Reverb to start collecting tax IDs

Information of note regarding Reverb just sent to their customers.

Dear Reverber,

We’re writing to let you know about a new IRS reporting requirement for 2022:

Beginning January 1, 2022, marketplaces like Reverb will be required to collect tax identification information from sellers who sell $600 or more on the platform in a calendar year.

This information is needed to ensure timely and accurate issuing of a Form 1099-K.

There’s nothing you need to do now, but we may ask you for tax identification information in 2022 if you hit the new $600 threshold.

Reporting your sales doesn’t necessarily mean you’ll need to pay income tax on your sales—it just means that you’ll be issued a Form 1099-K. You can learn more in our Help Center, which we’ll keep updated with the latest tax information. We’ll let you know if you need to take any action in 2022.

Thanks for being part of our community,

The Reverb team

https://www.google.com/amp/s/money.c...sy/%3famp=true

This article says PayPal will start reporting also

So will you need to keep proof of purchase price?
If you don’t have proof of purchase and you buy a $8,000 mandolin and sell it for $7,000 will you owe taxes on the $7,000? If you sell on Reverb or Paypal?

I think basically we are expected to file a schedule SE if we get 1099-K . If I don't file one, IRS is probably going to be very interested in me. Darned if I do and darned if I don't.:( But at least then I can report the loss and deduct it from my income - until IRS declares it to be a "hobby loss" (I think that takes a few years in a row of losses).

HonketyHank, check with a CPA. That’s a good way to find out how you might be impacted. Maybe just show on 1040 as misc income.

BTW, HonketyHank, that’s a great handle, makes me chuckle.

There are a lot of rules around gains and losses, and deducting them from income. You cannot deduct the loss on personal use property. Businesses can deduct losses on sales, but not individuals. Unless you are buying and selling high end violins (Amatis, Magginis or Strads, of something of that nature) then the instruments are all classified as persona use. If you are buying and selling Strads, etc. then you should really be doing it as a business entity anyway.

If you are using PayPal and Reverb to sell, then it might be time to either talk to a CPA who does taxes (many do not) and discuss what you should and should not be doing. Better yet, if you want to avoid the hassle, consign your instruments or trade them. My understanding is that Reverb has raised their fees considerably. 20% to a music shop that has a good reputation is looking better and better these days.

If you have concerns or questions about taxes make sure you address them with a licensed tax pro (a good EA- Enrolled Agent would be fine too).

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Originally Posted by Mandobar

...You cannot deduct the loss on personal use property. ...

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... but you can try ... ;):whistling:

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Originally Posted by HonketyHank

... but you can try ... ;):whistling:

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It's only cheatin' if ya get caught :)) Sounds like it's time to post those guitars I'm looking to sell!

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Originally Posted by HonketyHank

... but you can try ... ;):whistling:

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you could, but then again, is it worth the risk of being audited? I work in this field, and I have had more people running at me with questions since this notice came out than anything. I may have to double my rates this year.

<violates forum posting guidelines, political content>

Solution is cash, bitcoin, or other forms of payment that cannot be tracked by this government.

<Political con tent removed, violates forum posting guidelines. There is a difference between starting a conversation with information about a decision made by a sovereign business and its right to take actions that impact our readers vs. introducing political chatter into the forum.>

If that sentence is too political, so be it. This thread was started by the moderator.

I could be wrong, but I see this as a good time to stop selling & buying through ebay and reverb and just do personal sales. Shoot, I have lost a lot over the years but I think I would have a hard time proving that. BTW, wouldn't you consider a atransaction on the Cagfe, a personal sale? What are the chances of audting for past years?

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Originally Posted by Deyoung

If you don’t have proof of purchase and you buy a $8,000 mandolin and sell it for $7,000 will you owe taxes on the $7,000? If you sell on Reverb or Paypal?

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Great question! Since I don't buy instruments with the intent of flipping them, I don't have much in the way of purchase records. I don't have cancelled checks from more than seven years back, and I don't know how far back you can access your PayPal transactions. So, if I do sell an instrument, I'd have a problem proving my purchase price.

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Originally Posted by Mandobar

There are a lot of rules around gains and losses, and deducting them from income. You cannot deduct the loss on personal use property.

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But you have to include the gain on personal use property?

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Originally Posted by J.C. Bryant

BTW, wouldn't you consider a transaction on the Cafe, a personal sale?

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Even though it's a personal sale, I think the difference is that the Cafe isn't involved in the transaction. There is a requested percentage donation, but no fee. After the initial buyer inquiry, all communication takes place outside of the Cafe.

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Originally Posted by J.C. Bryant

I could be wrong, but I see this as a good time to stop selling & buying through ebay and reverb and just do personal sales.

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I buy and sell a lot of big stuff, not just instruments, and it's always local via CL, Nextdoor, etc, mostly because shipping and packing is such a hassle. There has never been a better time for it selling local because of sites like these. All free of charge. I remember when I was a kid my grandfather would put ads in the local paper to sell things, which came with a fee and reached a much smaller audience.

Eventually cash will be no more. So card transactions will be used. And info will be used from the cards to say what you spent , what you made and what you owe.

“But you have to include the gain on personal use property? “

Yes. There’s a lot of guidance on these activities on the US Treasury/IRS website.



Just so you all know, the laws on capital gains, and gains and losses have not changed. These have been the laws for years. The advent of internet selling has brought about increased rules and enforcements. The rules also apply on in person sales, but are harder to track and enforce.

Will be interesting to see how this shakes out and the ultimate impact on inventory.

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Originally Posted by sgarrity

Will be interesting to see how this shakes out and the ultimate impact on inventory.

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Here's our current base line.... pun intended..

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