PayPal (et al) and New IRS Regulations

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woodsroad

Lifer
Oct 10, 2013
11,569
15,218
SE PA USA
You don't even need to do that to make the process more arduous for the IRS. In 1985 I received a notice from the IRS that I was going to be audited for my 1983 taxes. 1983 was the first year that i had earned almost all of my income as a freelancer, filing a pile of 1099's.

The auditor was a petite woman with the soul of Vlad the Impaler. A couple of weeks later I received a notice from the IRS that I owed back taxes and penalties totaling about $12,000, which was almost all of my savings at that time.

Sometimes the Universe intervenes in curious ways. One of my friends back then, an architectural photographer, offered to cheer me up by taking me out for dinner and beers at Gorky's, a restaurant popular with artists for its cheap and filling food and microbrewery in the Arts District in downtown LA.

Seating at Gorky's consisted of long communal tables. As I was working through my first pirogi and maybe my third beer, two young women approached us and asked if they could join us. I wasn't feeling exactly sociable, but decided to welcome them anyway. They settled at the table and introductions were made.

The conversation eventually turned to occupations and when I asked them theirs they said I wouldn't be interested as what they did was pretty arcane. I persisted and they said that they were both auditors for the IRS and were at Gorky's because they loved the atmosphere and they loved artists.

I'd had all I could take of auditors so my response was to tell them that I had just been audited and then to form a cross with my left and right index fingers. That caused them to break out into merry peals of laughter, which didn't exactly brighten my sour mood, but before I could say something rude they started asking me to tell them about the audit.

Turned out they had issues with the IRS and with auditors they felt broke the rules to bring in money and make themselves look good to their supervisors.

As I went through the audit and they asked more questions, my responses brought forth more laughter from them and I was ready to get up and walk. But before I could, one of them waved me to sit down and they proceeded to tell me that the audit was in violation of a number of rules, that my auditor was dirty, and that they would give me a roadmap on how to overturn the audit while inflicting maximum professional damage on the auditor. They explained that if I didn't fight this I stood a good chance of getting audited repeatedly, but if I put up a fight the IRS would back off.

Over the next 20 minutes they told me which IRS booklets to pick up, recommended a book on tax law for artists, and explained the process by which I would make Mrs Vlad's life hell.

Turns out Mrs Vlad had lied like hell to me.

I did the research, made a list of all of the rules and sections of the tax code that Mrs Vlad had misled me about and started the process.

Rather than submit all of the objections in a single document I listed only one, which would necessitate Mrs Vlad having to rewrite the audit report. When that report arrived, I would respond with one more objection, which would result in Mrs Vlad having to rewrite the audit again. I repeated this over the next eight months, forcing Mrs Vlad to clock countless hours on a continually diminishing result.

After 8 months I had the audit down from a $12,000 penalty to $30, which would cancel any further action on the part of the IRS, and if it hadn't I had more objections that would have taken the total into negative territory.

Seems I didn't take all the deductions I was entitled to.

Having hit the magic $30 I drove over to the IRS office in Van Nuys, went up to the receptionist with the pile of copies of the audit results that I had collected over the prior 8 months and asked to see Mrs Vlad's supervisor.

I handed over the stack of audit reports to the supervisor, asked him to review the case and wished him a good day. Two weeks later I received a letter from the IRS vacating the taxes and penalties and stating that I had passed my audit.

Mrs Vlad was transferred to a one person office in Death Valley.

The IRS did get its own back the following year when they sent me a letter stating that I owed them 27¢, which I paid by check.

I keep scrupulous records in case this ever happens again.
I have a similar story from 1987, but mine involves the auditor’s car getting broken into (after I told her where to park, so it would be safe), stretching the audit out to two days by continually finding more receipts and ending with the IRS owing me $7.

Like you, I keep good records and don’t hide income. I can’t, really, since all my clients are major institutions and issue 1099’s.
 

Servant King

Lifer
Nov 27, 2020
4,111
22,275
38
Frazier Park, CA
www.thechembow.com
If you transact business using an unregistered legal name, that name is controlled by whichever state issued the Certificate of Live Birth (the creation of that legal name). In other words, it's public which, to put it simply, meaning you're conducting public business masquerading as private business. The state can make whatever rules it wants to make regarding its property (the legal name it created), so it should come as no surprise when the regulating gets more and more oppressive.

There's a solution to this problem, but you have to dig a little bit to find it. :)
 

Servant King

Lifer
Nov 27, 2020
4,111
22,275
38
Frazier Park, CA
www.thechembow.com
Y’all are trippin’. According to Uncle Klaus, we will be happy about owning nothing by 2030. Welcome to the new neo-feudalism.
It already is that way, and always has been. Nobody owns anything--having or holding something privately might feel like ownership, but it's just an illusion. Anything that is regulated is proof that private ownership of whatever is in question is simply a hoax. Everything is public. Case in point: "homeownership." Try not paying your rent to the county (property tax) and see how fast the true owner will take it away. Just one example of a bevy of them.

The Paypal reporting change is just a symptom of a much larger, deeper issue.
 

brian64

Lifer
Jan 31, 2011
9,602
14,666
It already is that way, and always has been. Nobody owns anything--having or holding something privately might feel like ownership, but it's just an illusion. Anything that is regulated is proof that private ownership of whatever is in question is simply a hoax. Everything is public. Case in point: "homeownership." Try not paying your rent to the county (property tax) and see how fast the true owner will take it away. Just one example of a bevy of them.

The Paypal reporting change is just a symptom of a much larger, deeper issue.
True...but it will be harder to maintain the comfort of the illusion under Uncle Klaus's plan after you're downsized to 200 sq ft and living on bugs.
 

KaunThePiper

Starting to Get Obsessed
Jan 2, 2022
159
1,540
45
New England
www.instagram.com
I pulled this off NBC news and edited it for brevity. I know this is not legislation but rather regulation, but I am posting it here as it may be an aggregate to this thread.

Jan. 6, 2022
Venmo, PayPal and Zelle must report $600+ in yearly transactions to IRS

As of Jan. 1, mobile payment apps like Venmo, PayPal, Zelle and Cash App are required to report commercial transactions totaling more than $600 per year to the Internal Revenue Service.
The change to the tax code was signed into law as part of the American Rescue Plan Act, passed in March (2021).
Previously, these mobile payment apps only had to tell the tax authorities when a person had over 200 commercial transactions per year that exceeded $20,000 in total value, the IRS said.
Starting Jan. 1, the IRS said, if a person accrues more than $600 annually in commercial payments on an app like Venmo, then Venmo “must file and furnish a Form 1099-K” for them — reporting on all the commercial income they collected through the app.
The tax-reporting change only applies to charges for commercial goods or services, not personal charges to friends and family, like splitting a dinner bill.
In an explanatory document on the new tax changes, the IRS said these changes also apply to people who sell items on internet auction sites like eBay and people who "have a holiday craft business" so long as they accept credit card payments through these apps.
So, accept payments as "Friends or Family" only. Taxation is theft.
 
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Osirus

Might Stick Around
May 13, 2022
59
144
Nebraska, USA
I used to sell a bit on ebay, nothing enough to live on but $600 is pretty low... it's all "garage sale" items, things I've accumulated over the years that would sell for no profit based on what I paid originally. But apparently, I would need receipts to prove that...
 

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AJL67

Lifer
May 26, 2022
4,489
24,341
Florida - Space Coast
Don't forget this isn't to milk every fucking dime from every single person in the country this is and I quote "to go after the billionaires" the same excuse they gave when hiring 80,000 new IRS agents .. it's not to go after lower and middle income earners it to "go after those billionaires", anyone that believes this shit should be first in line for audits every year.
 

condorlover1

Lifer
Dec 22, 2013
7,993
26,607
New York
You want to shrink the U.S government overnight? Very easy. Just removed the concept of Statutory/Sovereign Immunity for Federal employees so they can be sued personally for their decisions/actions. At present a Federal employee can make any arbitrary or capricious decision and they enjoy total immunity. Imagine if they didn't? If the nob end at any government department risked losing his house/pension for his decisions due to you the U.S citizen seeking recourse in the courts how many of these people do you think would work for Uncle Sam? Authority with personal responsibility would frighten the sh*t out of the average bureaucrat!
 
Dec 6, 2019
4,296
19,375
33
AL/GA
You want to shrink the U.S government overnight? Very easy. Just removed the concept of Statutory/Sovereign Immunity for Federal employees so they can be sued personally for their decisions/actions. At present a Federal employee can make any arbitrary or capricious decision and they enjoy total immunity. Imagine if they didn't? If the nob end at any government department risked losing his house/pension for his decisions due to you the U.S citizen seeking recourse in the courts how many of these people do you think would work for Uncle Sam? Authority with personal responsibility would frighten the sh*t out of the average bureaucrat!

That's a damn good start.
 

warren99

Lifer
Aug 16, 2010
1,943
23,278
California
How is this surprising to anyone?

FYI, the IRS requires drug dealers to report their income from illegal dealings, corrupt politicians report income from bribes, and thieves report income from stolen goods (unless the goods were returned in the same tax year).

And that yard sale you had a little while ago? Don't get me started.
What happened to the 5th Amendment privilege against self-incrimination?