Do scrap yards report transactions to the IRS?

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.

Of course they report it to the IRS.

Originally Posted by 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.

I don't think they do. When I take in scrap they only ask me for my license when I sell non-ferrous scrap (copper, brass, aluminum, etc). If I am only selling ferrous, then they do not. The bulk of my money comes from ferrous, so they would be losing out of a good chunk of change if they did report it. I think it is just for tracking purposes, in case they get in something that was stolen.

I guess it goes state by state, according to their laws. Here in Texas we get paid cash for everything, and only have to show a license if we sell non-ferrous scrap.

Below is the Texas Law regarding scrap metal dealers.

Metal Recycling Entities
Anyone operating as a metal recycling entity dealer within the state of Texas is required to register with the Department. For purposes of Chapter 1956, Occupations Code, the regulatory term for "second hand metal dealer" has changed to "metal recycling entity". A metal recycling entity would be a business predominantly engaged in performing the manufacturing process by which scrap, used, or obsolete metal is converted into raw material products consisting of prepared grades and having an existing or potential economic value, by methods including processing, sorting, cutting, classifying, cleaning, baling, wrapping, shredding, shearing, or changing the physical form of that metal. A metal recycling entity also could be a business that manufactures the raw material products from the recycling process into producer or consumer goods. The following exemptions apply:

Exempt:


The purchase of regulated material by a manufacturer whose primary business was the manufacture of iron and steel products made from melting scrap iron and scrap steel.
The purchase of regulated material from a public utility, or a manufacturing, industrial, commercial, retail, or other seller that sells regulated material in the ordinary course of the seller's business.

Registration as a metal recycling entity shall last for 2 years and must be renewed on or before the expiration date if the registrant wishes to carry on as a metal recycling entity. Other Information regarding Metal Recycling Entities

Local Regulatory Authority
Chapter 1956 allows a local government or political subdivision of the state to adopt a rule, charter, or ordinance or issue an order or impose standards that are more stringent than state law but do not conflict with it. Additionally, Chapter 1956 would allow local governments or political subdivisions to issue licenses or permits to a business to allow the business to act as a metal recycling entity in that county or municipality.

Information Provided by Seller
A person attempting to sell regulated metal to a metal recycling entity is required to display personal identification, provide a description and license plate number of the vehicle used to transport the regulated material, and either:

provide evidence in writing that the person was the legal owner or lawfully was entitled to sell the regulated material; or
sign a written statement provided by the entity that the person legally owned or was entitled to sell the material offered for sale.
The recycling entity is required to visually verify and photocopy the seller's identification for record keeping purposes. Additionally, the entity is allowed to take a picture of the seller and the vehicle used to transport the material, a photo of which could be accepted in lieu of the description and license plate number, if the license plate number is clearly identifiable in the photo. The entity would not be required to make a copy of the identification if the seller:

signed a written statement evidencing ownership or authority to sell the material; or
previously had provided this information, and the information has not changed.
A metal recycling entity is required to provide a notice in two inch lettering, warning a person who wishes to sell regulated metal that written proof of ownership is required by state law.

Records Retained
Each metal recycling entity must keep electronic records detailing all scrap metal received at that location and all scrap metal either processed at or dispatched from that location. All purchases of copper, brass, or aluminum material, regardless of weight, must be recorded by the recycling entity.

The details to be kept for scrap metal received are:

The description and weight of the metal;
The date and time of receipt of the metal;
If the metal is received from another person, the name and address of that person;
The price of the metal if it has been ascertained at the time the entry is made in the electronic file;
If no price has been ascertained, the estimated value of the scrap metal;
The registration mark of any mechanically propelled vehicle used to deliver the scrap metal.
The details to be kept for scrap metal processed or dispatched are:

The description and weight of the metal;
The date of processing or dispatch, and in the case of processing, the process applied;
Where scrap metal is dispatched for sale or exchange, the name and address of the person to whom it is sold or with whom it is exchanged and the consideration for which it is sold or exchanged;
Where scrap metal is dispatched or processed other than for sale or exchange, its estimated value before being dispatched or exchanged.


Entries must be made immediately upon receipt, processing or dispatch and electronic records must be kept for two years following the last entry.
Restrictions on sale or processing of regulated materials
A metal recycling entity is restricted from disposing of, processing, selling, or removing from the premises an item of regulated metal unless:


the entity acquired the item more than 72 hours before the disposal, processing, sale, or removal ; or
the entity purchased the item from a manufacturing, industrial, commercial, retail, or other seller that sells regulated material in the ordinary course of its business.
Any peace officer has a right at any reasonable time to inspect registered premises, records kept on the premises and scrap metal kept on the premises. Peace officers may place on hold an item of regulated material in the possession of a recycling entity if the officer has reasonable suspicion to believe that the item was stolen. The hold lasts for 60 days, during which time the entity may not dispose of, process, sell, or remove the item from the purchased material unless the hold is released.
Limited Hours for Purchasing
A metal recycling entity is prevented from purchasing regulated material for more than 15 consecutive hours in one day or later than 9 p.m. Local governments or political subdivisions of the state of Texas are allowed, within these parameters, to establish the hours during which a metal recycling entity can purchase regulated material.

Criminal Offenses and Penalties
It is a criminal violation to knowingly provide false identification or information to an entity or knowingly record information known to be false in the entity's records.

A violation is a class A misdemeanor (up to one year in jail and/or a maximum fine of $4,000) unless the defendant previously has been convicted of failure to comply with identification or recording requirements or buying or selling stolen regulated material, in which case the offense is a state-jail felony (180 days to two years in a state jail and an optional fine of up to $10,000).

The purchase of stolen regulated material is a class A misdemeanor, unless the defendant previously has been convicted of failure to comply with identification or recording requirements or buying or selling stolen regulated material, in which case the offense is a state-jail felony.

The sale of stolen regulated material is a state-jail felony, unless the defendant previously has been convicted of failure to comply with identification or recording requirements or buying or selling stolen regulated material, in which case the offense is a third-degree felony (two to 10 years in prison and an optional fine of up to $10,000).

A court may order an entity to cease doing business as a metal recycling entity for an offense under Chapter 1956. The order of closure would be limited to 30 days for a first offense and 180 days if it has been shown that the entity previously had been convicted under this section.

If conduct that constitutes an offense under this section also constitutes an offense under any other law, a person may be prosecuted under this section or the other law

Where did you find all of that info? I'd like to look up NYs rules

Here in NJ they just want your name no Id , cash on spot.

Starting in 2012...1099 on every sale!!! one of obamas hidden rules in new taxes

In my state,IL, I'm only asked to show an ID if the total amount of metal I bring in is more than $100. I once asked what this was for and the guy told me it had nothing to do with the IRS, rather the state of IL feels that $100 is the "line in the sand" that a person would feel is worth stealing metal to sell. Plus my driver's license doesn't have my SS#, of course the state could look it up but it would be troublesome. In addition, I'm not given a receipt unless I want one. The yard guy once asked me if I wanted a receipt and I replied that unless I could buy something with the yellow piece of paper(receipt) the same way I buy something with the green piece of paper(money) he can keep it. Since I do this primarily as a "paid hobby", going to the yard once a week and make $30-$60 each time I go, I end up putting a close estimate on my taxes.

I've never been asked to show my ID or even been asked my name. Someone told me that if they started to recognize me as a regular than they would start reporting it to the IRS. I hope this doesn't happen because it might effect my unemployment. Being jobless is the reason I started doing this. Unemployment doesn't pay all the bills.

All scrap yards report to irs even if they pay you cash...they have to pay taxes on it when they sell it...do you think they are gonna pay yours too?...Even with cash payment there is still a receipt so its the same as getting a check!

If they were reporting (currently), to the IRS, don't you think they'd also have your SS# or EIN on file? I've never been asked for that info...

Ultimately the IRS is federal. Any and ALL money earned is considered income and is required by law that it is reported by us on our yearly income tax report. They do not care that we can barely survive on what we make. Most of us consider cash as falling into a gray area...........well, truth is, there are no gray areas. they don't have to ask us anything..........we are expected to play by the rules set, they do have some meager allowances for minimum earnings but after that we have to use expense deductions to prove the costs of earning that cash....and......I just gave myself a headache...........

At the yard I go to, if they give you less than $100 than your paid out of the "petty cash". They don't need a drivers license or anything unless it's over $100. I'm glad the yard is only 3 miles from my house so I tend to take a lot of smaller trips. I weigh out most of what I can before going so that I have an estimate of what I'm getting.

I had brought scrap to the scrap yard a few times, not for extra money, just to get rid of some junk I had from the house and working on cars. Went down there around 6 or 7 times, don't remember how much cash I got. Do I have to file a 1099 or would it be alright not to, I couldnt imagine all those scrappers putting it on there tax returns. Just saw this post, never thought about it, figured Id ask.