This seems to go beyond simply issuing a 1099. They're actually withholding funds.
They withhold taxes ONLY if you don't supply them with the SSN or Tax ID number. If you provide them with those, then they will send the 1099 and you are supposed to do it with your taxes -- and then, if you have kept your appropriate documentation from the original purchase, you are only expected to be taxed on any profit. This was implemented several years ago. But the actual requirement torpor this to the IRS and for the vendors (eBay, Venmo, PayPal, etc) to send the 1099-Ks has kept slipping. It was supposed to be two years ago, then last year, and it has slipped again until next year. They old standard of $20k in sales (or whatever the higher threshold was before the rule change) is still in place.
They withhold taxes ONLY if you don't supply them with the SSN or Tax ID number. If you provide them with those, then they will send the 1099 and you are supposed to do it with your taxes -- and then, if you have kept your appropriate documentation from the original purchase, you are only expected to be taxed on any profit. This was implemented several years ago. But the actual requirement torpor this to the IRS and for the vendors (eBay, Venmo, PayPal, etc) to send the 1099-Ks has kept slipping. It was supposed to be two years ago, then last year, and it has slipped again until next year. They old standard of $20k in sales (or whatever the higher threshold was before the rule change) is still in place.
This is simply incorrect when it comes to US taxation of foreigners who do not have a place of residence or a business located in the U.S.
The 1099K forms are for domestic sales only. If you are a non-resident selling outside the U.S. there should be no withholding against U.S. tax due, because the U.S. doesn’t tax these transactions.
However @DON has a different issue here. He is maintaining a U.S. bank account to collect on his sales to US people. That is why I suggested he discuss this with his accountant. The way PayPal sees it, he is conducting a business within the U.S. that needs to be registered to avoid the 24% backup withholding.
There may be provisions (this is not my area of expertise) in the tax treaty that exempt this activity from U.S. withholding, but it’s going to require that the proper forms be filed and filled out correctly to qualify for any exemption. I’m sure there are firms in Canada that deal with this every day. My firm also handles this sort of thing, but it’s just not me doing it.
Hope this helps,
gatorcpa
If you buy watches, you possibly have to deal with sales tax, use tax, VAT, customs duty, auction house fees, shipping fees, customs brokerage fees, service costs and scammers or sellers who may misrepresent what they are selling . If you sell, you possibly have to deal with capital gains taxes, income tax, shipping fees, insurance costs, sales commissions, scammers and non-paying buyers and now backup withholding. Just holding on to your collection, admiring it, and wearing your watches seems to be the way to go.
While I have a US bank account (in cooperation with my Canadian bank). My business is in Canada, so I'm not collecting any taxes off US or any countries sales.
It's why I listed my residence as Canada and I don't own a US company
Wait and see
