IRS urged to go after eBay sellers

[Newsjock]

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/02/24/EBAY.TMP

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.

Now a growing chorus of tax experts is hoping to crack down on the cheating by requiring eBay -- and other online auctions, such as those on Yahoo, Ubid.com and Amazon -- to track users and report their gross sales to the federal government. Armed with such information, the IRS could better seek any taxes owed, potentially reaping millions of dollars in extra revenue for the U.S. Treasury.

But requiring eBay to out its sellers to tax collectors could send a shockwave across its vast online bazaar, where users trade everything from Ferraris to Ugg boots to pepper spray. Paying Uncle Sam could significantly reduce their profits or even make their businesses money-losers.

[Doremus]

1. Suuuure. Let's go after the minnows with guns blazing

and let the big fish do as they damned well please.

This crap makes me sick.

[SharonAnn]

2. Don't forget garage sales!

[TomClash]

16. Summer's coming - better go after those tax cheating kids at the lemonade stands!

Think they might be able to collect more revenue going after, say, Halliburton?

[Skink]

3. Nothing on the internet should be tax exempt.

let the Federal Government collect an internet sales tax to pay for military adventures.

Seriously those without credit have to pay retail and the sales taxes that go with it. By definition those with access to credit are better off and they are finding a way to avoid taxation.

[proud2BlibKansan]

22. You can use a debit card to purchase stuff online

You don't need a credit card.

[NoodleyAppendage]

59. Many with "access to credit" are on a revolving system of indebtedness.

Instead of going after relatively small fish, the government should be going after the off-shore tax havens that the corporations construct to avoid taxes altogether. Revoking corporate tax breaks and loopholes would more than enough compensate for the governmental income shortfall.

J

[pinniped]

4. This makes perfect sense to me.

A couple years ago the Dickhead vp did say ePay people were proof of a booming eCONomy and part of the workforce.

[rodeodance]

23. I immediately thought of Cheney's comment when I read this. I think he

thinks it is some sort of black market

[Connonym]

5. So instead of selling your unwanted junk toss it in a landfill!

:sarcasm:

[pokercat999]

15. Don't throw it away FREECYCLE it!

Google "Freecycle" for a group near you, it's free!

[Connonym]

37. I do a lot of freebies on Craigslist

and make pretty regular trips to Goodwill for donations. I'm moving and trying to restyle my life with a lot less junk. I also sell some on ebay. But think of how many people won't want to go through the trouble. I see it all the time when I drive around the city I live. Loads of stuff sitting on the curb for the garbageman. I guess my point is, if I want to sell for $5 on ebay that extra set of computer speakers that I paid $50 for originally, why the hell should I have to pay tax on that? There's no net gain for me here, I'm not making a profit off these sales. I'm just trying to recoup a little bit of what I paid. I already paid sales tax on the shit, now they want income tax on it? That's just bullshit as far as I'm concerned. I'm personally willing to find a new use for my junk if I can but how many people, people who sell their odds and ends, their outgrown baby clothes and such, how many of them are going to want to dick around with tax forms on that stuff? or go out of their way to give it away when the garbage man comes every Monday with a lot less effort. I'm just constantly amazed that our government will nickle and dime working class folks while corporations and their CEOs get a comparatively free ride. We have to deal with this shit so that Dick Fucking Cheney can get a tax break? Eh, I'm rambling now but so sick of every day people gettign fucked over.

[pokercat999]

58. I agree with you I was referring to the throw it in the

landfill thing. The freecycle group in my area exchanges tons of "stuff" everyday.

[hlthe2b]

6. Double taxation for many

If you are selling your own junk, as many do when they need the $$,that is double taxation... Isn't that what everyone claims about the inheritance tax? Here it may be really the case for some proportion of ebay sellers..

[NovaNardis]

7. I don't disagree with this.

If you are making a big enough profit off of eBay to be taxable, you should pay.

But as above. We are fishing for minnows with rocket-launchers, as the sharks swim straight by. Hey did anyone check Ken Lay's grave recently? :)

[hlthe2b]

29. As long as it is graduated

[youngdem]

25. Double Taxation is a junk phrase invented by anti-government loons

There is no such term in economics.

ALL money is taxed dozens of times as it passes through the economy. Your income is taxed, then the house you bought with it is taxed, then the house is taxed each year you own it, the repairs you make on the house is taxed, etc, etc.

Or when you buy food, the farmer's gas, seed, fertilizer and land are taxed, then the farmer's payment is taxed, then the food is taxed when sold to processors, then taxed again when it is sold at the Supermarket (depending on the state), where it is bought with money that has been subject to an income or capital gains tax. What's that, quintuple taxation?

[1932]

26. Exactly. It's right that money is taxed when it changes hands to someone's profit

If you didn't tax one of the methods by which people profit, people would exploit that as a way to get super rich to the disadvantage of people who can't control how they accumulate money and to the disadvantage of society, which needs to fairly apportion the tax burden so that it can create an economic environment in which people get a fair shake and aren't exploited.

[hlthe2b]

30. I do agree with you on estate tax and would for ebay sellers...

also, as long as it is graduated. It is not fair to hit the poor people who hit on hard times and are forced to sell the things they bought and paid taxes on when they were doing better financially, as their only alternative to a pawn shop. And yes, mixed within the countless ebay profiteers are 100s of thousands or even millions of these types.

[truthisfreedom]

8. What this will lead to is online calculators to estimate how much you should mark something up when

selling it on eBay in order to cover the tax obligation on the sale. Basically, it will lead to higher prices on eBay, probably about 10-30%.

[ngant17]

19. If the federal gov. was subsidizing the internet

maybe they would have a logical right to tax it. Otherwise it's taxation without representation.

Bringing in the IRS will increase costs for sellers which will probably be pushed onto the payers. It will be like adding on another "shipping fee", except it will be called an "IRS fee".

If the federal gov. was subsidizing the internet, then it would be logical for it to try to tax the system to keep it running. Something like the USPS and postage stamps. but the gov. is basically out of this internet business, or it's going in that direction, and it is leaving it up to private enterprise to run the internet.

On the internet, ebay is a part of the system. I could buy into the ebay tax plan, however the problem is that the gov. doesn't want to keep the internet running by subsidizing it with public money, so they should have NO reason to tax it. They want the internet to run itself via free market ideology. So why the taxes? You can't have your cake and eat it, too.

[grasswire]

9. let's see

So they start taxing sellers who have increased the business of the postal service exponentially, and the sellers quit selling, and the postal service loses untold millions of dollars?

How is that useful?

[Divine Discontent]

10. annoying! go after the corporate welfare rolls, I'm preachin to the choir I know n/t

[TreasonousBastard]

11. Fits in with the plan...

the IRS has already been pounding on little guys with back taxes and cutting down on corporate and billionaire audits because it's easier to squeeze a few bucks from them than fight the lawyered-up bigshots with 500 page returns.

This just continues the trend-- concentrate on thousands of little guys who will easily be coerced into making a deal after a few nasty letters from the IRS. Even if they give up on half of them, they're ahead of the game.

[w4rma]

12. It's not because it's easier. It's because the * administration shuffled around IRS employees

towards going after lower income people and ignoring high income people.

This was a political choice, not a pragmatic one.

[TreasonousBastard]

14. Seems to me this started at least under Clinton...

and maybe even earlier.

Remember the scandals about how IRS collection people were rewarded for what they brought in, and so went for the easy money?

on edit:

Yeah, I agree it's worse now, and probably has some direction from the White House, but it seems to be an institutional problem.

[951-Riverside]

13. RIP American Entrepreneurialship.

:cry:

...BTW how are the freeps taking this news?

[Esra Star]

17. I think you can be sure that the IRS is watching tha activity on

all online sites. They just like to keep their powder dry.
At an appropriate time they will create a problem for some people.
Surveillance is increasing.

[Uben]

18. Why should Ebay tax cheats be exempt?

I am an Ebay seller. It started as a hobby, then exploded. People started bringing me things to sell.....nice things. I sell high-fashion women's clothing and apparrel and anything else that is worth my time. I do not sell the nickel and dime stuff. I report my earnings. It is a business. I sold over $30,000 worth of goods in 2005.

Reporting your sales is not altogether a bad deal. By claiming it as a business, you get deductions! You can deduct part of your expenses such as heating and air, rent or mortgage, transportation to and from the post office, etc.

I am all for full disclosure on all sales, no matter if it is on Ebay or elsewhere. I pay my taxes and think everyone else should too. If you knew how many millions are made on Ebay and how some people just have to scam people or even Ebay out of a dollar, you would agree.

Tax cheats are criminals.....thieves. No better than those who rob liquor stores, in my opinion, and should be prosecuted to the full extent of the law.

Just be honest. Keep good books and give Uncle Sam his due.

[Vinca]

20. Exactly. I've been an ebay seller since it began and I've always

reported my profit - it never occurred to me not to. That said, compared to the taxes big corporations don't pay (think Cayman Islands), ebay is small potatoes.

[all.of.me]

32. good for you.

i don't know how anyone can hide ebay income anyway. it is all transmitted online. there is a record. i do think that people, like you, that have honest businesses on ebay should act like businesses. i buy a lot from established stores on ebay! but the little guy who sells yard sale stuff should not have to pay taxes on it.

[Uben]

34. The IRS is not concerned

....with those who are simply resaling their own items (within reason). Those who sell for others for profit are their target.

I sold a silver tea service for a client for $16,000 a couple of years ago. Transactions that big raise a red flag at the bank anyway, so if you chose not to report the earnings, you are begging to get caught. The last thing I want is the IRS breathing down my neck, so I keep good books and simply add a percentage to the goods to cover Uncle Sam's share.

I report illegal activity and scams I find on Ebay. One way to scam is to charge 1 cent for an item, then put $40 on the shipping and handling. If there is dissatisfaction with the product, they only refund the purchase price......1 penny! Beware!

[all.of.me]

35. i've run across a few dishonest vendors on ebay, too.

it's just a slice of life, i suppose.

[Uben]

36. I report them all

They give us good Ebayers a bad name. I have reported hundreds of them. I have learned how to identify the scammers, especially those who hijack others accounts.

[all.of.me]

51. 100's?

wow. i have only seen a few, but i don't spend that much time there.

hijack accounts?! wow again. there is a lot i don't know about ebay!!! :o

i love my good experiences at ebay. i really appreciate the honest vendors and customers. so thank you!

[Retrograde]

38. finally a ray of sense!

There are eBay sellers and then there are eBay Sellers! There's a difference between selling off one's surplus stuff and running an on-line business. The latter should be treated like any other business - and that includes applicable taxes.

I'm still in the nickel and dime state - every big sale (i.e., the one semi-big one to date) is offset by all the used stuff sold for less than I paid for it. But it gets it out of the house and out of the landfill.

Anyone want some old magazines?

[proud2BlibKansan]

21. It was Cheney

Remember when he said ebay was responsible for the robust economy? I'll bet he called the IRS.

[Vodid]

24. Taxed twice

Many folks use ebay as a virtual garage sale. With that in mind; First I paid tax on the income that I earned to be able to afford to buy something, plus I paid sales tax on the actual item when I bought it new. Then I decide to sell it used at a considerable loss. And I'm supposed to count that as income, a second time? Jeez, this pushes me a bit toward the libertarian camp.

[PA Democrat]

28. No, you pay taxes on your NET profit.

Everyone should pay their share of taxes. I would like to see the IRS spending more time going after the big offenders than the little guy, however. The truth is that the rich can afford good tax attorneys to fight the IRS and find every possible loophole for their wealthy clients, while the little guy is relatively easy pickings for the IRS.

[Doremus]

33. No. If you're a hobby seller you don't need to claim anything.

The IRS has a list of "tests" to determine if you're a hobby seller. Generally, if you're just getting rid of things laying around the house they don't consider it a business and you don't have to report it.

ALL businesses should pay taxes -- not just middle class working stiffs. The IRS should pay proportionately MORE attention to going after the corporate conglomerates with offshore "subsidiaries" (aka tax shelters) that allow them to pay ZERO taxes.

It really ticks me off that the people's government is so skewed in favor of big corporations.

[unblock]

44. if you sell something at a loss, there's no tax. in fact, a loss can offset a gain!

subject to the limit that overall, your loss from hobby can't offset other income. i.e., there's no tax advantage to LOSING money on ebay. but if you sell a book at a loss (e.g., bought for $20, sold for $1 => loss of $19) then you can use that loss to offset a gain (e.g., 2 tickets to rock concert, bought for $100, sold for $135 => profit of $35).

on the ticket sale, you'd be liable for income tax on the $35 profit, but with the $19 loss, you only pay taxes on the $16 NET profit. if you really know what you're doing, then there are all sorts of other things you can deduct, such as the cost of trips to the post office and shipping supplies, etc.

it's income just like any other income, but it's the income is net of all your costs, particularly the original/acquisition cost of the thing you sold! that's why most garage sale ebay-ers don't need to pay taxes. they just need to have a lot of paperwork to PROVE that they don't owe taxes.



note that i'm not a tax guru, take my opinion at your peril.

[Doremus]

46. In order to claim expenses, you have to file a Schedule C.

People who file a Schedule C are acknowledging to the IRS that they are in business.

Hobby sellers, those who are only selling off household stuff, shouldn't file a Schedule C.

Oh, and claiming a business loss 3 years in a row will get you in hot water. ;)

[unblock]

48. you CAN deduct hobby expenses

but only if you itemize your deductions. it's on schedule a, subject to the 2% agi threshold (and you can't claim more hobby expenses than you have hobby income). that is, you can only use the expenses to the extent that they excess 2% of your agi. and it's not the full range of expenses that you could have on a schedule c.


also, 3 consecutive years of schedule c losses usually just means that the irs will no longer consider it a business. if you persist after losing money for 3 years, then it must be a hobby.

on edit: still not a tax guru

[brentspeak]

27. What about all the scam artists ebay allows from China, Romania, and Nigeria?

Why doesn't the IRS go after ebay to recoup the tax portion of all the profits ebay makes by allowing the foreign scam artists to run wild on its site?

[CountAllVotes]

42. good point

They are plenty of people selling from overseas on eBay. Lots of them are crooks too!

IRS wake the hell up and look at WHO is making the money and ripping people off!

So, I bought a pair of shoes that did not fit quite right and I paid $75 for them and sold them for $20. Where is the huge profit I ask?

:kick:

[dweller]

31. hey IRS ...

start here:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2743490
Dick Morris owes over $280,000 in Connecticut back taxes


dp

[CountAllVotes]

39. gee does this mean that that old Elvis CD I sold

needs to be reported to the IRS? By the time PayPal and eBay were done with me on that "sell", I think I made about $7.00. :argh:

:kick:

[wildflowergardener]

40. receipts

I guess I better be saving the receipts of anything I ever might try to sell on ebay? I am sure I never made a profit off anything I sold on there - everything was sold for less than I bought it.

I agree, though if someone is actually running a business making a large amount of money, that is different. They should be reporting it as income on their tax returns.

Meg

[unblock]

45. i would save all your receipts, but then, i'm a pack rat and save ALL my receipts

at a minimum, though, save your ebay listing. this is a good idea for lots of reasons. for instance, you might be able to prove original cost, e.g., a book title. sell a book for $1 and if the title is steven king, you surely spent more than $1 for it.

[mitchum]

41. They can go to hell at an opening bid of 99 cents

[indepat]

43. If the IRS goes after the sellers like gangbusters, enough money to fund maybe one day in Iraq can

be collected each year and that's real money, not chicken-feed.

[MindMatter]

47. The small fish don't make a profit, hence no tax obligation

The average eBay user does not do this for profit. It is just a way to clean out the garage and pick up items you may want to own for awhile. With the eBay and paypal fees, you just don't much of an opportunity to profit unless you are a mega dealer. Those mega-dealer guys SHOULD be taxed. And if that puts them out of business, eBay would be a much better place for it, because they are mainly junk peddlers, just one notch above spammers on the respectability scale.

[earth mom]

49. The bastards want to nickel and dime us all with taxes until we have nothing left when we die.

Meanwhile they've stolen our tax money and live like fat cats and have children like the * twins who don't do diddly squat because daddy pays for everything! :puke:

:grr:

[pitohui]

50. the sooner the better, as an honest seller i can't compete

since i pay taxes and don't steal, i simply can't compete and haven't been able to sell in years since i'm easily undercut by thieves

it's time the free ride came to an end

no one on ebay is "unaware" of their tax obligation, it's just that a great many people pretend to be unaware because they prefer to cheat

there should also be more enforcement of people who steal their employers blind and re-sell stolen property also

honest people can't supply product at the same low cost as people who steal and cheat, we are placed on an unfair footing

enforcement is VERY badly needed

when you see something being sold well below wholesale, you need to open your eyes to what is going on

[KT2000]

52. That's OK

We are all supposed to pay income tax and states taxes too.
I do sewing and pay those taxes.
After taxes my hourly wage is just about embarrassing and it's not easy keeping up with the paperwork.
But that is how it is set up for all of us.

For eBay sellers, it might make sense to set a minimum amount of sales, under which the person does not need to report. This would put them in a category similar to having a garage sale to get rid of stuff. But when people are running a business through eBay, that should be reported. That is only fair.

I would hope though that IRS money be spent catching the high end tax cheats.

[BrokenBeyondRepair]

53. might hurt ebay more than sellers

ppl that don't want to pay taxes are always going to find a way around the IRS.. good luck to them

[kestrel91316]

54. Most of what I sell on ebay is my own USED JUNK that I already

paid retail for YEARS ago and have no receipts, or it's garage sale finds I have used and am now unloading. Where the hell is any profit in THAT? I'm only recouping a fraction of what I put into the stuff.

Guess I'll switch to selling on Craigslist.

[CountAllVotes]

55. that is my story too

are you serious? What is Craigslist? Never heard of it.

Ebay needs some serious competition IMO.

I'm shocked that no one else has tried to compete with them successfully. Ebay has a monopoly it seems to me almost.

It is a hard way to make a buck and a good way to recycle. I guess this thought never occurred to anyone making these idiotic decisions did it. :mad:

:dem:

[area51]

57. craiglist.org

They have craigslist for some of the cities in the U.S. & elsewhere.

[kestrel91316]

60. Craigslist is sort of the internet's version of classified ads.

I think it's just craigslist.com. You can go to the page for your state/city.

[Contrite]

56. What about Craig's list?

Jeez, IRS, why stop there? Go after all the small-changers, why don't you?