Do individual sellers on Facebook’s marketplace pay taxes?
Generally, the answer is NO. Unless you are selling as a business such as Ebay, etc to make income.
Although the IRS has a reputation for trying to get a piece of just about every cent we bring in, when it comes to the occasional garage or yard sale, you generally do not have to report the sales amounts as income.
The reason? In such sales, you’re generally selling household items you purchased over the years and used personally. More to the tax point, you’re selling them for less than you paid for them.
In discussing the sale of personal items in Publication 525, the IRS says, “if you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain.”
The key phrase here is “capital gain,” and that’s underscored by the example the IRS offers:
You sold a painting on an online auction website for $100. You bought the painting for $20 at a garage sale years ago. Report your $80 gain as a capital gain on Schedule D (Form 1040).
But most items sold at garage sales and the like don’t bring in more than what you paid for them. In fact, in most cases, your total take for all yard sale offerings will be far less than what you originally paid. Excerpt from: Are garage sale proceeds taxable?
You may find additional information at this website: https://www.irs.gov/pub/irs-pdf/… page 33
I hope this information is helpful.
The Hidden Risk of Selling on Facebook
As more sellers turn to Facebook to sell items, there’s a risk that may not be obvious and is unique to social networking sites: suspension of their personal accounts in the event they run into policy violations while selling. That can be devastating for those who depend on Facebook to keep in touch with friends and family or for those who have grown addicted to the site.
It can also hurt professionally beyond the loss of a selling venue, since many online sellers congregate in Facebook “groups” to discuss and seek advice on ecommerce issues.
It may seem obvious to be just as careful selling on Facebook as you would on a site like eBay or Amazon. But selling on Facebook is often local, with deals done in person. It can feel like selling on a classifieds sites or at a flea market with people hawking everything from real estate, used cars, and weight-loss products.
Whatever the reason, one experienced seller who asked not to be identified by name was lulled into a sense of complacency. She makes frequent trips to a large flea market where she acquires certain types of items, and on one recent trip, an item featuring a well known brand that was obviously handmade caught her eye.
Unthinkingly, she listed it on Facebook.
It’s not surprising she received a takedown notice from Facebook – it was a “monumental” mistake, the seller told us. “I really WISH I knew what the heck was going through my mind when I listed it. I’ve NEVER made a mistake like that on eBay, and yet I sat right there and listed it on Facebook marketplace without it even DAWNING on me that it was a trademark problem.”
Lesson learned, right? But it didn’t end there. As soon as she received the notice, she went to remove the listing and found – nothing. Facebook had suspended her personal account, so she was unable to log in to the site.
She appealed through a link in the email notification and received back a message: “Thanks for contacting us. We removed or disabled access to your profile because content you posted on Facebook violated the Facebook Statement of Rights and Responsibilities. Our policies prohibit posting content that infringes or violates someone else’s rights or otherwise violates the law.”
“Boy, I thought eBay could be tough,” she told us. “I’m still shell shocked by the whole thing. You never really know how much you rely on and use Facebook until you lose it altogether.”
We immediately sought answers from Facebook about its policy – did it have a policy to close a seller’s personal account after a single IP violation (“VeRO” in eBay parlance)? If so, we wanted to warn sellers right away.
A spokesperson told us that Facebook takes prompt action against IP infringement and disables the accounts of repeat infringers when appropriate. When it receives a valid notice, it works quickly to remove the reported content and notifies both the reported party and the rights holder and explains the reason for the removal to the reported party.
Facebook also provides reported parties with contact information for the rights holder in the event they want to dispute the infringement notice.
The spokesperson also said that when people repeatedly infringe on others’ intellectual property rights, it is the company’s policy to disable their account when appropriate and provided several links for clarification.
According to Facebook’s Help Center: “If you repeatedly post content that infringes someone else’s intellectual property rights, your account may be disabled or your Page removed under Facebook’s repeat infringer policy.”
It also states: “If we remove content you posted because of an intellectual property report through our online form, you’ll receive a notification from Facebook that includes the name and email of the rights owner who made the report and/or the details of the report. If you believe the content shouldn’t have been removed, you can follow up with them directly to try to resolve the issue.”
The seller had indicated this was her first violation, but she wondered if the drastic action was taken because she had cross-posted the item to multiple selling groups when listing the item.
“When you list something on Facebook it pops up a message asking if you’d like to cross post your ad to your selling groups – you simply click the box and it does it for you,” she told us.
“I could understand a suspension, but a COMPLETE loss of my account seems rather harsh for someone who’s never been in Facebook trouble before,” the seller told us.