Q. Isn’t that (not reporting the 1099-K) just setting yourself up for the IRS to contact you if you don’t report the 1099?
A. We don't know for sure. The Government rules on expanded 1099-K reporting are new this year. We don't know what the IRS is going to do with them (they will be overwhelmed). But we do know that there is, for now, no specific place on the tax forms to account for a 1099-K. Where you put it depends on why you got it. Most people will end up reporting zero income or, at least, much less than the amount on the 1099-K. The red flaggyness is only a tiny bit more by not reporting it. Either way, you need to be prepared to explain it.
Earlier, in this thread, somebody said " it is possible that eBay sales may not be taxable however, all eBay sales reported on Form 1099-K have to be reported as income on your tax return". That's not true. In most cases, you have to calculate the taxable portion and report only that. Except when reporting it as business income, there is no IRS form to report your expenses and cost of goods sold.
To cite an example: 529 Tuition Plan distributions are reported on a form 1099-Q. They're not taxable if used for tuition. But there is no IRS form to report the 1099-Q and tuition expenses on. Years ago, we saw numerous complaints from people getting IRS notices for not reporting the 1099-Q. We don't see those anymore as the IRS learned their lesson. Admittedly documenting tuition is easier than documenting cost basis of "garage sale" items.
