Originally Posted by
scarlson
Based on the information I have from my lawyer friends, if you don't report a low value 1099-k, most of the time, the IRS will take no action. When the IRS does take action, most of the time it will be an inquiry, sometimes with a bill assuming the entire amount was profit. You can answer the inquiry, and usually quickly make peace with the IRS. In rare circumstances, an audit could be stimulated, but not just for a low value 1099-k. Keep in mind: only profits are taxable. Non-taxable income is not required by law to be reported at all, although it might be best to explain if the IRS so requests.
Maybe you missed my earlier post where I identified myself as a CPA.
The advice from your lawyer friends would only pertain to somebody already filing a Schedule C, like for a sole proprietor-type business.
At least, if that person files revenue in excess all 1099's given to him.
But somebody who gets their $3,000 1099-K from eBay, who fails to file a Schedule C will typically get a bill from the IRS.
That bill will treat the entire revenue as taxable. There's no simple explanation to make it go away. The IRS will require an amended 1040.
A Schedule C takes minutes to complete and, most times, you can bring the profit to nil.
I am not referring to tax audits, which are super rare. Just the normal triggering caused by a 1099.