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IRS 1099K Forms
What are the requirements?
New IRS regulations require all businesses that process payments to collect a Tax Identification Number (TIN) or a Social Security Number (SSN) for all sellers with more than 200 transactions in a calendar year, and to file a Form 1099-K for all sellers with more than 200 transactions and $20,000 USD paid to them in a calendar year. Because Half.com processes payments, we are subject to these new IRS regulations. If we have determined that you are likely to meet the above criteria, then we'll need your Tax Identification Number (TIN) or Social Security Number (SSN) on file. While we are required to collect a TIN from sellers who have sold over 200 items, we are not required to report any information to the IRS unless the seller has sold over 200 items and has also had more than $20,000 in sales in a calendar year. Review the IRS proposed regulations.
What is a TIN and who needs to provide one?
A Taxpayer Identification Number (TIN) is a number used by the Internal Revenue Service (IRS). Your TIN could be your Social Security Number (SSN), or if you run a business, you may have an Employer Identification Number (EIN) issued for that business by the IRS. Individuals can request a SSN through the Social Security Administration office near you. Business owners can apply for an EIN online at the IRS website. Learn more about Taxpayer Identification Numbers.
Under the new IRS regulations, all US sellers who we have determined are likely to have more than 200 transactions on Half.com during a calendar year are required to provide Half.com with a TIN. If you have multiple accounts, they will all be taken into consideration when calculating your volume status. In other words, all of the sales from all of your accounts will be combined to determine if you meet the 200 transactions threshold, at which point you would be required to provide Half.com with a TIN. If the combined sales exceed 200 transactions and $20,000 USD, those sales will then be reported on one Form 1099-K.
This regulation change impacts all businesses that process payments, not just Half.com.
How do I give you my TIN?
You'll be able to give us your TIN online in the Personal Information section of My Account.
Important: For security purposes, you'll never be asked to provide your TIN over the phone. Please do not call with or email us your TIN.
How does Half.com protect my personal information?
What will happen if I don't provide my TIN?
We're required by the IRS to collect your TIN for reporting purposes. If you don't provide your TIN before you reach the IRS thresholds, we may take certain actions such as withholding tax from your payments, suspending or removing your listings, or suspending your ability to sell on Half.com. We want to avoid any disruption to your selling, so please make sure you give us your TIN as soon as we request it.
If your selling privileges have been suspended because you didn't provide us with your TIN, the quickest way to resolve this issue and regain your selling privileges is to provide your TIN online in the Personal Information section of My Account.
How long does it take for my TIN to be validated once I have provided it?
Your TIN will usually be validated within 1 day of when it is provided. We will notify you if your TIN is invalid.
Will I receive a Form 1099-K for sales in 2010?
No. While we'll base whether or not we need your TIN on your 2010 sales history, the 1099-K requirement only applies starting in the 2011 calendar year.
Where will I receive my 1099-K?
Your Form 1099-K will be mailed to the registered address we have for you on Half.com. Please be sure that your contact information is up to date.
What information will be provided to the IRS in the Form 1099-K?
The IRS will receive the same information that is provided to you on Form 1099-K. This will include your gross payments for 2011 which will be reported by month. You can view a Form 1099-K here.
Only sales starting from January 1, 2011 will be reported on the Form 1099-K which we will send to you at the beginning of 2012. No Form 1099-K will be issued for sales occurring in 2010 or before that time.
Will any information about each individual transaction be given to the IRS?
No, for purposes of Form 1099-K reporting, individual transaction level details will not be provided to the IRS.
Will eBay information (for example, User IDs and email addresses) be provided to the IRS?
No eBay account information, such as User IDs and email addresses, will be provided to the IRS as part of the Form 1099-K reporting.
Will the Form 1099-K include my gross sales amount or my net sales amount?
Your gross sales amounts will be shown on your Form 1099-K. For example, if you made $40,000.00 in sales and paid $1,600.00 in fees, your Form 1099-K will list $40,000 in gross sales. It will be your responsibility to determine the deductibility of fees that you have been charged when you file your tax return. Please consult your tax advisor regarding the tax treatment for your online sales activities.
What about chargebacks and returns?
Chargebacks and returns will be included in the amount reported on Form 1099-K. You will need work with a tax advisor to decide how to handle chargebacks and returns when you file your taxes.
What about listings from my Half.com inventory that sell on eBay.com?
When a buyer purchases your Half.com listing on eBay.com, the transaction is recorded as an eBay.com sale and payments are deposited in the account you have on file with eBay for payment processing, such as PayPal. Half.com listings that sell on eBay.com will not be included on your Half.com Form 1099-K. These eBay transactions may be reported in a Form 1099-K issued by another payment processor, such as PayPal, if you exceed the IRS thresholds with that payment processor.
Note: In order to sell Half.com inventory on eBay, you must first qualify and opt in. Learn more about selling Half.com inventory on eBay.
What if the sales on my Half.com account need to be split over more than one TIN?
Form 1099-K reporting will be based on the Tax Identification Number (TIN) listed on each account. Only one TIN per account can be used at a time. All sales on a single account will be combined and reported on one Form 1099-K under one TIN. If you want certain sales to be reported under a different TIN then you will need to open a different Half.com account and provide a different TIN for that account. Remember that all of your sales from all of your accounts using the same TIN will be aggregated for reporting purposes.
What if someone I live with uses a different account to sell items?
We will issue Form 1099-Ks by Tax Identification Number (TIN). If you and the person you live with provide your individual TINs on your accounts, you will be issued separate Form 1099-Ks for each of your accounts (assuming you both cross the IRS thresholds). While we may need separate TINs for your accounts to avoid combining them, we will only issue a Form 1099-K if an account exceeds the IRS thresholds. Remember that all of your sales from all of your accounts using the same TIN will be combined for reporting purposes.
If I'm in a partnership, how will that be reported to the IRS?
If your Half.com account is in the partnership's name then the partnership's Tax Identification Number (i.e., the partnership's Employer Identification Number or EIN) will need to be provided (when required) and the Form 1099-K will be issued to the partnership.
What do I do if I have questions?
If you have any questions or concerns, please don't hesitate to contact us. However, we can't give tax advice, so you should consult your tax advisor if you have questions about how this new regulation may affect you.