IRS wants eBay to turn on its customers

AOL Money & Finance ^ | Feb 20th 2007 10:10AM | Douglas McIntyre

[Bloody Sam Roberts]

Of course, "their" should be "they're".

Egad.

[Fighting Irish]

I'll bet the farm some dweeb Homeland Security pocket protector type speculates Al Qeada is funding their activities by selling fake Elvis autographs, CZ engagement rings and erectile enhancement supplements ... and by god ... there going to smash it if they have to close down every mom and pop ebay auction in America!

[Gorzaloon]

The point is you have already paid taxes on it multiple times. The cookie stealing children, I mean the gubbamint wants to tax it as many times as possible untill the system totally breaks.

That is the part I do not understand...I buy something with AFTER TAX income, get tired of it, and sell it for half what I paid. That sounds like a LOSS, to me, because I ate the depreciation.

If I were a "Power Seller", and bought a shipping container of rubber poodle poop from Taiwan, and sold it for a 200%markup, that is different..That is just simply a "store".

[Señor Zorro]

With all the ebay fees and paypal fees and then adding taxes on, it really would not be worth it at all to see on ebay anymore.

While this fishing expedition can't be legal without some sort of subpoena (which would require something more specific than "we may find something"), I doubt the IRS would really go after people like you who are doing virtual garage sales. Not because they wouldn't, but because the penny-pinchers would lose more than they would gain. What they want to find, as I am reading this article, are people who are running businesses on eBay--real business, mind you--who are skipping on the taxes because it is online.

[rawcatslyentist]

Let's see. After taxed income, sales tax, hidden sales tax added by the retailer to cover their taxes, hidden sales tax added by the importer/manufacturer to cover their taxes. Oh but wait let's make it law to tax it every time you look at it. It could be legal......

[mysterio]

They did it to smokers in several states buying terbacky on the net, and everyone was hunky dory with that. Ebay users, get ready to get a $5k bill from Uncle Sam.

We warned ya.

[Always Right]

I would expect eBay to say no. But companies making profit on eBay SHOULD have to pay taxes on the profit. And if there are sales taxes, they should be paid by people whether they buy from a local store or from an internet store. Otherwise it's unfair to the companies who provide services directly to the community.

True, but I doubt the IRS really even cares about sales tax, which is where most of the cheating is. There probably are lots of ebayers cheating on income tax, but the few power ebayers I know are not.

[Always Right]

This is ridiculous. Many many people sell used items on Ebay (like an online garage sale - I sell my daughter's clothes and toys as she outgrows them). When I do this I am not making a profit

Then you don't owe any taxes and you have nothing to worry about. This is not a new tax, it is a method of tracking people who are using ebay as a business.

[steel_resolve]

you are not the type of ebay user the government wants to go after. They are looking at the professional seller that sells day in and day out and makes a living off of ebay. Why shouldn't they have to pay taxes? Why should you or I subsidize their lifestyle?

[Chickensoup]

It's called the law and if you don't withhold you go to jail and loose everything. Pretty good incentive wouldn't you say? Not to mention MATCHING SS AND MEDICARE for every penny withheld for each employee.

I know it is the law and it turns us into slaves. Both companies and workers.

[LadyNavyVet]

Hugely simplifying here, but what you do is subtract your costs of doing business--acquiring or producing the items, cleaning them, photographing them, eBay fees, postage, etc. from the total dollar amount people paid you. That is your business profit, and you're legally required to pay taxes on it. You can download all the info you need from the IRS website.

I hear ya on taxes. The govt's too darn powerful when they're going after houswives making a few bucks on the side. And, guess what? You're supposed to declare income made from garage sales, too.

[from occupied ga]

When I do this I am not making a profit - I am selling things at a loss (getting much less than the original retail price) so I don't consider it "income" and therefore should not have to be taxes on it. With all the ebay fees and paypal fees and then adding taxes on, it really would not be worth it at all to see on ebay anymore. I'll just go back to the old fashioned real garage sales.

The irs looks at it as (your initial cost - depreciation) = value
(Sales price - value) = taxable income

Now that the demons are back in power expect a lot more of this crap - I especially like nailing you with "imputed income" if you own your own home because you could rent it out and get inome (which is taxable), but if you rent, then tent is not tax deductable. Tails they win, heads you lose.

[poobear]

I'm part of the slave choir, an employer and employee.

It's still the best damn county on the planet at least for now!

[pandoraou812]

My town makes you take a permit out for yard sales and you are allowed 2 per year. They don't seem to enforce it though. I guess flea markets will be next. I don't think I make enough profit to be taxed on but I will check it out. I don't like the IRS one bit but I understand if I am breaking the law then I better pay my taxes. I think they ought to go after the big companies for their tax frauds before housewives. I will check out the info you gave me. Thanks ~P~

[coloradan]

Ebay doesn't pay sellers, buyers pay sellers directly.

[Amalie]

I have grossed between 10K and 25K on ebay for the last 8 years. This is like any other business - you maintain an inventory (in my case, it has been railroad and auto racing antiques ). As a result, I write off my antique shopping trip mileage, part of my monthly internet expenses, all of my ebay, paypal and inkfrog fees, and miscellaneous reference materials. After each transaction, the gross including shipping is used as a total, subtracting shipping via USPS/UPS/FedEx receipt and the cost of the item originally (usually by estimate as I buy a lot in bulk lots). My profitability usually still allows me to keep 65%+ of that money, which is subject to regular income taxes on a national and state level.

The bigger problem is that the IRS is planning on working with the states on this, according to my accountant. The states are losing the most on items being IMPORTED across state lines. Remember, ebay has a legal record of EVERY transaction you make, and states with sales tax have never had a good enforcement vehicle to collect that until now; you are liable for the state sales tax on the paid value of anything you buy on eBay for personal use. It sucks, but this is no surprise to me. Ebay is keeping your records for you; you probably need to thinking about your liability whether you are buyer or a seller...

[poobear]

You are correct and the IRS wants the records for these transactions of $5,000.00 and more per year from these sellers. They want to tax that as income. Hardly far fetched for the IRS. A tax on the Internet is not far either.

[gcruse]

"IRS wants eBay to turn on its customers'

Looks like I'll be joining eBay, then. Last time I turned on, the narcs were all over me, but it seems the worm has turned. Guess I should pick up some black lights and posters while I'm there...