Question
http://www.247wallst.com/2007/02/irs_wants_ebay_.html
Perhaps the budget deficit is getting too large. The IRS is trying to get Ebay (EBAY) to turn over records on its customers, especially the larger ones, so that the IRS can go after those who have not paid taxes on their auction transactions. What fun. Getting a company to rat out its own.
Ebay is fighting the move, but the government seems determined to go after merchants, especially those who have transactions of over $5,000 a year.
The government may have a point. Tax evasion is a serious business. And so why shouldn't Ebay potentially poison its relationship with thousands of customers? It would be patriotic.
Douglas A. McIntyre can be reached at douglasamcintyre*247wallst.com. He does not own securities in companies that he writes about.
Answer
Yup, that's one spin on it.
Another is that many of us good tax paying citizens and ebayers
have NO PROBLEM with those who chose to break the law being
"ratted out".
When I pay taxes, and you don't..... it costs me money.
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I have no problem with it either.
Let's see...the biggest ebay sellers probably do several million a year. Wonder if the same concerted effort is being made to go after the biggest scofflaws -- companies with offshore accounts raking in billions upon billions.
I'd bet my ebay profits not. But by all means let's worry about the small fry because they cost us so much.
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Who didn't see it coming? It's why I went legit a couple of years ago, when my business started to turn a decent profit. I'm surprised eBay is even putting up token resistence. Generally, they roll over so fast you get whiplash just watching.
Let's face it, the IRS has always put its hammiest handling on little people who both can't afford to fight, and don't even know how to start to defend themselves. If you don't look at the gross receipts, it certainly makes the sharks look good to chase after and catch say 200 minnows and expend less time, manpower and funds than it takes to catch one big fish who'd net the same amount as 500 minnows.
The minnows probably don't donate to the GOP either.
Answer
Originally Posted by Victoria
The minnows probably don't donate to the GOP either.
I don't think Ebay gives to the GOP either, which may be one reason why they might be targetted.
As for Ebay turning over the information, well, I don't have a problem with that. I am about to start doing my taxes for last year (I just started selling in September or so) and I'm dreading doing all the accounting work because I know I didn't make a profit last year, but I'm going to be doing it all the same. This year will be different, but last year, I was in the red.
But I declare all my income, pay my taxes, and expect everyone else to do the same. If people are using Ebay to hide income and profit, then by all means Ebay, turn them in. Turn my records over, too.
My only concern is that the IRS differentiates between the sales of new and used goods as income, and the sale of "used" personal items one is no longer using. We all buy things we never end up using, reading or wearing, that we might in turn sell on Ebay for a little cash, but for which we are not making a profit, in most cases. Many of those, I could never prove what I paid for them, but certainly know in most cases (certain highly desirable OOP applique books being the exception) that I didn't make a profit.
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I only sell stuff that I have and don't really make anything and only do it when I do have the stuff, not all the time. I do buy a few items at garage sales that I think might sell.
Do you think there might be a limit on how much you sale that you have to keep records on. Since my stuff is stuff I find or sell out of home I don't have prices on what I paid for them any longer.
Like the most hideous sweater in the world that my stepmother sent me for Christmas.
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From Small Business Televisionm this is pretty interesting, and answeres my questions about it anyway :
http://sbtv.com/default.asp?cid=27&uid=125
eBay IRS Tax Questions
There is no late-night partying on weekends for the St. Louis University student who wants to be identified as Brian B. He is up with the sun every Saturday and Sunday searching for treasures and collectibles at garage sales, flea markets, and thrift stores near his modest St. Louis apartment.
“Searching for finds that will sell on eBay has become my week-end routine. You can find some great things if you are early,” Brian B. explains.
He is one of more than 430,000 sellers on eBay. It was the need to sell used textbooks for quick cash that first attracted the 21-year old student to selling on eBay, but he soon discovered he enjoyed searching for things to sell on the auction site.
“For me it is like a treasure hunt, searching out the hidden gem at the garage sale or thrift store. I think of it as a hobby that actually pays,” adds Brian B., who doesn’t want to use his last name because the Internal Revenue Service may not agree his weekend pastime is a hobby.
Thousands of people have launched small eBay businesses and are making the auction site pay so well, they’ve left their old jobs behind. They consider their eBay selling a business and so does the taxman. The IRS rules require taxes be paid on all personal and business income. Because Brian B. scours estate sales and thrift stores looking for items to re-sell for a profit on eBay, the IRS would most likely view his activity as a taxable business. The taxman’s definition of a hobby is an activity for which you do not expect to make a profit. There are nine factors the IRS uses to evaluate if eBay sales constitute a business and are taxable:
1. You carry on the activity in a business-like manner,
2. The time and effort you put into the activity indicate you intend to make it profitable,
3. You depend on income from the activity for your livelihood,
4. Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),
5. You change your methods of operation in an attempt to improve profitability,
6. You, or your advisors, have the knowledge needed to carry on the activity as a successful business,
7. You were successful in making a profit in similar activities in the past,
8. The activity makes a profit in some years and the amount of profit it makes, and
9. You can expect to make a future profit from the appreciation of the assets used in the activity.
If you answered yes to most of these questions, your eBay activity is a business and you are required to pay federal taxes on your profits. But don’t forget the business designation also qualifies you for a number or business deductions including eBay listing fees, shipping, and packing materials. You might be able to deduct part of the purchase price of your computer and other office supplies, but consult your tax professional for specifics.
If you answered no to most of the questions above and are just selling the old thigh-master exercise machine out of the attic or the old tricycles out of the garage, you probably won’t have to pay taxes on your eBay sales. Those items are probably going to sell for less than you originally paid, so there is no profit to worry about. Plus, you are just cleaning out unwanted household items, so you are not operating like a business. If you are interested in launching your own eBay business there are a number of ways to approach it. Some eBay sellers are moving into store-fronts to help the e-clueless dispose of unwanted items for a commission.
To learn more about this growing small business segment, click on this link: http://www.sbtv.com/?playstring=snappy_v210.flv|1|210|. You might be able to do the same thing out of your home as a registered trading assistant.
For more ideas on growing your business online check out www.sbtv.com and www.ebay.com.
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Also:
http://www.etaxes.com/eBay.htm
I can't find anything by Googling ebay +IRS dated any later than 2005.....
I must be google-dudded.
My ebaying is strictly a hobby.
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There's no doubt, even in the IRS' mind, that I'm a hobby seller
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I guess I am like MGC I'm a hobby seller.
I will ask our account about it when I take out taxes in though.