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PayPal is total ripoff

Scooter7779h

PATRON
Anchorage, Alaska
Just a note to readers. On a thread about a member looking for a set of hydrosorbs, I sent a private message that I had hydrosorbs and lower legs and we had some conversation and agreed to a purchase. I suggested we use PayPal for payment as I did not know the member and he was out of state. No problem. I packaged them, sent them priority mail, sent photos of the box and mailing label with tracking number. After I sent that information to the buyer, I made a PayPal invoice and he very promptly approved payment. Then I get this message from PayPal because the purchase was over $600 when the shipping was included in the sale I had to provide SSN or EIN, as they were going to issue an IRS 1099 as additional income from the sale. I did that and after he received his items, I tried to redeem the money from PayPal. Hold said it was because I was an infrequent seller, and I had to provide a tracking number. SO... I put the tracking number. There information would say that they would confirm delivery. At that time the tracking number showed it was delivered. Two weeks later my payment is still on hold. I wove through the hugely layered BS of a webpage to try to get an answer including their help and chat. Finally I was told because I was an infrequent seller, that my payment will be released on February 2. This is total BS and ripoff. They are simply using my buyer's money for a month, and stiffing me on getting any reasonable prompt payment. I wish now I had just simply trusted a fellow SuperCub.org member and had him mail a check. He got his item quickly. I got a nightmare.

Bottom line: I am NEVER NEVER using PayPal again if I have a choice. Thought I would pass along what I went through trying to help a guy out.
 
I had a similar experience with Pay Pal trying to retrieve money from a sale. I have bought and sold a number of items directly with members here - in every case with nothing more than mutual trust, and it always went very smoothly. Good folks here.
 
I had a similar experience with Pay Pal trying to retrieve money from a sale. I have bought and sold a number of items directly with members here - in every case with nothing more than mutual trust, and it always went very smoothly. Good folks here.

No longer use paypal and no longer sell on ebay. I have had the same experience buying/selling from other pilots - mutual trust and mail a check. Regarding the $600 IRS thing - there was a pretty good thread an BT discussing this administration's tax collection ambitions.
 
Thought I saw somewhere the new leaders have lowered the threshold for reporting and is going after sites such as PayPal and Venmo which is used a lot of times to transfer money between friends free of charge.


Sent from my iPhone using Tapatalk
 
The buyer can go into the transaction and confirm receipt of the parts and it will release the hold on the money in your account. Just another layer of security on the buyer's side.

Paypal is very heavily weighted towards buyer protections. It can be a hassle on the sellers side but overall it's the best money transfer app I've found so far. It's some serious BS that they're reporting to the IRS now. Taxing you on sold items that you originally purchased with post-tax income is the definition of government overreach.

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Thanks Gabe. Buyer could not find that. However, they are going to make me pay taxes on the item and shipping costs, PLUS their cut of a handling fee, and they have been using our money for 3 weeks. Sucks

The buyer can go into the transaction and confirm receipt of the parts and it will release the hold on the money in your account. Just another layer of security on the buyer's side.

Paypal is very heavily weighted towards buyer protections. It can be a hassle on the sellers side but overall it's the best money transfer app I've found so far. It's some serious BS that they're reporting to the IRS now. Taxing you on sold items that you originally purchased with post-tax income is the definition of government overreach.

View attachment 59571
 
With the way things are going in this country, I am glad I am old. Not as old as many but not starting out into this life.
 
Talking with my wife on this, we thought the last we heard this was rolled back to the 10K amount.
 
Ebay owns Paypal. Up until 2022 there was a 20K max before IRS got involved.........now it is 600 bucks ?????
 
Ebay owns Paypal. Up until 2022 there was a 20K max before IRS got involved.........now it is 600 bucks ?????

It's the new regs on 1099k: From the IRS website: https://www.irs.gov/businesses/understanding-your-form-1099-k

Form 1099-K, Payment Card and Third-Party Network Transactions, is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:



From payment card transactions (e.g., debit, credit, or stored-value cards), and/or
In settlement of third-party payment network transactions above the minimum reporting thresholds as follows:
For returns for calendar years prior to 2022:
Gross payments that exceed $20,000, AND
More than 200 such transactions
For returns for calendar years after 2021:
Gross payments that exceed $600, AND
Any number of transactions

From Jan 1 2022, >$600 on any number of transactions generates the report.
 
What are "third party payment network transactions"? Is that just credit/debit card / paypal-like transactions? Not checks?

If I purchase or sell a $700 widget from/to somebody and payment is by check, is a 1099 required?
 
What are "third party payment network transactions"? Is that just credit/debit card / paypal-like transactions? Not checks?

If I purchase or sell a $700 widget from/to somebody and payment is by check, is a 1099 required?

What they are saying it is for the seller.


Sent from my iPad using Tapatalk
 
I don't think so. "You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:" That would mean the paying entity would generate the 1099. But it seems to be specific to the mode of payment and that's what's not clear to me.
 
When using PayPal, I won’t send an invoice and the buyer can just share with friends and family option. Otherwise I can wait for a check in the mail. This sight has great folks here.


Sent from my iPhone using SuperCub.Org
 
First, it is important that forever you have technically been responsible for reporting and paying tax on items you purchase (new or used, from a dealer or a person)- whether it is enforced or not. We all remember when states started collecting sales tax on airplanes... even purchased from another state. Some states don't require this, most do.

Regarding Paypal, they are just a big bank like all the others. All the banking rules apply to them - and what you experienced from a timing standpoint Scooter was just standard fraud avoidance stuff, and CYA by paypal to make sure they collect the tax. When Venmo came out, I knew it was just a matter of time before they were required to start reporting. This is especially true if you did not have a balance in Paypal and that it transferred from your bank account or a debit card.

I recently did a 64,000 ruble PayPal transaction with a Russian person that was really the only way to get money over there. It turns out - btw - that not all Russian's are hackers, some are just ordinary folks. Interesting at the time of that transaction a few months back, the value was $1800 - now that same amount of rubles is worth about $800.

As others have mentioned, you need to use "family and friend" money sends to avoid additional fees. If you are paying a company, you likely won't be able to do this.

We still get a fair bit of membership purchases from Paypal, but nothing like we used to. It's about 90% credit cards and 1% cash, checks, and money orders.

Sorry for your frustration!

sj

P.S. 1099's have been required for $600+ payments like forever.
 
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We still get a fair bit of membership purchases from Paypal, but nothing like we used to. It's about 90% credit cards and 1% cash, checks, and money orders.


sj

Finally I have achieved becoming part of the 1%!:lol:
 
P.S. 1099's have been required for $600+ payments like forever.

Right, you always had file a 1099 if you paid more than $600 for business rent, independent contractors, professionals, etc. If you didn’t, you couldn’t deduct as business expenses.

A bunch of other income type transactions
required them too, like banks paying interest or brokerages paying dividends.

Pay networks and credit cards companies had to also. Only the threshold for reporting has changed to the $600 amount.


Sent from my iPhone using SuperCub.Org mobile app
 
.....As others have mentioned, you need to use "family and friend" money sends to avoid additional fees.......

Not necesarily.
A year or two ago, I bought something and as requested, paypalled him the money as a "gift to family or friends".
I used my credit card to pay paypal, I'd done this before but this time turned out to be different.
I ended up getting nicked a $30 cash advance fee from my bank,
plus they charged me interest on the amount I sent.
I contacted PP, they said if I have a balance in my PP account payment would come out of there fee-free,
but most of the credit card outfits were now considering it a cash advance.
After calling the bank to bitch about it, I ended up paying the charges.
Then to add insult to injury, the next month I got charged interest again--
for the time period between the statement date & the date they received my payment.
Lesson learned-- now I won't ever send money via PP as a gift.
PP is great to get something on its way immediately, but I'd just as soon pay with (or get paid by) a check or money order.
 
First, it is important that forever you have technically been responsible for reporting and paying tax on items you purchase (new or used, from a dealer or a person)- whether it is enforced or not. We all remember when states started collecting sales tax on airplanes... even purchased from another state. Some states don't require this, most do.

Regarding Paypal, they are just a big bank like all the others. All the banking rules apply to them - and what you experienced from a timing standpoint Scooter was just standard fraud avoidance stuff, and CYA by paypal to make sure they collect the tax. When Venmo came out, I knew it was just a matter of time before they were required to start reporting. This is especially true if you did not have a balance in Paypal and that it transferred from your bank account or a debit card.

I recently did a 64,000 ruble PayPal transaction with a Russian person that was really the only way to get money over there. It turns out - btw - that not all Russian's are hackers, some are just ordinary folks. Interesting at the time of that transaction a few months back, the value was $1800 - now that same amount of rubles is worth about $800.

As others have mentioned, you need to use "family and friend" money sends to avoid additional fees. If you are paying a company, you likely won't be able to do this.

We still get a fair bit of membership purchases from Paypal, but nothing like we used to. It's about 90% credit cards and 1% cash, checks, and money orders.

Sorry for your frustration!

sj

P.S. 1099's have been required for $600+ payments like forever.

SJ,

I think the biggest issue is how the cost basis is calculated. Are you supposed to keep the purchase documentation of a pair of bose headsets you bought two years ago, and then sold for $800 which is a loss...but if they ask you to prove it??

T
 
SJ,

I think the biggest issue is how the cost basis is calculated. Are you supposed to keep the purchase documentation of a pair of bose headsets you bought two years ago, and then sold for $800 which is a loss...but if they ask you to prove it??

T

Sales/use tax is based on price, not cost basis isn't it?

sj
 
Sales/use tax is based on price, not cost basis isn't it?

sj

Further, the consumer is responsible for sales/use tax, but normally it is the seller (companies) that collect it from the consumer.
 
Same here. Cash or check. I recently sold two different propellers, i had the guy send me a check for one and the other, I hand delivered to Memphis on the way to Florida. Cash sale. Maybe I am getting old and crotchedy, but paying sales taxes on a loss erks me.
 
SJ,

I think the biggest issue is how the cost basis is calculated. Are you supposed to keep the purchase documentation of a pair of bose headsets you bought two years ago, and then sold for $800 which is a loss...but if they ask you to prove it??

T

Not a bad idea. There will be a 1099 out there saying you received $800. The IRS will want to tax you on that as income. But you can use Schedule 1 to report that amount and offset it with your cost basis.

It's a hassle. I don't like having to deal with incidental sales, but ebay abuse has reached the govt's notice.
 
Right, you always had file a 1099 if you paid more than $600 for business rent, independent contractors, professionals, etc. If you didn’t, you couldn’t deduct as business expenses.

Being deductible and being reported on a 1099 are two different things. Just because you failed to send a 1099 for an expense does not prevent it from being deductible. If it were I would still be in jail.

Jerry
 
Being deductible and being reported on a 1099 are two different things. Just because you failed to send a 1099 for an expense does not prevent it from being deductible. If it were I would still be in jail.

Jerry

You are right. The IRS wants you to file it and may cause a fuss, but ordinary business expenses are deductible even without the 1099. Sorry for being misleading.
 
You are right. The IRS wants you to file it and may cause a fuss, but ordinary business expenses are deductible even without the 1099. Sorry for being misleading.

No problem at all. It's a common misconception even with IRS auditors not getting it right. The flip side of this is even though you receive a 1099 it does not force you to claim it as income. The 1099 is a reporting tool and that's it. It does not establish any classification as to whether an item is income or an expense.

Jerry
 
Meanwhile my payment is on hold, have no way to figure out how to get my money sooner than February 2 since PayPal says since im an infrequent seller. I'm going to Costa Rica so it will be longer than this. This pisses me off.
 
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