I Will No Longer Buy Games or Dvds!

K

kingkiller33

CAGiversary!
Well not entirely true. I will no longer buy games or dvds unless they are dirt cheap. The reason being is this article right here:

http://www.examiner.com/examiner/x-34131-NY-DVD-Examiner~y2010m3d26-IRS-Form-1099K


Like many people, I have justified my gaming purchases by being able to resell the used game on Ebay or Amazon. But starting in 2011, if I want to sell online, I have to register my SSN, and report sales as income to the IRS.

This opens up a whole mess of complicated and time consuming book keeping. If you register your SSN with the IRS, your local state might take notice, and then demand that you register as a business and collect sales tax. They may even look at your previous year's sales and penalize you for not paying sales tax.

While I do believe that people making profits should pay their fair share, the issue here is I am not making profits. Games depreciate in value so fast that even if I get it on sale and resell the title a month later, I lose money. Yet if I want to keep selling, I will have to keep every freaking receipt, detailed logs of all costs, run the risk of an audit and potentially have to provide proof of past year's purchases.

Not worth the hassle, IMO so I'm stuck with my huge collection and massive backlog. It would be foolish for me to buy any more titles until they go dirt cheap.
 
Only sellers who make $20,000 and over or sell more than 200 transactions per year will receive a Form 1099-K.
Click to expand...

Just how many games are you selling? For most people $20K or 200 transactions in a year is pretty extreme. I can see the 200 transactions being reached by more people, but that can easily be rectified by not selling as many low cost items. This seems like it is going after the people who are trying to make a profit on this stuff and not the general public who are just selling their own personal items once they are finished with them.
 
This really wouldn't affect the average person selling used games and DVDs. If you buy a game for $60 and sell it 2 weeks later for $40 after you are done with it you can report a loss and you won't have to pay any taxes on it. Also, the IRS isn't going to audit anyone for selling a few games online during the course of the year - they don't have the time or the manpower.
 
Yeah, this just seems like a REALLY wide net that they hope to catch some big fish in. There are a lot of things that people SHOULD be doing, but they don't, because the government can't monitor it or won't waste the resources doing so. I mean, look at use tax. All of those Amazon purchases that we say are "tax-free" really aren't. That's a lot of money. State governments don't really do anything about it, though, because it simply would not be worth it to track down every, single person. They'd up spending more money than they got back. That is why some states have started trying to go directly to the businesses themselves and saying that they are obligated to collect tax.
 
[quote name='shipwreck']Just how many games are you selling? For most people $20K or 200 transactions in a year is pretty extreme. I can see the 200 transactions being reached by more people, but that can easily be rectified by not selling as many low cost items. This seems like it is going after the people who are trying to make a profit on this stuff and not the general public who are just selling their own personal items once they are finished with them.[/QUOTE]


I average around $100-200 a month in sales of my games, dvds, and books so I'm pretty far from the 20K limit.

However, my concern is that the IRS will now question why a seller is receiving funds and not reporting it on their tax return. Since they will now have a direct link between your SSN and online activity, these questions or audits are much more likely to be triggered. I think the 20K limit just means that you will get the 1099 form, not that you don't have to report if you are under 20K.

It's really very confusing to me, and there is a lot of conflicting info out there. I think this could potentially destroy Ebay as a lot of people stop selling.
 
[quote name='javeryh']This really wouldn't affect the average person selling used games and DVDs. If you buy a game for $60 and sell it 2 weeks later for $40 after you are done with it you can report a loss and you won't have to pay any taxes on it. Also, the IRS isn't going to audit anyone for selling a few games online during the course of the year - they don't have the time or the manpower.[/QUOTE]

But if you get audited, they will demand receipts or proof of the original purchases. I am bad about throwing receipts away. I hope you're right and I'm worrying for nothing.
 
I wouldn't consider this the end of the world just yet.

This is designed to collect taxes from Professional Ebay sellers. The people with 25,000+ feedbacks who have dozens or hundreds of items up on ebay at any one time.

I don't think this will affect gamers reselling games to make money to buy more games.
 
This is capturing the business people at ebay that run through enough funds that they would then have to report for.

Any schmuck that sells a few there now and then won't fall under it.

Kinda screaming fire when there is just smoke.
 
[quote name='xycury']This is capturing the business people at ebay that run through enough funds that they would then have to report for.

Any schmuck that sells a few there now and then won't fall under it.

Kinda screaming fire when there is just smoke.[/QUOTE]

Actually, I'd say its more like screaming fire at a fireplace.
 
[quote name='evanft']So, OP is a moron who can't read. Can this thread be about waffles now?[/QUOTE]

Oh hell yes.

waffles.jpg
 
[quote name='javeryh']This really wouldn't affect the average person selling used games and DVDs. If you buy a game for $60 and sell it 2 weeks later for $40 after you are done with it you can report a loss and you won't have to pay any taxes on it. Also, the IRS isn't going to audit anyone for selling a few games online during the course of the year - they don't have the time or the manpower.[/QUOTE]

This. In fact you can use it as a tax write off if all you are doing is reselling games and dvds you no longer play.
 
Only sellers who make $20,000 and over or sell more than 200 transactions per year will receive a Form 1099-K.
Click to expand...

Considering the monetary limit, 200 transactions seems pretty low. That's $100 per transaction. A lot of stuff on Amazon certainly nets that much, but considering things like used games, DVDs, and the like - hell, even new games, DVDs, etc. - it's doubtful you'll be coming anywhere near hitting $20,000 minimum first. Most people will likely reach the 200 limit much sooner, while earning substantially less than $20,000. It just seems pretty ridiculous that you could sell 200 things for $5 each, earn $1,000 and be taxed, yet someone who sells things for 20 times that amount is exempt if they only sell 199.

The sad thing is these costs will likely be passed on to the buyer, increasing the costs, which for the game market, will likely make GameStop even more viable for used games.
 
FTA: "Perhaps there is a silver lining here for collectors who have always been irate about scalpers wiping out limited stock and forcing collectors to pay premium prices online."

That's all I care about. I never sell more then 200 anything per year. I figured most CAGs would be happy about it since we, I admit of being part of it, always scream hoarders. Now they'll just have to be more careful of what they hoard.
 
Jev is right that you likely are worried about nothing. However, technically, if your selling stuff online now, the IRS can audit you, and could demand to see your receipts. If you can't produce something, they could charge you taxes on this. It doesn't happen, but it could.

The rule of thumb I would use is this, if the IRS caught you in the activity, and charged you the taxes for it, if it would be a hardship for you, then you should be documenting it. If it's a $10 charge, don't worry about it, if it's costing you $100, then save it.

It really isn't that hard to save your receipts. Just get a shoe box in your room (you probably have one laying around). Write, receipts on it (along with today's date). Now, everytime you buy something that you typically resell (DVD or video game), just throw the receipt in there (as opposed to the trash). Now, you have it, if you ever need it. When the box gets full (it'll probably take 2-3 years for this to happen), just write the date it's full on it, get a new box, and start again (put this one in the closet...after 5 years after the last date, you can burn it).

Once you have the receipts, it really isn't an issue. You are losing money on this overall, so the IRS really won't hassle you. Now, try to claim your money losing empire here is a business, and not a hobby (so things like gas for your car to go to the store should be deductable), and you'll have IRS issues.
 
[quote name='RedvsBlue']Actually, I'd say its more like screaming fire at a fireplace.[/QUOTE]

:applause:


Coming back to Hoarders... this really only hurts the ones that would actually use this as a 2nd income and not just fun money.

Selling games to buy more is fine, but the ones that would depend on it to make that much to feed/house them would be the ones that would need to get filed.

This wouldn't be any different than working while getting paid under the table.


Government wants what's owed to them.


I'm just hugely surprised they haven't monopolized on the Internet for Internet sales.

Both State and Federal really don't track, and forcing businesses to collect that is a pain but it's "Free" money without taxation.

Amazon charges NY tax... but what if Amazon did that to every state? Or what if Ebay had to collect taxes too, they do in some, but every purchase?
 
i agree with Cantatus that sellers will pass on this cost to buyers. I personally have found that buying some games online has been costing more and more lately and it's actually put a damper on what I buy online because of people who charge over a hundred for a game. Now imagine if there were taxes on rare" games that have end prices of 300-400 dollars.
 
Before individual reseller get nailed with the tax plague, i think internet sales tax will drop on us first. Come on, Amazon is not even located near NY and yet New Yorkers have to pay the tax. Think about it, the business is not even operating within the state and yet it needs to collect taxes for the state.

Anyhow, i think the internet sales tax is a bigger fish to fry than eBay or Amazon sellers.

When selling on eBay, the seller actually can collect tax on the auction... I always ignore that option, it pisses off buyers for sure.
 
[quote name='HaLLuZiNaTiOnZ']FTA: "Perhaps there is a silver lining here for collectors who have always been irate about scalpers wiping out limited stock and forcing collectors to pay premium prices online."

That's all I care about. I never sell more then 200 anything per year. I figured most CAGs would be happy about it since we, I admit of being part of it, always scream hoarders. Now they'll just have to be more careful of what they hoard.[/QUOTE]

I'm thinking it'll only really affect a hoarder who sells less than 200 a year. If you are that worried about the tax, you'll likely want to maximize how much you can make before you reach the 200 limit. For those that essentially make a career out of selling on eBay, they're not going to be able to avoid the tax regardless, so why worry about what you are selling if you can make a profit?

[quote name='Serpentor']Before individual reseller get nailed with the tax plague, i think internet sales tax will drop on us first. Come on, Amazon is not even located near NY and yet New Yorkers have to pay the tax. Think about it, the business is not even operating within the state and yet it needs to collect taxes for the state.

Anyhow, i think the internet sales tax is a bigger fish to fry than eBay or Amazon sellers.[/QUOTE]

I'm actually surprised there hasn't been more of a move to institute something like this. States could be bringing in a ton if they taxed internet sales, and considering the shape some states' finances are in, you think they'd be looking for new ways to bring in some money. I guess this is just one instance where the government's snail pace is beneficial to us.
 
[quote name='lordxixor101']Jev is right that you likely are worried about nothing. However, technically, if your selling stuff online now, the IRS can audit you, and could demand to see your receipts. If you can't produce something, they could charge you taxes on this. It doesn't happen, but it could.

The rule of thumb I would use is this, if the IRS caught you in the activity, and charged you the taxes for it, if it would be a hardship for you, then you should be documenting it. If it's a $10 charge, don't worry about it, if it's costing you $100, then save it.

It really isn't that hard to save your receipts. Just get a shoe box in your room (you probably have one laying around). Write, receipts on it (along with today's date). Now, everytime you buy something that you typically resell (DVD or video game), just throw the receipt in there (as opposed to the trash). Now, you have it, if you ever need it. When the box gets full (it'll probably take 2-3 years for this to happen), just write the date it's full on it, get a new box, and start again (put this one in the closet...after 5 years after the last date, you can burn it).

Once you have the receipts, it really isn't an issue. You are losing money on this overall, so the IRS really won't hassle you. Now, try to claim your money losing empire here is a business, and not a hobby (so things like gas for your car to go to the store should be deductable), and you'll have IRS issues.[/QUOTE]


That's a pretty good idea, but I've discovered that some of the receipts I've saved, especially USPS receipts, will lose their print and it is impossible to make out the price or description.

Another problem is stores like Walmart will display your item description in abbreviated terms on the receipt making it difficult or impossible to know what you actually bought.
 
yeah this doesnt aply to most of us but it is an example of the govt trying its best to squeeze money out of the gaming industry. like that fat tax some states are looking to apply to fast food and videogames. i think game sales will drop once companies start that whole code thing for used games to be able to get online.
 
One more reason I would like to see the US have a special economic zone to test the Fair Tax with. I'm not saying it will work for sure, but if taxes were more simplified then there would be less issues with trying to collect them in the first place.

If the government would have more transparency and be accountable for where tax dollars go in the first place it wouldn't be such a big deal.
 
[quote name='lokizz']yeah this doesnt aply to most of us but it is an example of the govt trying its best to squeeze money out of the gaming industry. like that fat tax some states are looking to apply to fast food and videogames. i think game sales will drop once companies start that whole code thing for used games to be able to get online.[/QUOTE]

It's not an example at all.

It's an example of trying to get income tax from people who are selling stuff as a business/career and making a profit.

Even if it came into being and was somehow aggressively enforced, it would have no impact on people selling used games for generally less than they paid etc.--which is the main function of the second hand market.

Those making profits would pay income tax, as they should as selling stuff online for profit is a form of income.
 
Indeed. I really have no problem with this. If people are making a job out of reselling, they should be paying tax. Simple as that. Those that work in offices, stores, etc. shouldn't be the only ones.
 
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