Pay Pal marked as "gift"

[Mr_Toad]

Thanks, FrankS!

I'm grateful for these "how to" discussions, since I have to (sadly) start selling some beloved camera gear on the Web. ..hopefully to a good home.

Robt.

 

[jarcher697]

I usually just add the extra onto the price and sell it as that just like Bobbo!

 

[rxmd]

Seems the "virtual Nigerians" are getting smarter at picking their marks.

I guess this is partly due to places like 419 Eater.

 

[illuminati_02]

I just received a note from PayPal today. I have never asked for or used PayPal gift, the fee is just a cost of doing business, but one thing that may push me towards using the gift option is the threat of being taxed for my hobby. PayPal warned me that I am getting close to $20k in payments received and they need my tax id to send me a 1099K at the end of the year. The only thing that saves me from obscene taxes is not having over 200 sales, which is the other half of the requirement. I am not a business, and I enjoy playing with cameras, and buying/selling into different systems. If they want to tax me on sales of used items that have already been taxed several times, I feel it is a bit ridiculous.. maybe I am wrong here. Money sent through "gift" is not figured into this total. Taxed coming and going.

 

[Issy]

Yes, if you ask for an additonal 3% and your buyer complains to Paypal, you risk having your account suspended (and the extra fee being immediately refunded to the buyer). But this also depends on where you are located. Here in Japan there is no such prohibition.

What if I say "$100 via PayPal... 3% discount if you pay by USPS MO"?

Same issue?

Bill

 

[FrankS]

What if I say "$100 via PayPal... 3% discount if you pay by USPS MO"?

Same issue?

Bill

$3 should not be a deal breaker.

 

[Issy]

it's all in the wording?

it's all in the wording?

$3 should not be a deal breaker.

Well, I used $100 as an example, but I was thinking more of the wording... rather than "charging extra" for PayPal, I am "discounting" for a MO.

Does PayPal still care/frown?

Personally, I am always willing to share the "pain" -- buyer pays 1.5%, and I pay 1.5% (but it's awkward to put in an ad).

I think a lot of people, especially those of use who might sell on ebay, don't appreciate ebay "triple dipping" -- $$ to post, $$ on the sale, $$ on the $$ transfer -- if they are protecting us "both", then we should share the pain. IMHO.

I guess the suggestion to just adjust your price accordingly is probably the easiest.

B

 

[rxmd]

I just received a note from PayPal today. I have never asked for or used PayPal gift, the fee is just a cost of doing business, but one thing that may push me towards using the gift option is the threat of being taxed for my hobby. PayPal warned me that I am getting close to $20k in payments received and they need my tax id to send me a 1099K at the end of the year. The only thing that saves me from obscene taxes is not having over 200 sales, which is the other half of the requirement. I am not a business, and I enjoy playing with cameras, and buying/selling into different systems. If they want to tax me on sales of used items that have already been taxed several times, I feel it is a bit ridiculous.. maybe I am wrong here. Money sent through "gift" is not figured into this total. Taxed coming and going.

Well from PayPal's point of view, it's not unreasonable to assume that someone who has more than $20k in revenue over hundreds of transactions may well be a small business. And they're not even saying that you actually are a small business; all they're saying is "OK, please take this up with the IRS", which you're legally required to do anyway on your $20k revenue whether you use PayPal or not.

Talk to your tax adviser. It should be no problem to prove to the IRS that you're not a small business; just show that you spend about as much money or more buying gear than what you make selling it. Incidentally it's basically irrelevant if you feel like a hobbyist or like a businessman doing it - if you do make a net profit with it, this net income is taxable. Yes, that does mean that hobbies can be taxable; what counts is whether you actually make a profit, not whether you're doing it for the profit.

Basically what you are proposing is to use PayPal gifts in order to work around PayPal's reporting requirements to the IRS. From your hobbyist's seems fine because you see this as your hobby, but if actual businesses pick up on this idea to work around their tax obligations I think this is not so nice. If they don't want to pay taxes, it's their problem, but I don't want to be come complicit in their tax fraud, much less if the proposal also means giving up on all buyer protection.

 

[randolph45]

if you fine folks could just send me 3% of anything...starting as soon as possible...i'd not only appreciate it but i also promise not to tell paypal!


😉

Looking to pay off that x100 you are!

 

[rxmd]

Exactly, and 20k is more than about half of the working population of the USA earns in a year from work...so it isWAY beyond hobby.

You don't know how much he earns. If you're rich enough, $20k hobbies are not a problem.

Maybe he buys new things as they come out and then sells them at a loss. From a tax point of view it's only interesting if he sells his stuff at a profit.

 

[Chriscrawfordphoto]

You don't know how much he earns. If you're rich enough, $20k hobbies are not a problem.

Maybe he buys new things as they come out and then sells them at a loss. From a tax point of view it's only interesting if he sells his stuff at a profit.

He said he did 20k in paypal receipts. That is not a hobby, that is a business. Even if he is just buying gear for hobby photography and selling it cause he can't decide what he wants, he is required by law in the US to pay taxes on the profits, and he made clear that he intended to avoid doing so.

 

[FrankS]

The 20K was not indicated as profit, but as PayPal receipts. He may have spent 40K to buy all that gear initially, hence no profit.

 

[Sonnar Brian]

If the person takes the price of the equipment off in taxes, business. Most of us would come out ahead financially if we could take gear expense as a deduction.

 

[mathomas]

What bugs me about folks asking for PP "gift" is that it's not a gift. It's a "workaround" (I'm being kind) for people that want free.

PP (and the internet in general) have made long-distance transactions (even credit card ones) possible and available to everyone. And then people bitch about having to pay for the pleasure. I realize there are a lot of other reasons not to like PayPal, but those are policy issues, not service, IMO.

What we need is really great competitors to PayPal so they are forced to improve (and hopefully reduce fees).

 

[Landshark]

It's not "equipment" but merchandise. The profit is sales minus cost=difference to be taxed.
$20k in receipts against $X in costs + % of $Y to the taxman

 

[uhoh7]

I have bought many lenses with paypal as gift. By now I have prolly saved around 100 usd by doing so. But no doubt it's more risk.

That's my business and my choice.

Why this is so controversial I 'll never understand.

You do it or you don't.

But for many it's some giant moral issue. Like bailing out GM 😉

If fact all the endless threads about whether pp fee should or should not be included in price are equally silly.

Seller and buyer agree or do not agree.

I care about glass, not accounting methods.

 

[lbenac]

Hello,

Nobody in the thread seems to have considered the real purpose of PP as a gift. It is not so much avoiding PP fees that they charge for their service and protection to the buyer. It just happens that PP and eBay are (sometime) unfairly giving full protection to the buyer and none to the seller. All it takes is for a buyer to built up their score with phony or not relevant transactions. Then they can at their pleasure require a discount under thread of a claim, return a different item or a broken item and get a full refund - and there is nothing that eBay/PP will do about it.
So I would like to see the face the self righteous the first time this happen to them :bang:
PP as a gift makes a lot of sense for a reputable seller that has a traceable history on various forum/ebay when selling to an unknown buyer specially ONA.
It also makes a lot of sense on a transaction between two forum members that are "known quantities" as you are only paying PP for the money transfer and not the unnecessary buyer protection.

Cheers,

Luc

 

[enasniearth]

paypal gift

paypal gift

well there are places where paypal gift is considered

buyer does not want to pay the price - in fact they want to pay a bit less . they say as is is ok and they accept that . they have offered a bit less . paypal gift has no fees ---- so it takes the sting out of the offer ----- if it really is a lower price buy . as is . paypal gift is ok .


buyer wants free shipping - as if the reasonable price you set was not so reasonable . ebay has everyone thinking shipping is free - it is not - shipping especially international shipping is expensive . so paypal gift allows you to recover a portion of the shipping . you give the free shipping in return for no complaints .

in reality some folks are very happy the item is nicer than your detailed description . some other folks are never happy and they expect a 60 year old item to be brand new with a warrenty . the second type want to pay less . expectations are the root of disappointment . this goes both ways .

the last type is the overseas buyer that wants a $1200 item sent parcel post insured for $75 . they know that the taxes are 30-40% . if you are willing to risk postiing the item as a gift , they are willing to make the payment a gift .if you do it as a gift without the payment as a gift they claim it never arrived , and the paypal warrenty backs them up . they have the item and the money .

all of these senerios are frowned on by paypal and customs and governments , since they make no money -- they try to convince you that the internet is full of theives and jack - rollers and only adherance to the company line can protect you .

i miss the days when you could look the other party in the eyes - shake hands - and trust .

 

[Chriscrawfordphoto]

I have bought many lenses with paypal as gift. By now I have prolly saved around 100 usd by doing so. But no doubt it's more risk.

That's my business and my choice.

Why this is so controversial I 'll never understand.

You do it or you don't.

But for many it's some giant moral issue. Like bailing out GM 😉

If fact all the endless threads about whether pp fee should or should not be included in price are equally silly.

Seller and buyer agree or do not agree.

I care about glass, not accounting methods.

You didn't save a dime, the seller did because HE escaped the fees. You're not supposed to pay them, at least if you're in the USA, where Paypal's terms of service specifically FORBIDS sellers adding the fee on top of the price.

You'll start caring about accounting methods when someone you've sent a gift payment decides to run with your money and paypal says "Sorry Charlie...you sent a gift, not payment for merch. No refund for you!"

 

[mto'brien]

Hello,

Nobody in the thread seems to have considered the real purpose of PP as a gift. It is not so much avoiding PP fees that they charge for their service and protection to the buyer. It just happens that PP and eBay are (sometime) unfairly giving full protection to the buyer and none to the seller. All it takes is for a buyer to built up their score with phony or not relevant transactions. Then they can at their pleasure require a discount under thread of a claim, return a different item or a broken item and get a full refund - and there is nothing that eBay/PP will do about it.
So I would like to see the face the self righteous the first time this happen to them :bang:
PP as a gift makes a lot of sense for a reputable seller that has a traceable history on various forum/ebay when selling to an unknown buyer specially ONA.
It also makes a lot of sense on a transaction between two forum members that are "known quantities" as you are only paying PP for the money transfer and not the unnecessary buyer protection.

Cheers,

Luc

The real purpose of paypal gift is for cash transfers. Things like parents sending money to their kids in college, bail money, paying rent, and, you guessed it, monitary gifts.

Paypal is obviously interested in taking business from services like western union with the gift option. I am sure that if paypal were to get wise to someone using the gift option for their business there would be consequences for them. If the amounts were high enough, the consequences would be of the legal variety.

This thread is not about all that though. This thread was started to warn buyers that sending money as a gift to an unknown seller is risky. Once you are aware of the risks, do as you please with your money. I personally would rather pass on an item than send a gift, which is essentially equivalent to sending cash in the mail.