Do scrap yards report transactions to the IRS?

[ilyaz]

Every time I bring scrap to a yard, they ask for my drivers license. I had assumed that they need that for cases of getting stolen property or something like that. But I am wondering now whether they are supposed to report all transactions to the IRS similar to how an employer would report wages of each employee. Does anyone know if this is what actually happens? I am in MD, in case that makes a difference.

[wayne1956]

I don't think so, the scrap yards I go to only ask for a drivers license when selling non-ferrous metals. If I only take in tin, then they do not. I think it is only for security.

[silversaddle1]

Don't be so sure of that. I know of one instance in Council Bluffs, Iowa where the IRS came in and recorded all the scale tickets for the year.

It may be to your advantage to report all you earn on your scrap. When you do, all sorts of write-offs come into play. Talk to an accountant and see if it's to your advantage or not.

Not that I'm a fan of telling those [fluffy kittens] anything about my business, but somethings do work out for the best, like write-offs!

[Thogey]

The amount of money the yard pays out, usually cash, is what the scrap yard would use as their cost basis.

They pay tax on the difference between what they pay out and what the sell the scrap for.

I doubt the IRS was recording weight tickets to tax the local scrap peddlers. Most likely they may have thought the yard was padding their invoices so as to raise their cost basis and show less of a profit.

Unless you're issued a 1099 by the yard your info was not furnished to the IRS.

[hobo finds]

I think that the yard would pay the tax on the sales only. Safeway is not taxed on what they buy just what they sell...

[Thogey]

They write off what they buy, the remainder is profit which is what they pay tax on.

Gross sales-Cost of goods sold=gross profit

For a scrap yard, cost of good sold can be measured by the weight tickets for incoming scrap. So if they were to inflate the incoming payouts, they would decrease thier profit and hence taxes. That's why the IRS is interested in monitoring the scales.

[justoneguy]

I think in 2012 scrap yards will have to issue a 10-99 to anyone they do over $600 in business with.
just like they're talking about coin dealers having to.

[silversaddle1]

I think in 2012 scrap yards will have to issue a 10-99 to anyone they do over $600 in business with.
just like they're talking about coin dealers having to.

That's correct, so you just as well get your Sole Proprietor status now so you can be ready for the 1099's next year. Gotta love the health care bill and the shithead obama.

[ilyaz]

I think in 2012 scrap yards will have to issue a 10-99 to anyone they do over $600 in business with.
just like they're talking about coin dealers having to.

That's correct, so you just as well get your Sole Proprietor status now so you can be ready for the 1099's next year. Gotta love the health care bill and the shithead obama.

justoneguy/silversaddle1

Where did you guys find this info? I just want to learn more about any other "nice surprises" from Uncle Sam I was not aware of. Thanks.

[Dr. Cadmium]

General rule: if you live in the US and you're making money, you have to pay taxes on it. Even criminals have to pay taxes!

Currently most scrap yards do not report payouts to the IRS (such as with a form 1099), but they are legal businesses that do report their own sales and profits and it's possible for them to get audited. It's not unreasonable to think that if "Company X Scrap Metal" is audited and their books say that "John Doe" was paid $100,000 for material over the course of a year that John Doe's tax return will soon be investigated.

Note that it's not only the IRS that you have to prepare for, but also the governments of any states you live and work in. Most states have an income tax and if you're making several thousand per year that you're not reporting it can lead to problems.

Tax regulations vary greatly from state to state so it's best to get advice from a CPA; they know both federal and state regulations.

If you do a lot of scrapping, it's best to do it through a business so you can write off travel, tools, gas and other expenses. Again, I'd strongly recommend an appointment with a CPA. They can help you with decisions like this, and you'll almost always get good money-saving advice.

[messymessy]

I think in 2012 scrap yards will have to issue a 10-99 to anyone they do over $600 in business with.
just like they're talking about coin dealers having to.

That's correct, so you just as well get your Sole Proprietor status now so you can be ready for the 1099's next year. Gotta love the health care bill and the shithead obama.

justoneguy/silversaddle1

Where did you guys find this info? I just want to learn more about any other "nice surprises" from Uncle Sam I was not aware of. Thanks.

From BusinessWeek, about the 1099 requirement:
http://www.businessweek.com/smallbiz/co ... 855178.htm

You also might try the Cato Institute, at Cato.org. They are the first place that I heard ringing the alarm bells about the new 1099 requirement.

[junior30king]

I pay taxes on my earnings every year and all they have to do is hit print and then they give me a copy of every pound that i turned in and every .01 that they paid me for the year. The yards that I deal with are not sure how the 10-99 will work yet but yes it will be sent out for 2012. So make sure you save your receipts for fuel etc. this year. I feel bad for the seniors who do this on the side for a little extra cash. Our government is just as broke as the rest of us and they are gonna squeeze every penny out of that they can.