touching the tip of the tip of the tip of this iceberg. Right on brother my children are in private school too!

PayPal also sent you a 1099 as the law requires them to if you have over 200 transactions and over $20,000 of proceeds. Both have to be true. PayPal does not mail the 1099, but you need to look online. Look under activities - statements - tax documents. If none are there, then PayPal did not generate one and the IRS did not receive one from PayPal. If the IRS has a 1099 from PayPal and your online account does not show one, then the IRS has asked for it outside the normal guidelines. 
The IRS is going after bigger fish as they don’t have the resources to go after 4 small transactions. I am sure your 1billion dollar business is the sole reason this is happening. The IRS may have asked PayPal for it as they are looking closer a folks they deem big fish.  
Just my thoughts based on what you have shared.  

Could the IRS be broke because some people bought lobbyists to write laws that were passed by legislators they also bought to exempt them from paying taxes?  Possibly these people were billionaires, but of course that is not true.

ALL billionaires are HAPPY to pay their fair share of taxes and do not need to buy legislators to pass laws that exempt them from paying taxes.  Also millionaires, of course.

This is also true for large corporations, who happily pay ALL their fair share of taxes every year.

None of these billionaires or corporations stash money overseas or incorporate in Ireland or have secret bank accounts or EVER avoid tax laws.

American billionaires and corporations and even politicians are scrupulously honest and always pay their full share of income taxes just like all of us do.  They also NEVER lie about anything.

Some of you people are supposed to be educated and American citizens who believe in our country and its laws.  Could it be that this is not true?

Naw!  Everyone on here is honest and a true, law-abiding American I am sure.  All the crooks and cheaters have certainly been banned by now, right?

Yawn.

@Nickaboy1, I see you