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

@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...

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?

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.

At least they left your caps lock key.

lmao

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

At least they left your caps lock key.

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

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.

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.

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

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.

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

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.

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

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

eag618

Stick it to the IRS.   Happy Listening!

It seems to me, you are a small business

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

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.

Paypal stinks big time leave ASAP!!

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

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

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. 

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

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.

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. 

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.

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.

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.

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.

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

Render unto Caesar.

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.

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. )

Pay up asap.