COVID-19 Relief bill reducing De Minimis exception from $20,000 to $600 starting 2022

Jackad7

Just a heads up for anyone who does a fair amount of buying and selling on the secondary market. This is really disappointing as it creates a massive headache for hobbiest sellers.

Get ready to start holding your receipts.

Yellowcastle

For those of us who are novices in selling, how do you believe this will affect things?

Chang405

In times like these, I wish LegoFanTexas was still around to share his wisdom. 

CCC

Is that per transaction or per year?

lowlead

Increasingly onerous tax law in a 'relief' bill.  Yep, sounds about right.

Jackad7

CCC said:

Is that per transaction or per year?

Per year but $600 is abysmally low. For example you sell an old phone will basically set you to this limit, if you don't have a receipt you are getting income tax applied to it. Did you pay more than what you are selling old electronics for? Most definitely but if you can't prove it you are getting slapped with taxes. People say "well it's to stop tax evasion." but the $600 is piss low that almost anyone who gets rid of old stuff online will hit and get taxed on items they paid more for. It is going to really discourage common place selling and reusing of items as it will be massive headaches to try and log everything you purchase *just in case* you decide to sell it in the future.

FollowsClosely

It is never a good thing to have one party in controll.

oldtodd33

There won't be any issue at all by 2030 because you will own nothing and be happy about it. 

cody6268

First of all, I really don't want to get political, but there are a few points.

One, it doesn't surprise me at all.  Typical of those in office, regardless of party. Especially those who have been in office for like forever. They like to stick stuff that has nothing to do with a bill, and may reach negative reception into more popular bills. They carve out loopholes so those in office don't get affected at all, while their constituents get hosed.

Secondly, how would this even be even close to helping anyone? When people lose their job/run into financial hardship, they often turn to selling their unneeded stuff online. That's gonna hurt them.  And, the average person probably didn't save receipts from stuff, especially that which could have been bought 15-20 years ago or more, or was even a gift to start with. Years ago, when I was a kid, I was told by a farm implement dealer (who himself was a model tractor collector) when I started buying some models from that very Kubota/Bobcat dealer to save all my receipts. I didn't really listen. While there's some I did keep them to, it is really rare. Pretty much the 5-6 I did save the receipts to higher-end pieces that cost me more than $20, usually bought from dealerships, as opposed to the cheap stuff. And basically anything I bought online I did not save the receipt to, outside of invoices which may still be attached in the stick-on envelopes attached to boxes repurposed and forgotten about. Even now, I buy a lot of my stuff from members of other forums, and there's almost never invoices with that. Invoices of stuff I've bought online (esp. eBay) usually doesn't come with anything that wasn't bought from a professional seller already registered as a business. I'm sure eBay's gonna take a big hit from this. I'm sure a lot of people who were doing it as a side hustle kinda thing will no longer do it. And I'm sure flea markets, yard sales, and stuff like that will suffer too.  I think it will affect pretty much any hobby in general, and possibly make stuff harder to find.

I don't spend as much on my hobbies as many others (here and other places do), but $600 a year is still less than half.  I've only found one or two pieces I had actually appreciated in value.

lowlead

cody6268 said:

First of all, I really don't want to get political, but there are a few points.

One, it doesn't surprise me at all.  Typical of those in office, regardless of party. Especially those who have been in office for like forever. They like to stick stuff that has nothing to do with a bill, and may reach negative reception into more popular bills. They carve out loopholes so those in office don't get affected at all, while their constituents get hosed....

^^Couldn't have said it better.  These absurdities transcend partisan political lines.

Our government has been woefully incapable of drafting clean legislation for decades.  Some may argue: But it's the way you get deals done in D.C.  My response would be: "Not good enough, do better, and represent your constituents who voted for you."

The law of unintended consequences is hard at work here - they're probably wondering where all the sales tax revenue disappeared to.  You shut down the economy like flipping off a light switch, maybe that's why.  15 days to flatten the curve (made sense to me) turned into a whole damn year - some countries don't even see a light at the end of the tunnel.

And before I get accused of being 'too political' or off topic, I'm really concerned about the level to which a cottage industry like Bricklink and others will suffer by this drastic change.  All because people are trying to make ends meet.  If this topic wasn't posted, I would have no idea about this change - thank you @Jackad7

Pitfall69

If anything; it will make Goods and Services increase in price if people are going to have to pay taxes on their Ebay sales....if they even decide to sell at all and will make items harder to find.

"They" say that they're looking out for the "little guy", but this will hurt more than help them. 

Istokg

Um.... this change in the US tax laws is disturbing.  However... I did several Google searches using different search words, and I cannot find any links or any discussions by anyone else about this.  Anyone else have better luck than I did?

I would think this would at least be under discussion on Bricklink or on Ebay forums... but it is not being discussed on either.  Hmmmm.....

lowlead

Here's a link to an article from eCommerce BYTES that discusses IRS Sec. 9674 concerning 'microsellers.'

...the comments section is particularly...spicy.

1265

lowlead said:

Here's a link to an article from eCommerce BYTES that discusses IRS Sec. 9674 concerning 'microsellers.'

...the comments section is particularly...spicy.

I was reading this same article last night. Agree....the comments are interesting.

AllBrick

Nicely timed to coincide with eBays switch to direct payments straight into your bank, removing PayPal from the equation completely. 

As the years go on I see the 2nd hand market decreasing and becoming more difficult to traverse as a buyer and seller. 

Pitfall69

So, wait. It used to be $20,000 PLUS 200 transactions. It even says that in the IRS publication. So, you would have to have both for it to be reported. If you had, say, $23,000 in transactions and only 180 total transactions, your income wouldn't be reported. Did they lower that threshold as well or did they get rid of that altogether?

ColoradoBricks

@Pitfall69 you are correct, 23K and 180 would not be reported. Now $600 on a single transaction and it is reported.

madforLEGO

It depends on where you live. States also have rules regarding EFT (electronic Funds Transfers) and now IL apparently has it to if you have more than 3 transactions and 1K or more for the year, the sales are reported.

autolycus

This is re-adding a requirement that was originally in the Affordable Care Act but that was repealed a year later and before it actually took meaningful effect. I won't be surprised either way on whether it sticks this time. With the ACA version, there was a LOT of lobbying against it because of the expense for most businesses. Then, like now, it slipped under the radar until after passage and then coverage started really taking off when people starting realizing what it actually meant in practice.

1265

autolycus said:

This is re-adding a requirement that was originally in the Affordable Care Act but that was repealed a year later and before it actually took meaningful effect. I won't be surprised either way on whether it sticks this time. With the ACA version, there was a LOT of lobbying against it because of the expense for most businesses. Then, like now, it slipped under the radar until after passage and then coverage started really taking off when people starting realizing what it actually meant in practice.

The reporting requirement of exceeding $20,000 and 200 transactions was first introduced in the Housing and Economic Recovery Act (HERA) of 2008.  The effective date began on January 1, 2011.  After that date, payment providers would be required to submit a 1099-K to the IRS and to those businesses and/or individuals if exceeding the dollar amount and number of transactions.  As some have pointed out, some States even lowered that requirement for reporting.  Now with the passage of the recent COVID bill, it's now $600 at the federal level for reporting to the IRS.  Regardless of the amount reported, it was always the law to account for any money gains regardless if you received at 1099-k or not.  Now, it will make people think twice before filling out their taxes knowing that a 1099-K was submitted to the IRS.

autolycus

Yes, the new requirement will be 1099s for anything over $600, just like was originally in ACA. Here’s the announcement of the act repealing that $600 requirement before it had taken affect. https://obamawhitehouse.archives.gov/blog/2011/04/14/repealing-1099-reporting-requirement-big-win-small-business

I was in no way suggesting people don’t owe taxes for any profits they make. I was simply saying I won’t be surprised if this new $600 1099 requirement gets killed just like it was 10 years ago.

Pitfall69

autolycus said:

Yes, the new requirement will be 1099s for anything over $600, just like was originally in ACA. Here’s the announcement of the act repealing that $600 requirement before it had taken affect. https://obamawhitehouse.archives.gov/blog/2011/04/14/repealing-1099-reporting-requirement-big-win-small-business

I was in no way suggesting people don’t owe taxes for any profits they make. I was simply saying I won’t be surprised if this new $600 1099 requirement gets killed just like it was 10 years ago.

I wouldn't be surprised either. Just like the ACA, most in congress probably didn't read the whole thing before it was passed and later on said "Wait...how did that get in there? We need to repeal that."

Pitfall69

If this is indeed the new norm; I'm going to throw "aftermarket sales" under my LLC. Start claiming EVERYTHING from paper to print out my shipping labels to miles to and from the post office. I'm even going to finally claim my home office on my taxes and storage area for any items I intend to sell. In the end; they might end up owing me money ;)

Yellowcastle

@Pitfall69 - I can’t shake the feeling that if you go that route, yousa be in some big doodoo. :o)

Istokg

Pitfall69 said:

autolycus said:

Yes, the new requirement will be 1099s for anything over $60

I wouldn't be surprised either. Just like the ACA, most in congress probably didn't read the whole thing before it was passed and later on said "Wait...how did that get in there? We need to repeal that."

What?!!  They had it read to them out loud all 600+ pages of it (per Wisconsin Senator Ron Johnson's delaying tactics)... you mean they didn't all stick around for 10 hours to listen??  I'm appalled.... LOL  :-D

ColoradoBricks

I was talking with some friends that are not involved in online sales but they mentioned that with ibotta, Rakuten(ebates) and a few others, they cash in more than $600 a year on their paypal account from those.
You don't have to sell anything to be impacted by that law...