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IRS Wants a Cut of Sales On eBay and Craigslist

Soulskill posted more than 4 years ago | from the piece-of-the-action dept.

The Almighty Buck 517

Ponca City, We love you writes "In 2009, $60 billion worth of items were sold on eBay, meaning 'extra' money for many sellers, whose activities may provide them with taxable income. Now the Washington Post reports that beginning next year, a new law will require 'the gross amount of payment card and third-party network transactions to be reported annually to participating merchants and the IRS.' Also, for 2011 tax returns, 'taxpayers who annually sell more than $20,000 worth of goods and have more than 200 electronic transactions' will receive a new IRS form, known as 1099-K, for reporting the proceeds. The new tax issues shouldn't be a concern for people who sell just a few small items online for less than they paid for them, because as the IRS points out, income from auctions that resemble a garage or yard sale 'generally' isn't required to be reported. But if an online garage sale turns into a business with recurring sales and purchases of items for resale, it may be considered an online auction business. 'Generally, transactions resulting in a gain are reportable, regardless of whether the taxpayer is conducting a business,' says Gil Charney, principal tax researcher at The Tax Institute at H&R Block. The real reason behind the law is simple: Research shows taxpayers do a much better job of reporting taxable income when they know the IRS is receiving information about their transactions."

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517 comments

How's this news? (4, Insightful)

Dyinobal (1427207) | more than 4 years ago | (#32397934)

How exactly is this news? Governments have wanted to tax everything since well since they were established it's what they do.

Death and Taxes (3, Insightful)

loose electron (699583) | more than 4 years ago | (#32398002)

The Works of Benjamin Franklin, 1817:

        "'In this world nothing can be said to be certain, except death and taxes."

I see how this could be tracked on EBay - especially "Power Sellers" with 1000's of transactions.
But on CL? that's going to be interesting to see happen.

Re:Death and Taxes (1, Interesting)

Anonymous Coward | more than 4 years ago | (#32398146)

The Works of Benjamin Franklin, 1817:

                "'In this world nothing can be said to be certain, except death and taxes."

It's a funny saying, but it's not quite true.

There was a famous case in Australia often cited by economists. The government was changing their tax regime, and if you died after a certain date, then you paid less tax. Death rates dropped significantly before the deadline:

http://people.anu.edu.au/andrew.leigh/pdf/DeathAndTaxes_BEP.pdf [anu.edu.au]

Well for starters (3, Interesting)

goombah99 (560566) | more than 4 years ago | (#32398054)

it means that they will have to collect your Taxpayer ID number and then validate it.

so no illegal alliens can use E-bay.

Since they will be reporting SSNs to the IRS it will also be interesting if the law enforcement agencies sniff this for fugitives. Supposedly SSNs are not supposed to get used for law enforcement but they are.

I wonder how they will deal with people who claim not to be US citizens.

Re:Well for starters (4, Informative)

LynnwoodRooster (966895) | more than 4 years ago | (#32398142)

it means that they will have to collect your Taxpayer ID number and then validate it.

so no illegal alliens can use E-bay.

Perhaps you weren't aware that illegal aliens can get a ITIN (Individual Taxpayer Identification Number) [irs.gov] from the IRS, and can actually report and file 1040s every year with that same TIN. Even when here illegally (thus making their entire income illegal).

The IRS doesn't care as long as you pay taxes, unless they feel you didn't pay enough, then it's up to you to prove you paid enough not up to the IRS to prove you didn't.

Re:Well for starters (3, Informative)

TheRaven64 (641858) | more than 4 years ago | (#32398276)

It's also worth noting that the IRS is prohibited by law from sharing information with other government departments, so illegal immigrants can pay taxes, even admitting to being illegal on their tax return, without fear that this information will be shared with the immigration department. Apparently getting money from people is more important than enforcing laws.

Re:Well for starters (3, Interesting)

blantonl (784786) | more than 4 years ago | (#32398418)

's also worth noting that the IRS is prohibited by law from sharing information with other government departments,

Really? That is interesting... because the FBI needed to get ahold of me about an issue with my business, and they contacted my [b]accountant[/b] first.... presumably through my corporate tax returns. Why/how else would they have contacted my accountant?

Re:Well for starters (1)

causality (777677) | more than 4 years ago | (#32398444)

Apparently getting money from people is more important than enforcing laws.

Only when officials have to make a choice between them.

When they can, they avoid making such a choice. For example, speeding tickets. There they get to enforce the law while also making money.

Re:Well for starters (0)

Anonymous Coward | more than 4 years ago | (#32398478)

It's also worth noting that the IRS is prohibited by law from sharing information with other government departments, so illegal immigrants can pay taxes, even admitting to being illegal on their tax return, without fear that this information will be shared with the immigration department. Apparently getting money from people is more important than enforcing laws.

The government can't make it compulsory for people to file a tax return and give them information that might incriminate you unless they also promise not to use the information for law enforcement purposes. It's due to a little thing called the fifth amendment.

Re:Well for starters (3, Interesting)

peragrin (659227) | more than 4 years ago | (#32398506)

I suggest you read the history of Al capone. He was never tried for killing anyone. Instead he went to jail for not paying taxes on his speakeasies, and illegal liqueur sales.

I don't know why people fail to understand history the implications it has across time. I am personally waiting for the IRS to start cracking down on drug dealers. there are billions in taxes that are waiting to be collected.

Re:Well for starters (2, Insightful)

causality (777677) | more than 4 years ago | (#32398434)

it means that they will have to collect your Taxpayer ID number and then validate it.

so no illegal alliens can use E-bay.

Since they will be reporting SSNs to the IRS it will also be interesting if the law enforcement agencies sniff this for fugitives. Supposedly SSNs are not supposed to get used for law enforcement but they are.

I wonder how they will deal with people who claim not to be US citizens.

How to solve all of these problems in one fell swoop: dispose of the income tax, disband the IRS, eliminate the ridiculously lenghty income tax code, and replace all of them with the Fair Tax. A national sales tax (NOT the same as a VAT) has none of these problems, carries no need to track income, is much more difficult to cheat, is paid by foreign nationals who visit this country including illegals, is paid by people who deal drugs and other contraband not currently tracked by the IRS, and has a much lower cost of compliance to businesses than the current ridiculously complex tax code.

Why it won't happen: an income tax has one "advantage" (though not for us) over all other systems of taxation. It makes it very easy to use carrot-and-stick methods to manipulate behavior and to give kickbacks to your special interest buddies. A national sales tax, on the other hand, would apply equally to everyone whether or not they are your buddies and whether or not they behave the way you want them to.

Re:How's this news? (4, Insightful)

moosesocks (264553) | more than 4 years ago | (#32398120)

It's news, because the tax code does cover sales such as the ones on eBay and Craigslist, but the users have been notoriously non-compliant.

No news here, but no new taxes either. Just even-handed enforcement of the existing tax code.

I'm sure Goldman Sachs will thank you handsomely. (1)

Colin Smith (2679) | more than 4 years ago | (#32398350)

Or should that be China?

I'm never too sure these days with trillion dollar handouts and trillions in national debt.

 

Noncompliance (1)

Iamthecheese (1264298) | more than 4 years ago | (#32398484)

It is trivial to make ten different ebay accounts with ten different pseudoidentities and keep the total for each under $20,000 a year. It is trivial to then transfer the money to one's real account.

and... (1)

fyngyrz (762201) | more than 4 years ago | (#32398542)

...it will be trivial for them to demand your TIN, and jail you if you commit fraud.

They like to jail people. Done a headcount lately?

Change we can believe in? (0, Troll)

NaCh0 (6124) | more than 4 years ago | (#32398172)

You didn't think the change would be good, did you?

As that Sestak criminal would say, "The era of big government has returned."

Re:Change we can believe in? (1)

Improv (2467) | more than 4 years ago | (#32398530)

Sestak criminal? Do you know something we don't?

Governments do useful things, and they acquire funding for that through taxes. Eventually, online goods and services were going to be taxed - everyone knew that. Nobody thought the state was going to just wither and die, leaving us an ugly return to barbarism..

Cue all the teabaggers blaming Obama... (0, Troll)

Anonymous Coward | more than 4 years ago | (#32397944)

.. even though this has been brewing since 2004.

Re:Cue all the teabaggers blaming Obama... (5, Insightful)

tuxgeek (872962) | more than 4 years ago | (#32398492)

I work with some of those tea baggers. Sometimes I can't believe the stupid shit they say & think

Never mind:
* The record national debt run up by Smirky & Snarly
* The national/global economic crash caused by 8 years of complete republican control
* 2 Unwinable wars in muslim nations for the benefit of the American multinational energy and military industrial complex corporations

disclaimer for the trolls: I hate all politicians and believe they all need to be dragged into the street and shot as traitors

Re:Cue all the teabaggers blaming Obama... (2, Informative)

LynnwoodRooster (966895) | more than 4 years ago | (#32398600)

* The record national debt run up by Smirky & Snarly

Which clearly is resolved by increasing the deficit by an order of magnitude...

The national/global economic crash caused by 8 years of complete republican control

I think Senator Tom Daschle [wikipedia.org] (D - SD), Senate majority leader from June 2001 through January 2004 would disagree. As would Speaker of the House Nancy Pelosi [wikipedia.org] (D - CA, speaker of the house from Jan 2007 to the present) and Senate Majority Leader Harry Reid [wikipedia.org] (D - NV, from Jan 2007 to present). In fact, it seems that of those "8 years of complete republican control" about half of them saw divided Government.

2 Unwinable wars in muslim nations for the benefit of the American multinational energy and military industrial complex corporations

Which, apparently, the current Administration has decided to ignore and escalate, simultaneously.

We now return you to your partisan rant...

"Research" (0)

Anonymous Coward | more than 4 years ago | (#32397970)

"Research shows taxpayers do a much better job of reporting taxable income when they know the IRS is receiving information about their transactions."

lol

Re:"Research" (1)

noidentity (188756) | more than 4 years ago | (#32398072)

Research also shows that people are more apt to give muggers with guns money, than someone merely asking for spare change.

it's worse than that (5, Informative)

larry bagina (561269) | more than 4 years ago | (#32397974)

starting in 2012, businesses (that includes me and many other people who do work on the side) need to file a 1099 if you pay more than $600 [cnn.com] in goods or services from someone.

Re:it's worse than that (1)

JDAustin (468180) | more than 4 years ago | (#32398058)

Its not just businesses who would have to pay it. The "health care reform" law puts this on individuals also.

On the OP, the IRS is actually being reasonable here (yes, a stopped clock is right twice a day). The basically want there share from those running a online store for profit.

Re:it's worse than that (0, Troll)

fyngyrz (762201) | more than 4 years ago | (#32398508)

the IRS is actually being reasonable here

That statement is predicated upon the idea that taxing income is reasonable in the first place. That has never been shown to be true. It's a method that is bound to gain enormous complexity - as it has - as the definition of "income" is stretched and mutilated by the government.

It's long past time to simplify; right now, the costs of paying taxes added to the costs of collecting taxes and the privacy invasions of cross-checking for liabilities in normal (through banks, etc.) cash flow, are so onerous that huge numbers of people and businesses don't comply.

The mechanism needs to be changed to one where compliance is simple; validation requirements are enormously simplified; and the vast infrastructure of the IRS is not required, nor an echo of it at the state level.

What exists right now is not by any means "reasonable."

Re:it's worse than that (2, Informative)

LynnwoodRooster (966895) | more than 4 years ago | (#32398080)

Well what do you expect? If we're going to get a VAT tax you have to build in means of tracking every dollar of spending in the economy...

1099's have been around for a long time (1, Informative)

Anonymous Coward | more than 4 years ago | (#32398150)

So, what you're saying is that you've been avoiding/evading paying taxes in the past? The requirement for 1099s for $600 or more has been around for a long time. The fact that people are ignorant of the rules doesn't really change that. Yes, you as a payer now have a slightly increased paperwork burden to actually fill out the 3 boxes on the form (name& address, TIN, and dollar amount), but I don't see that it's a huge issue. It's not like there's a filing fee for the 1099s, and if you're *in business* then annual recordkeeping isn't a big deal, eh?

Re:1099's have been around for a long time (2, Informative)

LynnwoodRooster (966895) | more than 4 years ago | (#32398262)

So, what you're saying is that you've been avoiding/evading paying taxes in the past? The requirement for 1099s for $600 or more has been around for a long time.

If you actually KNEW the law you would know that you only had to report for individuals who you paid more than $600 in a year. Not for companies (sole props, LLCs, or corporations).

This new regulation means that if you buy a $600 color laser printer from Office Depot you need to issue Office Depot a 1099 tracking that purchase. And if you buy gas at Costco for your travel to your clients you probably have to issue Costco a 1099 as well. McDonald's for the food you buy. United Airlines for the air tickets. NewEgg for the computer equipment. Apple for the two development iPads. And on and on...

Re:1099's have been around for a long time (1, Informative)

HiChris! (999553) | more than 4 years ago | (#32398394)

This is not the case. The problem is the new law (1099-misc not the 1099-K) will require an extreme increase in paperwork. The $600 requirement is now for EVERYTHING you do - not just for salary and similar expenses. Make a purchase for something (goods or service) over $600 and you need to file paperwork - that means getting TIN for all sorts of places - hotels, office supply store, rent, and on and on. For a large company that electronically files everything - they'll simply hire a few people to take care of it. However the small business owner will have an exponential increase in paperwork. An estimate of the average number of 1099s a small business files is about 10-15 a year currently - under the new law this number for many small business will be well over 100 (and that estimate only included 1099s for services not goods so the actual number is probably more than double that). Even if each form only takes 10 minutes to file if the owner does it themselves that is 1000 - 2000 minutes a year (16 - 32 hours) many owners of small business already work long hours 60+ a week and an extra couple hours a month is ridiculous to put them through. If they pay an accountant or the like more money goes out of the business. In the US with the economy the way it is currently and unemployment the way it is - this could slow down hiring of new people and/or reduce incomes of business who have to hire someone to take care of it. Most of these businesses are complying with everything already - this is punishing the many for the (potential) fraud of the few. With the number of new IRS agents that will need to be hired - they'd be better off just enforcing the current laws and do some quick audits of suspicious businesses

Re:it's worse than that (4, Insightful)

PPH (736903) | more than 4 years ago | (#32398176)

I'm looking at this from a slightly different point of view. If I, as a small business, accept credit card payments, I'd be insane not to expect the IRS to have its hooks into data on my receipts. But if I pay someone $600 for stuff, the IRS is going to expect me to track this for them? That means I'll have to get taxpayer IDs from any vendor I buy stuff from.

Try this some time: Walk into a local shop, buy a load of crap and then whip out your 1099-K [irs.gov] form and ask them for their social security (or taxpayer ID) number. Odds are that the clerk will think you are nuts.

Re:it's worse than that (2, Interesting)

ducomputergeek (595742) | more than 4 years ago | (#32398258)

Our CPA is going to a seminar training session about this in June or July, but that was pretty much my response. If I go to Sams club and buy $600 worth of stuff for my house a year, which we probably do, I have to send Sams a 1099-K? What about the grocery store? What about Wal-Mart? Hell I spend $600 a month on basic needs. Hell I probably spend $600 a year at my favorite restaurant. Do I need to send them a 1099-K? Am I supposed to now itemize EVERYTHING I spend? I try to do that now for business expenses, but now if I walk into Walmart to buy a $3.00 can of shaving cream because I ran out that morning mean I have to keep track of all that shit?

Oh well, I guess that means we'll have to use plastic. "Visa, everywhere you want your purchases tracked....priceless."

Re:it's worse than that (1)

LynnwoodRooster (966895) | more than 4 years ago | (#32398300)

Don't forget the gas station. Or United Airlines. And the additional money spent with your CPA who now has to track all this extra activity. And he'll have to now report to the tax form printing company because of the exponential increase on 1099s. And that tax form printing company will have to report the paper supplier, who has to report the mill, who has to report the logger, who has to report the landowner...

Re:it's worse than that (1)

PPH (736903) | more than 4 years ago | (#32398446)

do, I have to send Sams a 1099-K?

No. You send it to the IRS. What you have to do (as a business) is to get Sam's TIN and record it on the 1099-K. But I don't think this will apply to individuals making purchases.

You think like a ReThuglican Jew (-1)

Anonymous Coward | more than 4 years ago | (#32398538)

You think like a ReThuglican Jew

Re:it's worse than that (1)

Itninja (937614) | more than 4 years ago | (#32398374)

That's why for all my side work, my best friends call me 'cash' ;)

This that to cover on line sales / that don't get? (1)

Joe The Dragon (967727) | more than 4 years ago | (#32398582)

This that to cover on line sales / that don't get taxed?

Re:it's worse than that (1)

NF6X (725054) | more than 4 years ago | (#32398598)

I suspect that it'll become much more common for bosses to say things like "Hey Bob, here's $750 in cash. Take a long lunch and come back with a printer."

Privacy (0, Offtopic)

Kohath (38547) | more than 4 years ago | (#32397978)

The IRS wants to know all about your online transactions. And unlike Facebook, the IRS will definitely use the information against you.

But where are all the people who love to complain about their precious privacy?

Re:Privacy (1, Insightful)

Anonymous Coward | more than 4 years ago | (#32398062)

I believe you're under-estimating Facebook.

Re:Privacy (2, Informative)

Nichotin (794369) | more than 4 years ago | (#32398090)

In Norway, the tax department actually have people employed to surf the popular sites like Finn and QXL (auction/trading sites), and even blogs, to try to uncover tax evasion. One of the most popular bloggers in our country, which is a 14 year old girl nicknamed Voe, probably has to pay taxes because she recieves so many free products from vendors (who hope to get get free advertising).

Re:Privacy (1, Interesting)

Anonymous Coward | more than 4 years ago | (#32398210)

You would think that the Supreme Court decision Roe v.s. Wade (which is normally applied towards a woman's "right to privacy" to have abortions) could be applied here. I don't tell my neighbors or friends how much I earn -- it is none of their business and something I consider private. I suspect just about everyone on Slashdot considers their income the same. Why should I tell the government how much I earn? This is especially the case when it has been shown time and time again that they can't keep things private. (Just look at how government employees got into "Joe the Plummer's private dealings with the government and released to the press how he owed back taxes as a way to discredit him.)

The government has no need to know how much you earn. There are alternative ways to collect taxes. For example, if there were a flat tax, it could be collected from the employer. An audit would simply consist of the IRS looking to see how much was paid in payroll and how much was paid in taxes and making sure that the numbers work. Deductions could then be handled by the individual sending in claims to the IRS who would send back a check for the appropriate amount. The only reason why the IRS needs to know how much you earn is to be able to make some people pay more in taxes than others. (Which I've always felt violated the "Equal Protection Clause" of the U.S. Constitution that holds that we are all supposed to be equal under the law.) A national sales tax too would keep the IRS from needing to know how much you (or anyone else) earns.

It is amazing to me that people hold that in the U.S. there is a right to privacy when applied to abortions but clearly don't feel that there is any sort of privacy when it comes to just about anything else.

Re:Privacy (2, Insightful)

0xdeadbeef (28836) | more than 4 years ago | (#32398310)

Preventing me from cheating on my taxes is working against me?

I guess all laws that inhibit me from doing what I want are working against me.

Deductions (1)

Nerdfest (867930) | more than 4 years ago | (#32397990)

Does this mean that I'll be able to deduct all of my capital purchases from my income tax, as I may later sell it on eBay? I bought the things with after-tax dollars in pretty much all cases, so I think I should be able to recoup any money made from selling it without paying taxes on it personally. Taxing the sale of used items is taxing twice, which doesn't seem right.

Re:Deductions (2, Insightful)

Nerdfest (867930) | more than 4 years ago | (#32398014)

Sorry, I do need to add that it's not like double taxation isn't done. In Ontario, every sale of a car is taxed. The government can make a lot of money on a car that is frequently sold. Motorcycles hang around so long, and people upgrade so frequently that I would bet the sales tax eventually collected exceeds the original price of the bike.

Re:Deductions (1)

dougmc (70836) | more than 4 years ago | (#32398416)

In Ontario, every sale of a car is taxed.

Texas does the same thing, and I imagine many other US states have done this too. To make matters worse, Texas recently made the value of a used car for tax purposes based on blue book value or something similar, so if you sell a used car, they'll look up the value as if it was in good condition -- even if the car has been totaled. You can get the car appraised and use that value instead of the looked up value, but that costs about $300 -- often more than the tax will be for an older car. Licensed dealers are not subject to any of this -- they still use the actual sales price.

In any event, the IRS wanting their cut is not a new thing. The only new thing here is that they're now watching more carefully -- beyond that, the rules are generally unchanged. If you make a profit, the IRS wants their cut -- it doesn't really matter how you made this money -- with very very few exceptions.

Re:Deductions (2, Informative)

meniah (186455) | more than 4 years ago | (#32398182)

You can (and should) deduct your IRS allowed capital purchases from your INCOME, not your income tax (deductions from your income tax are known as credits). If your purchases fall under the definitions of a deductible expense, than yes - you can deduct it from your taxable income (typically Schedule C, Section 179 and others). Depending on the expense, you will either take the entire amount for the year, or you will depreciate it over a period of time. When you go to sell it, if you make more money on it than you paid for it, than it's a gain - also reported on your Schedule C. If you lose money on it, the gain will generally be offset by the larger original investment. You are taxed on the NET gain. What you've described as double taxing is only happens if you don't declare the original expense. There's a lot more to it, so make sure to consult an accountant or tax attorney for your specific situation.

Re:Deductions (1)

cdrguru (88047) | more than 4 years ago | (#32398246)

What was mentioned wasn't a sales tax but income taxes. A store already (collects and) pays a sales tax on goods sold and then somewhere along the line pays an income tax on the money collected.

Pretty much in the US if you make over $600 a year you are subject to income taxes. Period. On just about every dime you bring in. If you aren't reporting it as income, you are a tax cheat and robbing the people that should be getting your redistributed wealth, or so they say.

Opt in taxes. (1)

areusche (1297613) | more than 4 years ago | (#32398012)

Will they make this as easy as claiming my earnings on black market goods like drugs and firearms? Maybe they should require stamps to be purchased for Ebay and Craigslist sales.

I like the concept of opt in taxes. That and I wish I could write off my net losses (heavy sarcasm).

You don't sell on Craigslist; you meet in person (5, Insightful)

noidentity (188756) | more than 4 years ago | (#32398024)

You don't sell things on Craigslist; you simply find buyers, meet, and sell it on your front porch (or somewhere in public).

Re:You don't sell on Craigslist; you meet in perso (0)

Anonymous Coward | more than 4 years ago | (#32398110)

Craigslist would be completely unenforceable -- there's no way to know if the sale was made, or for how much.

If they're going to tax us on the sales we make in these venues then they'll have to give us tax breaks for losses we make on sales in the venues; not just as offsets to other sales, but on our total income. Otherwise, this is a complete scam by the IRS.

Re:You don't sell on Craigslist; you meet in perso (1)

Plekto (1018050) | more than 4 years ago | (#32398414)

Not necessarily. A lot of businesses are forced to advertise in the "dealer" section for car sales. Expanding this to most of the other categories has been talked about by CL users for several years now, as they generally want to avoid businesses using CL as a source of free advertising. It would be fairly simple for CL to implement this and comply(at least on the surface) with the IRS' wishes. It would also reduce the spam by an enormous amount. As it is, you have to put at least half a dozen "-foo" modifiers in any search field to get rid of spam and junk.

Dear IRS: (0)

Anonymous Coward | more than 4 years ago | (#32398026)

Fuck off.

Sincerely,
The Aeerican People.

They can haul my ass to jail if they can find me. I'm not paying taxes any more. Irresponsible, greedy fucks.

Re:Dear IRS: (1)

meniah (186455) | more than 4 years ago | (#32398232)

..and by not paying taxes, that makes you better? Everyone benefits from something your taxes pay for.

Re:Dear IRS: (0)

Anonymous Coward | more than 4 years ago | (#32398332)

I bet the above poster would actually qualify for the EITC if he ever bothered filing

Don't use our roads then. (1)

Beelzebud (1361137) | more than 4 years ago | (#32398452)

When you're on the run, don't use any roads, sidewalks, or anything else tax money pays for. If you do, you're just leeching off society for a free ride.

Already taxable (2, Informative)

ig88b (1401217) | more than 4 years ago | (#32398038)

The income was already taxable, this will just help them find people trying to cheat the system. This is really no different than your bank reporting your interest paid on the 1099-int or one of the many other 1099 forms that are required to be filed by various entities.

Re:Already taxable (1)

LynnwoodRooster (966895) | more than 4 years ago | (#32398100)

Actually, selling your own personal goods is not subject to income tax, even if there is an appreciation in the value (unless the item was bought for the sole purpose of investment). Buy a cell phone every 3 months then upgrading and selling the old one does not mean you have to pay income taxes on the sales of those phones.

Re:Already taxable (1)

ig88b (1401217) | more than 4 years ago | (#32398152)

Actually, selling your own personal goods is not subject to income tax, even if there is an appreciation in the value (unless the item was bought for the sole purpose of investment). Buy a cell phone every 3 months then upgrading and selling the old one does not mean you have to pay income taxes on the sales of those phones.

And if you actually read the details, you have to sell over $20,000 and have 200 transactions in order for it to be reported. This is not for people who sell their cell phone every 3 months.

Re:Already taxable (5, Insightful)

LynnwoodRooster (966895) | more than 4 years ago | (#32398228)

And if you actually read the details, you have to sell over $20,000 and have 200 transactions in order for it to be reported. This is not for people who sell their cell phone every 3 months.

$20K is nothing; I can sell my classic car in my garage and exceed that amount. And since the regulations are not yet written (1099K is still in draft), the "and 200 transactions" is still up in the air. Knowing the desire for tax revenues, my opinion is that it'll end up being $20,000 OR 200 transactions.

Additionally, if I sold my classic car for $25,000 (about what it's worth, and about about what I've put into it over the years), and had two garage sales where I sold a lot of my old clothes, computer parts, records, and trinkets (easily beyond 200 items), I could end up having to report. Having 50 transactions at a single garage sale is not that uncommon; having 4 garage sales a year (especially if someone is out of work and looking to raise money by selling assets) puts you into this new "you're a business even though you aren't" category.

Re:Already taxable (1)

IntlHarvester (11985) | more than 4 years ago | (#32398448)

Since we're arguing by anecdote, there's people in my neighborhood who have been holding a weekly "estate sale" for the last two years. They're clearly running an antique business out of their garage, shouldn't they be paying taxes?

As a practical matter the IRS doesn't care about your garage sales, either online or off. Anyone who has bothered using eBay in the last 10 years knows that the place is dominated by small businesses selling new items. And there's no reason these people should have a tax advantage over their competitors just because they're operating under the semi-anonymity of eBay.

Re:Already taxable (1)

EmagGeek (574360) | more than 4 years ago | (#32398242)

If you sell a car for $25,000 on ebay, it would have to be reported, even if you are just selling your personal vehicle for less than you paid for it.

Re:Already taxable (1)

gnasher719 (869701) | more than 4 years ago | (#32398410)

If you sell a car for $25,000 on ebay, it would have to be reported, even if you are just selling your personal vehicle for less than you paid for it.

Obviously you won't have to pay any income tax.

Re:Already taxable (2, Funny)

Rockoon (1252108) | more than 4 years ago | (#32398532)

You have a receipt for that 40 year old classic Rolls Royce you picked up in college?

Re:Already taxable (1)

Rockoon (1252108) | more than 4 years ago | (#32398500)

To quote the fucking article:

"Some of these sellers may unwittingly be operating businesses, which could trigger tax consequences."

Unwittingly operating a business! For christ sakes, how is that even possible?

Unless the phrase "Ooops! I didn't know that I was operating a business!" jives with your world view, you cannot buy into the 'we just want to catch tax evaders' bullshit.

Abolish the IRS! (1, Insightful)

fustakrakich (1673220) | more than 4 years ago | (#32398050)

Of course anybody who says that is labeled a loony teabagger... Good job guys... Effectively discrediting all opposition to the government was the plan all along, wasn't it?

Re:Abolish the IRS! (0)

Anonymous Coward | more than 4 years ago | (#32398428)

Apparently they're still hard at work discrediting the opposition by modding you troll.

Re:Abolish the IRS! (1)

clarkkent09 (1104833) | more than 4 years ago | (#32398474)

Effectively discrediting all opposition to the government was the plan all along, wasn't it

I wouldn't say that the tea partiers are being discredited effectively. Polls show that about 35% of Americans either strongly or moderately support the Tea Party movement (that's 105 million people). Only 16% are strongly or moderately opposed. It shows in recent primaries as well. Just because on /. for some reason any post remotely supporting conservative views is immediately modded down doesn't really mean anything, it is the /. that is odd here.

As for abolishing the IRS, you can't do that. Who will collect the taxes? What we need is a simplified flat tax system (as per the contract: http://www.thecontract.org/the-contract-from-america/ [thecontract.org] ) like they have in just about all of the eastern European countries and they've been growing steadily (not that that's the only factor of course).

Re:Abolish the IRS! (4, Insightful)

Improv (2467) | more than 4 years ago | (#32398550)

Flat taxes are disproportionately hard on low-income earners, while they give the wealthy a huge break. They're not fair, stop pushing them.

Good! (0)

Anonymous Coward | more than 4 years ago | (#32398086)

Selling online shouldn't be taxed differently than regular sales.

If you occasionally sell stuff that you own, then you (generally) aren't running a business, and not subject to tax.

If you are running a business (even a small one) selling stuff online, then you should pay tax like other businesses.

There is a long history of existing jurisprudence that determines whether you are a business or now.

And running a business isn't that bad, since you then get to write off many of your business costs.

business opportunity (0)

roman_mir (125474) | more than 4 years ago | (#32398096)

Some would say 'crisis', but I see a business opportunity brewing in this. A darknet like sale system hosted outside of the US with out of US transaction and exchange mechanisms.

BTW, the 'citizens', I mean the consumers of the 'land of the free' are having real problems with trying to open offshore bank accounts, credit lines and the latest of these is that any foreign hedge funds are no longer allowed to advertise to US consumers. The government is tightening the grip on the people's money and freedoms. Eventually the exchange controls will be implemented, gold will be again illegal to do transaction in, the taxes will be exorbitant, the interest rates will go through the roof, the price controls will kick in and this will lead to shortages of everything, including food, which will of-course give the government the always bright idea of collectivization of the farmers, food products confiscations etc. The borders will shut down not to prevent anybody from coming in but to ensure that nobody can leave.

That will be the result of the Keynesian experiment, free money, no interest rates to the banks, printing of money, minimum wage laws, unions, social programs, the end of the cold war and globalization of economy, trade deficit, death of the free markets... the end will look a lot like the beginning of the socialist revolution in post tsar Russia.

Re:business opportunity (1)

Bysshe (1330263) | more than 4 years ago | (#32398280)

wow, paranoid much?

Taxes aren't evil - they pay for your lifestyle. If you don't want to pay them, get the government to spend less.

Re:business opportunity (2, Insightful)

roman_mir (125474) | more than 4 years ago | (#32398360)

Taxes pay for my lifestyle?! I am paying for my lifestyle, with all the work and all the bills.

Bankers, those get paid for their lifestyle from the Fed but not from taxes, purely from a money printing press.

Re:business opportunity (1)

Bysshe (1330263) | more than 4 years ago | (#32398388)

if you drive, you use roads. if you go outside, police are there to protect you (unless you're in LA, then they're there to brutalize you). your taxes are going to secure oil sources around the world. your taxes go to subsidize corn which is in nearly every product you consume.

Yes, your taxes go to your lifestyle.

Re:business opportunity (1)

Beelzebud (1361137) | more than 4 years ago | (#32398470)

Yes because you are an island that brought yourself up without any intervention from society. I'm sure you've NEVER used anything paid for by tax money!

Re:business opportunity (1)

gothzilla (676407) | more than 4 years ago | (#32398466)

You mean they pay for other people's lifestyles, specifically the rich friends of politicians who recieved trillions in stimulus money and the lazy who feed off of the welfare system. If we stopped giving money to those two groups then everyone's tax burden would drop like a rock.

Re:business opportunity (1)

Bysshe (1330263) | more than 4 years ago | (#32398546)

The US enjoys one of the lowest tax burdens in the western world already. What you see as hugely wasteful (yes, the wars and the bailouts certainly were that) is a drop in the bucket compared to the taxes that actually go to things you use.

with a handle like gothzilla, you've obviously attended the public school system. That was also paid for by taxes. As is much of the medical research that has kept Americans from dying from McDonald's induced coronaries.

The lazy who feed off the welfare system are also just a miniscule percentage

A much much larger chunk goes to the retirees and their medicare.Example: "In 2004 Social Security, Medicare and Medicaid were 8 percent of national income." [washingtonpost.com] Taking an average 25% tax rate, that means 32% of your taxes went to these benefits.

Removing the two groups you just mentioned would not drop your tax burden in reality. It would just balance the budget and maintain what you have now... instead of what will happen in the near future: tax hikes.

Re:business opportunity (0)

Anonymous Coward | more than 4 years ago | (#32398390)

That is one possibility. Another is that all the shitasses selling chinese crap on ebay will start paying their taxes and nothing else will change.

Offshores? (0)

Anonymous Coward | more than 4 years ago | (#32398144)

Wouldn't this just mean someone will make an auction site not run in the US and therefore not required to report to the IRS?

Sounds like the perfect opportunity to compete with ebay and/or craigslist

Re:Offshores? (1)

meniah (186455) | more than 4 years ago | (#32398250)

It does, though I don't see it being able to solve the problem. You still have to pay taxes being an American citizen. Oh, you mean evading being reported to the IRS by using an international 3rd party? Now you've committed a felony. Problem not solved.

Re:Offshores? (1)

LynnwoodRooster (966895) | more than 4 years ago | (#32398346)

Hey, you can even try working overseas, living overseas every day of the year, but then the IRS still demands their cut, even if you paid taxes on it already in your new country of choice! Uncle Sam wants it all, no matter where or how you earned it, or even if you've already paid taxes on it two or three times...

Re:Offshores? (0)

Anonymous Coward | more than 4 years ago | (#32398570)

Not quite, unless you live/work in a country that taxes your income less than Uncle Sam. I am unaware of such a country, living in one that has higher tax rates. So, while I have to file each year with the IRS, I don't have to pay them anything...

Just sayin'

Just straighten this up (0)

WindBourne (631190) | more than 4 years ago | (#32398174)

I am tired of complex and complicated taxes. The overhead from processing it hurts business more, than does the actually tax.

Obama/Dems should push a FIXED tax on ALL on-line goods for some amount (say 6%). Then have the feds take a set amount( say 3), and then the rest goes to the state. If the state does not want it, then it remains with the feds. In the states, they decide how to divy it up (states vs. local area). The point being that the costs of the accounts and complex IRS are worse than the overhead of the tax.

Already paid taxes on those items once before... (1, Interesting)

Anonymous Coward | more than 4 years ago | (#32398190)

We have already paid enough taxes on the stuff we already own. If tax paying citizens want to sell something that they have already had to pay a sales tax to get, we should be exempt from any further taxation on said items. Am I missing something here, or is this just another greedy stab from our darling government???

Re:Already paid taxes on those items once before.. (1)

jwdav (1003969) | more than 4 years ago | (#32398552)

For casual users buying and selling on eBay, especially selling at less thn first paid, I would agree with not paying taxes. This is targeting people operating ongoing online businesses that compete with offline businesses, yet pay no state, federal, local or sales taxes. Either all reselling should be tax free, or all taxed - what's going on now is unfair to businesses that do pay taxes & duties.

It's worse than it looks. (4, Insightful)

John Hasler (414242) | more than 4 years ago | (#32398192)

All businesses no matter how large or how small or informal will have to file a 1099 for every entity to which they pay more than $600 in payments for goods and/or services in a year. This includes everything: the part-time plumber, your landlord, the power company, Office Max, WalMart, etc. You are going to have to get Best Buy's TIN if you purchase a server from them. The average USA small business will need to file about 600 every year.

Re:It's worse than it looks. (2, Interesting)

PPH (736903) | more than 4 years ago | (#32398378)

will have to file a 1099 for every entity to which they pay more than $600 in payments for goods and/or services in a year.

...for every US entity to which they pay ....

If I purchase stuff from a foreign entity, there is no such requirement. What they earn is between them and their taxing authority. But that authority doesn't get me (the customer) involved in tracking these transactions. So, all other things considered, I'm better off buying my stuff overseas. Since 'my stuff' is software and online services, there are no added shipping costs. And I save all that time managing 1099 forms.

I see our online services business moving off shore in the near future.

Loophole / workaround (1)

bobdotorg (598873) | more than 4 years ago | (#32398214)

What's to stop someone from having multiple eBay / PayPal accounts? Will keeping each of them under $20k or 200 transactions prevent reporting?

Also, how the hell is Craigslist supposed to do accounting for anonymous ads?

Re:Loophole / workaround (3, Insightful)

fyngyrz (762201) | more than 4 years ago | (#32398424)

What's to stop someone from having multiple eBay / PayPal accounts?

How about having to give your taxpayer ID number (SSN for most of you... yes, that same SSN they promised not to use for anything but your retirement accounts, you stupid suckers) to Ebay for starters. Then, when you try to open account #2, they say, oh, wait, we already have an account for that TIN, sorry, no more accounts for you.

Fake TIN/SSN? Jail.

Don't worry; while the government isn't bright enough to keep from screwing the citizens, it is bright enough to keep the majority of citizens from screwing it.

It's just going to keep getting more and more like this. They conned the public, and the supreme court, into giving up 4th amendment guarantees on privacy a long time ago -- no legal recourse remains.

Re:Loophole / workaround (1)

gnasher719 (869701) | more than 4 years ago | (#32398464)

What's to stop someone from having multiple eBay / PayPal accounts? Will keeping each of them under $20k or 200 transactions prevent reporting?

I don't know how the US IRS works; in the countries that I know that kind of action, when found out, would make you enemies in the IRS. And that is not a good idea, since nobody in the whole world is hundred percent correct in all their tax affairs, and by pulling a stunt like this you would make it obvious that any incorrectness on your part is not an innocent mistake but an attempt at tax evasion.

That's why ebay and craigslist will need your SSN (0)

Anonymous Coward | more than 4 years ago | (#32398480)

In the same way, and for the same reasons, that banks refuse to allow you to open a bank account without your SSN/TIN eBay and Craigslist will now "have" to insist that you provide your SSN/TIN in order to establish (or continue) any userid (account) with them. Even old-school media like newspapers will now insist you provide your SSN/TIN as part of placing a classified ad.

Knowing eBay, they will require this even from people who have never placed an auction rather than establishing it as a pre-requisite for placing an auction (which is really the only time they would need to know it to permit them to comply with the new law).

In case that wasn't clear for you ... NO MORE ANONYMOUS ADS.

I'd just like to say (3, Funny)

Vinegar Joe (998110) | more than 4 years ago | (#32398234)

Fuck the IRS.

Sales Tax Makes No Sense (1)

SplicerNYC (1782242) | more than 4 years ago | (#32398244)

Well, it makes sense that a government entity wants more money but the logic of a sales tax escapes me. If I'm buying something, the person who is taking my money is making income and therefore paying taxes on it. So a sales tax is a tax paid by the buyer for the privilege of being allowed to buy something? Makes no sense.

Why is income reported twice? (1)

techmuse (160085) | more than 4 years ago | (#32398268)

When you earn income from a job or investments, that income is normally reported to the IRS. But then you have to report that same income yourself. Why is the data not just sent straight to the IRS, which could automatically calculate your tax bill?

Re:Why is income reported twice? (1)

LynnwoodRooster (966895) | more than 4 years ago | (#32398326)

It's called penalties and interest of which the IRS makes a good amount of income from. If you - or the person reporting on you - mess up then you've created a situation where you are subject to high fees and interest on the error. Unless of course you are a high placed Government official like Tim Geithner or Charlie Rangel. Then it's just a simple mistake and not a problem at all...

Re:Why is income reported twice? (1)

The Snowman (116231) | more than 4 years ago | (#32398400)

When you earn income from a job or investments, that income is normally reported to the IRS. But then you have to report that same income yourself. Why is the data not just sent straight to the IRS, which could automatically calculate your tax bill?

Two reasons.

First, you don't know exactly what the IRS knows, so you are more likely to report everything, even stuff the IRS doesn't know -- the government makes more money. Second, and this follows from the first, it keeps people more honest and less likely to cheat.

Besides, do you really want to trust the government to calculate your taxes? The government wants all of your money -- it is in your best interest to prevent them from taking it, by any means legally possible.

Re:Why is income reported twice? (1)

rotide (1015173) | more than 4 years ago | (#32398512)

You lost me. First you state that the government doesn't really know how much you owe them (read: they are probably low-balling the figure) then you go on to say that they will charge you more than you're due; "government wants all your money".

It can't be both ways.

I'd rather the government take all the information that is already forwarded to them via work and they can just tell me what to send in (if anything). If they owe me, use the bank account I setup last year or ask for a new one.

Umm. I wouldn't be opposed to them taxing (1)

melted (227442) | more than 4 years ago | (#32398282)

Umm. I wouldn't be opposed to them taxing the _profits_, not gross sales. Particularly if they let me deduct the losses when I sell something for less than I paid for it a month ago.

About time! (1, Insightful)

hackel (10452) | more than 4 years ago | (#32398342)

Those people have been scamming the system for far too long, I'm very glad to hear this. Unfortunately they're still not doing enough to go after the mega-corporations and their thousands of tax loopholes.

Oh noes! What will the teabaggers do now? (0)

Anonymous Coward | more than 4 years ago | (#32398348)

Guess the teabaggers will have to take a break from selling each other useless shit on eBay and rely on their government checks to pay for signs objecting to "socialism".

Re:Oh noes! What will the teabaggers do now? (0)

Anonymous Coward | more than 4 years ago | (#32398520)

"Teabaggers"? Since you seem to know so much about it, why don't you tell us of your teabagging experiences? And do you swallow or spit? I'm betting you swallow.

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