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IRS May Ask eBay To Snitch On Sellers

kdawson posted more than 7 years ago | from the taxman-cometh dept.

The Almighty Buck 418

Makarand writes "The IRS thinks that many sellers on online auction sites are unaware of their obligation to declare their profits and pay their taxes to the IRS. Tax experts are now asking the IRS to require online auction sites like eBay, Yahoo, and Ubid to report the gross sales numbers for their sellers. Such a requirement will surely send a shock wave across the online trading world because it could drastically reduce the profits a seller would make on these sites. The IRS thinks it can collect an extra $2 billion in taxes from this requirement that auctioneers report sellers who complete 100 or transactions a year worth at least $5,000."

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418 comments

It's really simple..... (2)

Marthisdil (606679) | more than 7 years ago | (#18139002)

Just figure out how much you paid for said item originally, sell item for less (many times), you get to reap the deduction....Now, dunno how depreciation rules work for some items...so you'd have to check on that....but it seems simple that if you paid more for something than you are now getting selling via ebay...

But yeah - they should pay taxes on the things like buying a pack of cards for $3....and selling a rare one for $30 just because they got lucky...all about capital gains baybee...

Re:It's really simple..... (2, Interesting)

Chmcginn (201645) | more than 7 years ago | (#18139172)

The catch here is that if you're audited, they (through Ebay) will have the proof you made, say, 10000 dollars last year selling stuff on Ebay. But you have to provide the reciepts proving that you spent 8000 (or 11000, or whatever) acquiring those goods for sale.

Re:It's really simple..... (4, Interesting)

Anonymous Coward | more than 7 years ago | (#18139200)

Yeah, I'm a little unclear on what happens if you don't have those receipts. Sorry, Uncle Sam, I don't have the receipt for the DVD player I bought back in 2001 for $599 and just sold for $100. If you insist on assuming that my basis in the DVD player was $0 and tax me on the whole $100, you can bet I will find a way to make up for it elsewhere.

Bring it on.

Re:It's really simple..... (1, Informative)

Anonymous Coward | more than 7 years ago | (#18139530)

According to the IRS, if you can not prove how much you paid for the item, then the ENTIRE resale value of the item is considered taxable income.

If the IRS tries to tax eBay transactions, people will just move to craigslist...or go back to yard sales.

Re:It's really simple..... (1)

twiddlingbits (707452) | more than 7 years ago | (#18139568)

They can use Fair Market Value based on the value of the DVD player today. Sorry if that means you pay more taxes but thats the way it is if you don't have the paperwork.

Re:It's really simple..... (0)

Anonymous Coward | more than 7 years ago | (#18139772)

Which is fine, because I can make a good case that "fair market value" of an item is exactly what I just sold it for in a fair market, e.g., eBay.

Unfortunately, my understanding is closer to that of the other reply; that is, if there's no original receipt, it's all taxable income.

Re:It's really simple..... (1)

anagama (611277) | more than 7 years ago | (#18139642)

With a 100 sale floor on reporting, I think you're safe. Unless you happened to buy 101 of those DVD players way back in 2001.

Re:It's really simple..... (1, Insightful)

Anonymous Coward | more than 7 years ago | (#18139776)

To some extent, the threat of making you bring it all in as taxable income is supposed to encourage you to keep track of the basis (cost) of your DVD player. If you were ever audited and you sold just that dvd player, or maybe you cleaned out your entire stereo cabinet, they may do something that'd sting a little, but probably not make you take the full 100 as income.

However, if in that year you sold 100 DVD players and said "sorry, no receipts," you can expect the full 10k as income. Plus penalties and interest, likely.

The whole point of this request by IRS is to ensure compliance by people running businesses on ebay, hence the $5k limit.

Did you know if you buy $5,000+ of goods from a business that you're planning on reselling... THEY'RE supposed to 1099 you for that?

I'm not in the USA (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#18139026)

So you can fuck off and die.

In that case, (0)

Anonymous Coward | more than 7 years ago | (#18139106)

I'm taking you off my Christmas list.

+ tax (2, Interesting)

iknowcss (937215) | more than 7 years ago | (#18139028)

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax? And who decides how much tax is paid? States? The National Government? (Please excuse my ignorance in American Government policies)

Re:+ tax (5, Informative)

LFS.Morpheus (596173) | more than 7 years ago | (#18139066)

I believe they're after income tax - the amount of tax would be decided by the existing income tax code. It is likely that most eligible eBayers would be considered operating their own business (self-employment) and would need to report their income (and expenses) on a 1040SE.

Reporting of this income might also lead to sales tax as well, but that is collected by the state, not the IRS. In addition, this is the responsible of the buyer to pay, not the seller, unless the buyer and seller are in the same state.

Dislaimer: I'm not a tax expert, but I play one when I talk to my friends into letting me do their taxes. :)

Re:+ tax (4, Funny)

pla (258480) | more than 7 years ago | (#18139128)

Dislaimer: I'm not a tax expert, but I play one when I talk to my friends into letting me do their taxes.

Need any new friends? ;-)

Re:+ tax (0)

Anonymous Coward | more than 7 years ago | (#18139630)

Someone help me with this: isn't the concept of the federal government fretting about individual citizen income
  • A trampling of state's rights
  • A significant invasion of privacy
This is not a libertarian argument; I'm not as much arguing against taxation per se as pointing out what, in a software project, would amount to some lousy factorization.
With the current outcry against BeelzeBush teh neo-Hitler Chimp, it seems that the left, had they hair #1 in a useful location, would be arguing to curb Federal power, starting with taxation.

Re:+ tax (0)

omeomi (675045) | more than 7 years ago | (#18139256)

It is likely that most eligible eBayers would be considered operating their own business (self-employment) and would need to report their income (and expenses) on a 1040SE.

If you're selling old stuff for less than what you paid for it, it's not income. While there are several people that run eBay-based businesses, I would imagine that the majority of the eBaying population just uses eBay to sell old stuff that they don't want anymore, which doesn't constitute income.

Re:+ tax (1)

Stewie241 (1035724) | more than 7 years ago | (#18139370)

I would have said the opposite... eBay seems to have been taken over by online retailers using an auction format (or Buy-it now) to open a store front. I think this would apply to many many people. I'm sure some are already claiming their income, but for those that aren't...

Ian

Re:+ tax (0)

Anonymous Coward | more than 7 years ago | (#18139658)

I'm sure some are already claiming their income, but for those that aren't...

I have zero problem with the IRS collecting the taxes that are due. If the summarizer of this article thinks I'm going to feel bad for criminals who aren't paying their taxes they are barking up the wrong tree.

Re:+ tax (1)

LFS.Morpheus (596173) | more than 7 years ago | (#18139418)

Yes, that is absolutely correct, which is why I also said eligible. This provision says they want people who do more than 100 transactions or more than $5,000 - the $5,000 limit doesn't quite seem appropriate but I would guess that most people who do >=100 transactions a year are probably doing it for profit. I do wonder if we would see a "cost basis" field when making an auction to track profit.

Re:+ tax (3, Interesting)

Ucklak (755284) | more than 7 years ago | (#18139308)

If it's going to come to State tax, you might as well do Craigslist and avoid the Ebay tax altogether.

Re:+ tax (1)

TheSkyIsPurple (901118) | more than 7 years ago | (#18139498)

I'd be curious how it'd go with the income tax bit. I've never sold anything on eBay for more than I paid for it.
I've always taken a loss, but I have no real way to prove it.

Closest I could some to would be to try to find an archived catalog of the item, since I know I bought it new.

Re:+ tax (0)

Anonymous Coward | more than 7 years ago | (#18139070)

You don't just "charge sales tax". Sales tax is demanded by the equalization board. I'm sure they'd love to tax everyone both ways. Sales tax and income tax. Both go to the govt. :( :( :(

Re:+ tax (1)

ack154 (591432) | more than 7 years ago | (#18139072)

It'll probably be an option at some point (if it isn't already). The trouble is that sales tax varies by state/county. So if they leave it open for the seller to put in a % of their choice, buyers will pretty much get screwed on it just like they do on shipping (you know, like charging $10 to ship a dvd via media mail?). It would have to be something automatically added as needed per the buyer's ship to address and the tax rate for that location.

What a PITA that would be though.

Re:+ tax (1)

chaoticgeek (874438) | more than 7 years ago | (#18139080)

It varies by state and local government... National, State, and local each have their own they tax. In my home town they have an extra 1.5% above the city where I go to college.

Re:+ tax (4, Informative)

patio11 (857072) | more than 7 years ago | (#18139112)

Sellers already have to charge sales tax in some circumstances but for small non-corporate sellers compliance is nil. This is an income tax issue, though, not a consumption tax issue. For example, if I make say $50,000 a year and am hypothetically paying a marginal 30% on additional income, if my bosses give me a $5,000 raise I lose the first $1,600 or so to taxes. However, if my eBay business profits $5,000 and I don't declare it I get that $5,000 taxfree. (If I do declare it I actually end up paying MORE than $1,600 due to self-employment tax but thats another matter altogether.) I suppose you COULD raise prices to compensate for this but you can't call it a sales tax surcharge and, indeed, with the amount you'd have to raise prices people would likely go spare if you tried.

Signed,

Guy who actually did pay taxes on his web-based small business this year

Re:+ tax (1)

dubl-u (51156) | more than 7 years ago | (#18139126)

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax? And who decides how much tax is paid? States? The National Government? (Please excuse my ignorance in American Government policies)

This is not a new tax. The IRS is just saying that people are required to pay income tax, and that they believe that a lot of eBay sellers are failing to do that. In the US, the federal government is the main collector of income tax, but many states have one as well.

Sales taxes are purely a state and local matter. That's another big loophole. If I buy a computer locally, I pay sales tax, and it is collected automatically by the vendor. If I buy one from out of state, I am still obliged to pay the tax, but it is not collected automatically. At the end of the year on my state taxes, I'm supposed to declare and pay for the computer purchase. In practice, most people don't.

Re:+ tax (1)

nmb3000 (741169) | more than 7 years ago | (#18139152)

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax? And who decides how much tax is paid? States? The National Government?

IANAA, but I believe any revenue generated by selling items via online auction would simply be added to your gross income for the year. You would add it to any other income (working, tips, bank account interest, investments, etc) and then figure you state and federal taxes as normal.

The issue strikes me as "no duh" and "simply a matter of time". As online commerce has grown of the last decade, I'm surprised they didn't go after that income sooner. There's nothing really wrong with it (unless you don't believe in paying taxes in the first place), but the execution of the idea might be a little more difficult. Tracking users and equating them to SSN might be kinda tricky.

Sellers could add sales tax I suppose, to try and cover their taxes, but I don't think it will cause a huge upheaval in online auctions. That widget you want on eBay will still cost $0.99, but now you need to add the obligatory $40 shipping cost and $20 in arbitrary "sales taxes".

Re:+ tax (1)

anagama (611277) | more than 7 years ago | (#18139696)

Don't forget the self employment tax, i.e., social security/medicare. That's 15% off the top. Then you get to income tax.

Re:+ tax (1)

AK Marc (707885) | more than 7 years ago | (#18139206)

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax?

There is no new tax. Income tax is paid by all people that run businesses (well, at least those that are profitable). Many people selling on ebay are running businesses, but are lying on their 1040 forms regarding income. The IRS is looking for one and only one thing, the ability to track people that lie on their tax returns. If you aren't a liar, then you have no new tax and nothing to fear.

Re:+ tax (1)

Zordak (123132) | more than 7 years ago | (#18139586)

Does this mean that sellers will now add a "sales tax" to what they're selling in order to compensate for this new tax?
It's actually not a "new" tax---it's tax on income you're obligated to report anyway. Ironically, if you add in tax to the sale price to compensate for the tax you'll have to pay, it's deemed income (because you got somebody else to pay your tax obligation). So the IRS will tax you on that. But then if you get somebody to pay THAT tax for you, they leave you alone, because that's what they had to say to win the case where this came up.

Re:+ tax (1)

Americano (920576) | more than 7 years ago | (#18139700)

Not really a sales tax... a sales tax is typically added as a % of the cost of the product, and goes directly to the state in which the tax is levied.

This is an income tax, which means that of the profits a person makes, they will need to declare that income on a tax form, and pay a % of that to the government as taxes. In effect, the government is coming along and saying, "Yes, you owe us 20% of that income as taxes." This isn't really a "new" tax, as you're supposed to declare all income on your yearly tax forms. What it sounds like is an enforcement effort to collect taxes from people who aren't currently paying them.

Net result is that this will force the smaller-volume sellers to either raise their prices to offset the chunk now going to taxes, take less profits (20% goes to taxes, effectively reducing their income by 20%), or simply close up shop because they can't maintain a reasonable profit margin while paying taxes.

what to do with it? (0)

Anonymous Coward | more than 7 years ago | (#18139034)

And extra $2 billion, huh? So we can just throw it away in the middle east or something? Ya, good idea.

So.... (3, Insightful)

whoop (194) | more than 7 years ago | (#18139044)

Just create multiple accounts, each keeping within the $5000 annual limit. Take that IRS!

Re:So.... (3, Insightful)

Anonymous Coward | more than 7 years ago | (#18139094)

Too bad tax evasion is a crime, huh?

Re:So.... (3, Funny)

Anonymous Coward | more than 7 years ago | (#18139456)

Too bad tax evasion is a crime, huh?
So is anything but Missionary Position in some states, what's your point?

Re:So.... (1)

chaoticgeek (874438) | more than 7 years ago | (#18139108)

But since they are all yours you would still have so much over the limit even with multiple accounts. I don't think it works that way when you have multiple accounts, otherwise I think more people would already do that.

Re:So.... (1, Informative)

Anonymous Coward | more than 7 years ago | (#18139116)

What annual limit are you talking about? All income is reportable and taxed regardless of your age and amount. I guess if Ebay was your only source of income and you made a little money, you would not be taxed very much but your income from sales will just add to your overall income you made that year, just like all income from interest is taxed, regardless if you made $10 or $10000 in interest.

Cool as long as Europeans stop getting (3, Insightful)

Timesprout (579035) | more than 7 years ago | (#18139052)

fucked over for US sales tax.

Re:Cool as long as Europeans stop getting (3, Informative)

JeffSh (71237) | more than 7 years ago | (#18139130)

can you site a case where europeans pay a state sales tax? I don't think i can think of any situation where they would.

Hell, I live in Michigan and even I don't have to pay state sales taxes.

If someone is charging a european a US State sales tax on a mail ordered item, they are pocketing the money. That makes them a reseller of questionable moral character.

Re:Cool as long as Europeans stop getting (1)

LFS.Morpheus (596173) | more than 7 years ago | (#18139176)

Not sure what you're getting at--Europeans should never be charged sales tax from any state (there is no national US sales tax). This won't encourage or discourage sellers collecting sales tax from those people who they shouldn't be collecting from in the first place.

Re:Cool as long as Europeans stop getting (1)

adrianmonk (890071) | more than 7 years ago | (#18139230)

It would be nice if you were to explain what you mean by this. Are you saying that Europeans pay US sales tax when they buy items online at a US company and have them shipped to Europe?

I would be very surprised if this were the case. I live in the US, and if I order from a web site in some other state, I don't pay any sales tax, because the order is coming from out of state. It's thus interstate commerce, and I believe that states do not have the legal authority to tax that.

In the US, sales tax is not figured into the price and is added as a separate line item, whereas in some (most?) places in Europe, it is included in the price. Is it possible that this difference in customs is leading you to believe you are paying US sales tax when you are actually not?

Stop putting the first half of (1)

nmb3000 (741169) | more than 7 years ago | (#18139242)

your reply in the subject line.

And when have Europeans had to pay a "US sales tax"? Considering the US does not have a federal sales tax, you must be referring to a state's sales tax. However, if you order something online and specify a delivery (or perhaps billing) address that is *outside* the US, that tax won't get applied. Last time I checked, Europe wasn't in a US state. Of course if you buy something and ship it to a friend/relative/whatever in the US, you might then have to pay sales tax depending on the state. When I lived in Montana, I didn't pay sales taxes for anything online. Now I'm in Utah, I do, and it blows.

Besides, I have one word for you: tea :)

Re:Cool as long as Europeans stop getting (1)

fuego451 (958976) | more than 7 years ago | (#18139484)

But, but we have a long and glorious history of fucking over Europeans.

Re:Cool as long as Europeans stop getting (2, Funny)

R2.0 (532027) | more than 7 years ago | (#18139728)

The US history of fucking over Europeans only dates back to the beginning of the Bush administration - for some an eternity, but really only 6 years. I'll even give up 60 years, to post WWII - we all know the Marshall plan was just a big conspiracy.

The history of Europe fucking over the rest of the world goes back over 2000 years - Rome, Crusades, Colonialism. Find me a speck on the globe that wasn't exploited by some European.

Is there some law? (2, Interesting)

Frosty Piss (770223) | more than 7 years ago | (#18139056)

I'm not upon this stuff, but is there some law that says everything has to be taxed?

Re:Is there some law? (1)

AvitarX (172628) | more than 7 years ago | (#18139090)

If you make money it is income.

Income is taxed.

Re:Is there some law? (2)

JeffSh (71237) | more than 7 years ago | (#18139164)

in this case it's about taxing a business, so more accurately it's the profits that are taxed.

yes, I am aware that by some definitions, income is profit, but that's only as a wage. for a business, the difference between income (revenue) and profit (revenue minus cost) is quite clear.

Exciting new tax bases (1)

Original Replica (908688) | more than 7 years ago | (#18139182)

So now eBay businesses are in it with other small businesses. With an estimated tax of $2 billion, it's not just some profitable hobby, like sellin' pot. Which makes me wonder how much income tax would be generated if pot were legalized and became a business?

Re:Is there some law? (0)

Anonymous Coward | more than 7 years ago | (#18139104)

Yeah, sounds like a great way to fuck up an already crippled economy. OUTSTANDING!

Re:Is there some law? (1)

anagama (611277) | more than 7 years ago | (#18139722)

Eliminating ebay and its fraudulent lousy customer service "I wanna make a million selling junk" L@@KIE HERE idiots would probably be more of a service than a detriment.

mod this: I would read this post again AAAAA+++++

Re:Is there some law? (1)

imageboard (1038004) | more than 7 years ago | (#18139110)

You must be new here.
Welcome to life.

Re:Is there some law? (1)

eebly (7752) | more than 7 years ago | (#18139144)

eBay and the like get no special exemption. Sellers are *supposed* to pay an income tax on their earnings from those sites, it's just that relies purely on self-reporting. It looks like the proposal would be akin to requiring employers to report wages for employees. This proposal would just make it more feasable to enforce existing law.

Re:Is there some law? (1)

Frosty Piss (770223) | more than 7 years ago | (#18139186)

Than the Slashdot headline "IRS May Ask eBay To Snitch On Sellers" is inaccurate and sensationalist?

Oblig Monty Python (1)

LordEd (840443) | more than 7 years ago | (#18139178)

From http://www.ibras.dk/montypython/episode15.htm#4 [ibras.dk]

Third Official: If I might put my head on the chopping block so you can kick it around a bit, sir...
Politician: Yes?
Third Official: Well most things we do for pleasure nowadays are taxed, except one.
Politician: What do you mean?
Third Official: Well, er, smoking's been taxed, drinking's been taxed but not ... thingy.
Politician: Good Lord, you're not suggesting we should tax... thingy?
First Official: Poo poo's?
Third Official: No.
First Official: Thank God for that. Excuse me for a moment. (leaves)
Third Official: No, no, no - thingy.
Second Official: Number ones?
Third Official: No, thingy.
Politician: Thingy!
Second Official: Ah, thingy. Well it'll certainly make chartered accountancy a much more interesting job.

        Cut to vox pops.

Gumby: (standing in water) I would put a tax on all people who stand in water ... (looks round him)... Oh!
Man In Bowler Hat: To boost the British economy I'd tax all foreigners living abroad.
Man In Suit: I would tax the nude in my bed. No - not tax. What is the word? Oh - 'welcome'.

Re:Is there some law? (0)

Anonymous Coward | more than 7 years ago | (#18139184)

Pretty much any time you are paid by someone, it needs to be reported as income and gets taxed as part of your state and federal income tax. People tend to ignore small transactions, so the 50 bucks you made reselling a Wii on ebay is probably was never going to see the light of a tax form. This wouldn't change that unless you resold 15 of them and broke the 5000 dollar barrier for making it worth their time to go after you.

Re:Is there some law? (1)

tomhudson (43916) | more than 7 years ago | (#18139730)

Well, if you paid $250 for something originally, why not declare the $50 you made selling it on ebay a few years later, and getting a $200 capital loss? Plus being able to declare your internet connection, computer, etc. as business expenses.

Re:Is there some law? (4, Informative)

Grech (106925) | more than 7 years ago | (#18139194)

Yep. 26 USC 61 [cornell.edu] defines what is taxable income, and uses the phrase "from whatever source derived". 26 USC 1 [cornell.edu] imposes the tax itself on individuals, estates and trusts. 26 USC 11 [cornell.edu] does the same for corporations.

Re:Is there some law? (0)

Anonymous Coward | more than 7 years ago | (#18139334)

Goes down to political theory, preference, and commerce ideologies.

To put it bluntly, NO THEY DON'T NEED TO TAX EVERYTHING. They just prefer to, so the money currently being wasted doesn't look like pork. When society is busy worrying about whether more money is going to be taken out of their pocket, its a fresh distraction from the current money being wasted to bullshit projects.

If you haven't been paying attention, The American Gov. is Greedy. This is nothing new, so I'd get used to it.

Re:Is there some law? (1)

xmundt (415364) | more than 7 years ago | (#18139652)

Not so much a law, as a basic truth.
      That is...Money to a politician is like
crack to an addict.
        Regards
        Dave Mundt

Re:Is there some law? - Actually no there isn't ! (0, Redundant)

Adeptus_Luminati (634274) | more than 7 years ago | (#18139760)

Actually there is no such law for ANY taxes in the USA! Everyone just assumes there is one! And the IRS goons come after you if you don't pay taxes which kind of gets the population to file taxes out of fear, but in actual fact the IRS is constitutionally ILLEGAL! If you think I'm kidding, check this out:

YOUTUBE trailer
http://www.youtube.com/watch?v=rPypDaXfIV8 [youtube.com] [youtube.com]

Download the full movie torrent from here:
http://btjunkie.org/search?q=Freedom+to+Fascism [btjunkie.org] [btjunkie.org]

Not about sales tax! (1)

LFS.Morpheus (596173) | more than 7 years ago | (#18139102)

The IRS is not involved in collecting sales tax--this is about company and/or personal income tax. In fact, here's the first paragraph of the article:

When it comes to paying income taxes, eBay's legions of small-time entrepreneurs are on an honor system in which they are supposed to declare their profits to the Internal Revenue Service. Many users, however, ignore the law or are unaware of their obligation.

Re:Not about sales tax! (0)

MillionthMonkey (240664) | more than 7 years ago | (#18139428)

Conservatives like to insist that the income tax should be replaced entirely with sales taxes, which would make tax time "simpler", as well as discourage trade, not to mention being the type of taxation most conveniently avoidable by the wealthiest taxpayers. (Worst of all in this regard is the inheritance tax, or the "death tax", hated by the wealthy, but marketed as something that will affect most of us.)

Both the sales tax, and income tax collected from sites like Ebay, are taxes that will primarily fall on the lower and middle classes, as opposed to the upper classes. Rich people do not sell stuff on Ebay. A typical "successful" Ebay seller is typically bragging about $10K per year. Lots of Ebay sellers are just trying to clean out their garage.

The IRS does not have infinite resources available to it for enforcement, and has to carefully allocate what resources it has to different types of cases. Contempt for various segments of society has really been showing up in these enforcement allocations recently, and not just in this executive agency but others as well. Just look at the recent prosecutor firings in the DOJ.

Re:Not about sales tax! (1)

Bluesman (104513) | more than 7 years ago | (#18139598)

It's not quite that cut and dried, as income tax is easily evaded by rich people too. It's actually much easier for them...the poor don't have extra money to hire accountants and lawyers.

The assertion that rich people don't buy things with their money, and would therefore be exempt from the sales tax, strikes me as odd, too.

If anything, a national retail sales tax would tax a whole class of people who don't typically pay taxes on income -- criminals, people who have inherited most of their wealth, foreigners buying things in the U.S., etc.

Whether or not it would be good overall I don't know, but I wouldn't discount the idea out of hand. I think the national sales tax's greatest advantage would be to reduce the amount of special tax favors that can be bought with campaign contributions now, which is a major drawback to a graduated income tax with millions of special rules and exemptions.

It's quite funny to do your state income taxes and see the questions like, "Are you a disabled veteran farmer who owns waterfront property that helps the environment?" and realize that it's likely that some large contributor likely fits that exact description.

Or maybe our politicians have a soft spot for disabled veteran farmers with waterfront property, I dunno.

Re:Not about sales tax! (1)

SCHecklerX (229973) | more than 7 years ago | (#18139660)

But if you own something, you bought it. So it was an expense to begin with. Most things you sell on Ebay, I doubt you get the same as you paid for it, let alone more. So how, exactly, is that a profit? Hmm. Maybe this isn't such a bad thing. I'll just claim the stuff that I sell on Ebay as a loss.

"Shock wave" (0)

Anonymous Coward | more than 7 years ago | (#18139138)

Such a requirement will surely send a shock wave across the online trading world because it could drastically reduce the profits a seller would make on these sites.
Yeah, and I'm sure that you too would stand to make alot more money every year if you and your employer didn't declare your revenue to the IRS...

Re:"Shock wave" (1)

Schraegstrichpunkt (931443) | more than 7 years ago | (#18139710)

No kidding. I wonder if the IRS would be interested in that "Makarand" fellow.

Some sells make you pay sales tax right now! (0)

Joe The Dragon (967727) | more than 7 years ago | (#18139190)

So will this just may thing even harder for them?

So much for that gig (1)

Joebert (946227) | more than 7 years ago | (#18139198)

Damn, now when we hit people up for sales tax, it actually has to be used for sales tax.

This requirement will not reduce sellers' profits (1, Insightful)

Anonymous Coward | more than 7 years ago | (#18139204)

It will only force them to pay income taxes on profit they make.

Hmm (3, Interesting)

bperkins (12056) | more than 7 years ago | (#18139208)

When my employer tells the IRS how much I'm making it's reporting.

When eBay tells the IRS how much auctioneers are making it's snitching.

Funny how that works.

Re:Hmm (4, Insightful)

ScrewMaster (602015) | more than 7 years ago | (#18139330)

No, in the case of your employer it's still snitching: the business relationship is between you and company for which you work. The IRS inserted themselves into that relationship in order to extract their pound of flesh before the worker receives it. That doesn't make such "reporting" intrinsically right, in anything but a legal sense.

Re:Pound of Flesh (1)

sasha328 (203458) | more than 7 years ago | (#18139706)

I see a lot of people complaining about the taxman taking money from me. Well, I for one welcome the opportunity to pay taxes. You see my taxes are used by the people I've placed in office (efficiently or not, that's besides the question) to do things that benefit me. I can see a doctor for free. If I need an operation, I can have it for free. I drive on a road paid for by my taxes. You see, I see the benefits of my taxes everyday.
I have also lived in a country (3rd world, non-oil rich country) where there is no income tax, or at least no one pays it. It's not nice. It's every man to himself. There are no utilities, no good roads, health costs an arm an a leg (literally in some cases). Are my taxes high (33%), I sure would like to take home more.

Re:Hmm (3, Interesting)

omeomi (675045) | more than 7 years ago | (#18139338)

I dunno, I can see the difference...your employer is reporting on how much money *they* give to you, so it's just reporting. With eBay, they're not giving you any money, they're reporting on how much other people gave to you. So yeah, it kind of is "snitching"...although, it might be wrongly pejorative, since it's just enforcing existing tax law.

Re:Hmm (1)

Penguinoflight (517245) | more than 7 years ago | (#18139554)

Yeah, I gotta agree with "screwmaster" (and I'm hoping he's into carpentry). Reporting someone elses income is always snitching, especially when you do it wrong.

Cry me a river (4, Insightful)

spiritraveller (641174) | more than 7 years ago | (#18139226)

Such a requirement will surely send a shock wave across the online trading world because it could drastically reduce the profits a seller would make on these sites.

I hate the tax man as much as anybody, and my profits are already reduced by him.

So where did the submitter get the idea that eBay sellers are supposed to get a free pass?

If you already pay your taxes as the law requires of all of us, then your "profits" will not change. And if you don't... well, then you should go to jail like that guy from Survivor.

Re:Cry me a river (0)

Anonymous Coward | more than 7 years ago | (#18139424)

I'm all for this. The price you sell something for on ebay is not your income. Its the difference between what you bought it for and what you sold it for. Most things on ebay are sold below market value. If you are selling something you bought 2 years ago for $100 less, that should be a negative capital gain. Then we can apply that to our regular income for a tax credit! Awesome!

Re:Cry me a river (2, Interesting)

NotQuiteReal (608241) | more than 7 years ago | (#18139638)

Most things on eBay are sold below market value.

How do you figure? The purpose of an auction sale is to determine the market value of an item.

I presume the IRS is after those who sell new stuff on eBay, as a business, not the "garage sale" types selling used stuff.

I have purchased many "new" items on eBay, from sellers with very high positive ratings, so high, that I presume they are using eBay as a storefront for their business.

If I get a better price because the seller isn't paying taxes, that is not my problem.

The interesting question is what taxing authority has jurisdiction over those Hong Kong sellers who sell items to US buyers?

Re:Cry me a river (4, Insightful)

Adeptus_Luminati (634274) | more than 7 years ago | (#18139740)

"if you already pay your taxes as the law requires all of us"...

Actually there is no such law at all. Everyone just assumes there is one! And the IRS goons come after you if you don't pay taxes, but in actual fact the IRS is constitutionally ILLEGAL! If you think I'm kidding, check this out:

YOUTUBE trailer
http://www.youtube.com/watch?v=rPypDaXfIV8 [youtube.com] [youtube.com]

Download the full movie torrent from here:
http://btjunkie.org/search?q=Freedom+to+Fascism [btjunkie.org] [btjunkie.org]

We need to fight these tax laws (0)

minion (162631) | more than 7 years ago | (#18139250)

This really is crap. According to the government, ANY thing you sell, you need to be taxed on it. That is complete BS, but it'll never change unless we start fighting these insane tax laws. Anything I sell on eBay (individual here, not a business) has already had taxes paid the first time I bought it. I'm sorry, but I do NOT agree with having to have tax collected AGAIN for something that I already own.
 
They either need income tax, or sales tax, but not both. If they made our tax laws sane, the size of the government could be reduced enough that the loss of one of those tax categories would not negatively affect income to the government.

Re:We need to fight these tax laws (1)

baptiste (256004) | more than 7 years ago | (#18139384)

It's clear you do not understand tax law and what you are talking about is quite simple. If you are buying goods to resell, you can buy them without paying sales-tax if you have the appropriate registration/license/etc with your state. The idea is exactly what you refer to. If you will be selling to an individual and collecting sales tax, the states shouldn't tax YOUR purchase from your supplier as well. It works best for both. The state gets to charge sales tax on the highest $ transaction and it makes your life easier (plus increases your margin) So if you're paying sales tax on the goods you buy, get a resale certificate and send it to your suppliers. Then you can buy your inventory tax free because it's for resale.

What this post is about, however, is INCOME tax. It has nothing to do with sales tax. You buy widgets for $100 and sell them for $150 on ebay - you are making $50 profit - that's income and it should be taxed like any other income generating work. You aren't getting a bum deal more than anyone else. You're making money, ie income, and thats taxable.

Good for the IRS - no reason eBay sellers should get a free ride because their income isn't reported.

Re:We need to fight these tax laws (1)

twiddlingbits (707452) | more than 7 years ago | (#18139536)

You can also deduct the cut eBay gets when you calculate your profit. So you make less than $50. It adds up over time if you sell lots of items. Plus you can deduct other business expenses...but be careful the IRS loves to audit small biz!

Some sells make you pay sales tax right now! (1)

Joe The Dragon (967727) | more than 7 years ago | (#18139252)

So will this make them not be able to charge you for it?
What about seller that are stores?
What stores that sell your stuff on ebay?

More War Funds (-1, Troll)

Anonymous Coward | more than 7 years ago | (#18139258)

This is just great, another way for our government to raise funds to kill more helpless people. While at the same time the GI's coming back are finding themselves out on the street. "What country before ever existed a century & a half without a rebellion? & what country can preserve it's liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? The tree of liberty must be refreshed from time to time with the blood of patriots & tyrants. It is it's natural manure." Jefferson

It's time to take back our country from these terrorist. Join the movement and bring down a shit storm upon their heads.

Re:More War Funds (1)

jeremiah411 (1068226) | more than 7 years ago | (#18139540)

Your a little to gung-ho, but I agree with at least part of what your saying. The government really does stick its nose in where it doesn't belong to many times

Re:More War Funds (1)

TapeCutter (624760) | more than 7 years ago | (#18139682)

And they say education doesn't need fixing, it's about income tax, I repeat, income tax. You make a profit, you pay tax. The "tea party" was about tax collected in the colonies going to an offshore king, tax is nothing new to either the US or the colonies that preceded it. Ranting about forefarthers and slaes tax just demonstrates how clueless you are about the civilized world around you. If you really want to change the world then rant about how they spend it, because they're not going to stop collecting it

"Join the movement and bring down a shit storm upon their heads."

Just goes to show the 2nd ammendment also has a downside.

Disclaimer: I picked an AC as an example of the idiotic reactions to be found in this thread.

The real enemy... (1, Troll)

dada21 (163177) | more than 7 years ago | (#18139312)

...isn't just the IRS -- it is the CPAs and tax accountants and "experts" who have waged war on the common man. Taxes do NOT have to be as complicated as they are, but when they are complicated, the tax preparers have a huge "monopoly" of fear over the average taxpayer -- or even the non-average taxpayer.

The tax experts surely want the IRS to inquire to eBay and Yahoo because that means more business for them. For me, my biggest tax preparer prepared filings were years that I had more than a few businesses. They make a bundle on business returns, which in my case always had to end up as $0 income (S corp). They were dozens of pages in length, and I was never able to really ascertain what forms I really needed myself. Each year, it changed.

I hate every CPA and tax accountant I've met. I tell them this. They are scum of the earth, to be thrown into the pit of fire with the taxmen and Congressional Representatives that let this happen. It happens on the "watch" of the Democrats, and it happens on the watch of Republicans. It would happen on the watch of Libertarians if the ever were elected.

Re:The real enemy... (1)

ScentCone (795499) | more than 7 years ago | (#18139558)

I hate every CPA and tax accountant I've met. I tell them this.

How's that working out for you?

Anyway, please don't sugarcoat it. Tell us what you really think.

Alas, a simple flat tax is as likely as that Libertarian watch.

Easy solution for Ebay (1)

CrazyJim1 (809850) | more than 7 years ago | (#18139342)

Let the taxes ride for a year or three. Move the buisness out of the USA, and raise ebay fees. All you need to do is state that the fee raise is less than you'd have lost for taxes, and everyone wins, except for the US government.

Re:Easy solution for Ebay (3, Insightful)

skelly33 (891182) | more than 7 years ago | (#18139506)

The only thing eBay being in the U.S. has to do with this is that they are more willing to bend to the pressure of the IRS pushing for this information. eBay is not being taxed. Sales are not being taxed. Even if eBay moves off-shore, the fact remains that when the sale completes and the seller receives cash for the transaction... that is by definition "income".

While it is unarguably legitimate income that is required to be reported for U.S. residents, eBay is only one of COUNTLESS sources of non-employment based income that are absolutely untracable by the IRS. Tax evasion of this sort probably only amounts to a relatively small adjustment to the overall taxable income that the IRS handles. My guess is that IRS is just going for the "low hanging fruit" with eBay since all the transactions are recorded in a database and are easily deliverable; it is unlikely that they will be met with the same success in many other venues.

tax bullying (1)

lostinbnw (979632) | more than 7 years ago | (#18139404)

What does it matter to the common person using it to find "just what they need." This will only effect the people using the auctions as primary income. and they are already in the know of finding the loopholes to being able to sell anything and everything no matter legal or not. many of wich are making enough to be paying taxes no problem on their auctions. So in the end will the government actully make anything? Or is this just a scare tactic by the IRS to get people to stop cheating on their taxs.

Walking Mage on taxes. . . (1)

Fantastic Lad (198284) | more than 7 years ago | (#18139414)

Quinton [iboxpublishing.com] on taxes.


-FL

Yuo Fail It.. (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#18139450)

Coming a piis a child 4nows said. 'Screaming Rapid, they want you to

Off shore ? (1)

ron raw (943129) | more than 7 years ago | (#18139480)

Whats next Pirate sellbay ?

It's about time.. (1)

rebewt (588158) | more than 7 years ago | (#18139574)

First of all, for you really clueless people out there, this all comes down to paying INCOME tax. SALES tax is a whole other can of worms. As a small business owner myself I think it is perfectly fair to have ebay sales be taxed (at least the higher-volume sellers) like anyone else. Anyone doing higher volume (over 100 sales/yr) is obviously running some sort of business recognized or not and making a profit. There is no reason these people should be exempt from the laws the rest of us have to follow.

By the way, I -do- support cleaning up/simplifying the tax codes!

I've been done by the IRS (1, Offtopic)

bmwloco (877539) | more than 7 years ago | (#18139590)

I got reamed royally by the IRS for working for 14 months at the South Pole and subsequently taking the overseas tax exempt credit. For twenty years previous, no one had been taxed for working at the Pole. 5 years later I pay nearly $20,000 as two IRS agents looking to make a name for themselves decided to challenge whether or not Antarctica was a "Foreign Country". Raytheon was involved. Tada. A Federal Tax Judge decided for the IRS and Raytheon. It turn, anyone who worked in the first year of Raytheon's contract in Antarctica got hit. Five years later I get a bill. Epilog: I'm no longer a network administrator but now a car salesman, struggling to just get the bills paid as Raytheon ditched a whole generation of folks that worked on ice. The only ones left are suck ups and sycophants. 12 years of my life and memories McMurdo, Palmer Station, The South Pole and working on the RV/IB Nathaniel B. Palmer are now tinged by thoughts of the IRS reaming I took. At least I had a good ride.

Ask??? (1)

vic-traill (1038742) | more than 7 years ago | (#18139614)

IRS May Ask eBay To Snitch On Sellers - emphasis added

I don't know about the IRS, but I can tell you that Revenue Canada doesn't *ask* anyone for anything. I suspect it's the same in the States.

Revenuers don't *ask* for nothing; they *tell*.

gotta pay for the war somehow! (0)

Anonymous Coward | more than 7 years ago | (#18139644)

ok - go on, mod me down 'troll'

Move along (1)

telso (924323) | more than 7 years ago | (#18139732)

The IRS wants people to pay their taxes. People try to justify why they shouldn't have to. People look for technicalities. People find none. People whine. People say income tax is unconstitutional. The rest of us end up paying more taxes because some self-righteous tax-cheats aren't paying their fair share.

Nothing new here. Move along.

and then...? (1)

Grinin (1050028) | more than 7 years ago | (#18139746)

"The IRS thinks it can collect an extra $2 billion in taxes from this requirement that auctioneers report sellers who complete 100 or transactions a year worth at least $5,000."

Which could then be wrapped up in bricks, loaded onto a crate, shipped off to the middle east... never to be seen again. Thanks government!

Why pay income tax (1)

kahrytan (913147) | more than 7 years ago | (#18139778)

Why should you pay federal income tax?
  Why pay social security tax?
  You don't have to. Just tell your Representatives in Congress to vote YES to Fair Tax [fairtax.org]

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll taxes with an integrated approach including a progressive national retail sales tax, a rebate to ensure no American pays federal taxes up to the poverty level, dollar-for-dollar revenue neutrality, and the repeal of the 16th Amendment. This non-partisan legislation (HR 25/S 25) abolishes all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes and replaces them all with one simple, visible, federal retail sales tax - collected by existing state sales tax authorities. The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. So it is also cost neutral - the final cost for goods and services changes little under the FairTax. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.


  Because under Fair Tax, even illegal immigrants pay their fair share of taxes yet don't get a monthly prebates.
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