The IRS vs the Online Economy

[widebody911]

Well all knew this was coming (well, at least I did)

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9018758&intsrc=hm_list

The Center for Democracy and Technology (CDT) is sounding an early warning on a proposal in the president's 2008 budget that would require Internet businesses like eBay Inc. and Amazon.com Inc. to collect personal data on their customers and share it with the Internal Revenue Service.

The move is part of an effort by the U.S. Treasury Department to track down unreported small business income generated by the sale of personal property on such sites. Under the proposal, online "brokers" would be required to file income statements for all customers who use their sites to conduct 100 or more separate transactions that generate $5,000 or more per year.

Among the information the brokers would be required to collect would be customers' names, addresses and taxpayer identification numbers or Social Security numbers. The proposal would be effective for sales of property on or after Jan 1, 2008.

[thrown_hammer]

So long Ebay, and thanks for all the fish...

[Neilk]

Quick question- hypothetically (we're not there yet), if my gf/wife were to sell her old purses and clothing, stuff she bought for herself and used, and sold them for $7,500, would she have to declare that? On paper she would show a loss from the retail price.

Speaking of Ebay, my GOD THE FEES ARE HIGH... she recently sold a purse for $75, there were about $10 in fees between Ebay and Paypal. No wonder Ebay is making a killing and that sellers are moving away from Ebay.

[RallyJon]

No wonder ... that sellers are moving away from Ebay.

I keep reading that, but I can't seem to find where they're going? Maybe Craigslist out west, but our local CL sucks.

[speeder]

Ebay in the beginning, (and through the early 2000s), was a deal the likes of which we haven't seen since the RE deal we made with the Indians.

What's happened since was predictable since we live in a free-market system that is competitive and based on greed where everyone (including corporations and government) want their taste. Not saying that greed is even bad in this instance, but the lesson is to get in anything while the getting is good. I know of a guy who was making ~14k @ month on eBay w/ zero investment back in '02/'03. Probably tax-free as well, unless he was unusually honest or paranoid.

[Bill Verburg]

Is this a great country or what
first they tax the company that made the product
then they tax you for having an income to buy it
then they tax you to actually buy it
now they can tax you when you sell it


seems to me they need to figure a way to tax you for using the product

[thrown_hammer]

Depending on the product they already tax you for using it. We have excise and wheel tax on vehicles in Indiana…

[Christien]

Originally posted by Neilk
Quick question- hypothetically (we're not there yet), if my gf/wife were to sell her old purses and clothing, stuff she bought for herself and used, and sold them for $7,500, would she have to declare that? On paper she would show a loss from the retail price.

Speaking of Ebay, my GOD THE FEES ARE HIGH... she recently sold a purse for $75, there were about $10 in fees between Ebay and Paypal. No wonder Ebay is making a killing and that sellers are moving away from Ebay.

Obviously tax laws are different here than there, but personal consumption or depreciation of personal goods isn't permissible as a write off. Corporations can deduct depreciation, but not private individuals.

I think tax laws would apply to ebay the same way they apply to garage sales. If I understand it correctly, you're allowed to sell a certain amount of personal property (at loss or gain, it's all considered gain as far as taxes go) without declaring it. I assume this stems from the fact that it'd be far more costly to monitor garage sales than the tax revenue such monitoring would generate. But with ebay, it's an easy snare.

Personally, I think $5K/year is a fair cutoff. The gov't is trying to make sure those that make a living off ebay (or a fair portion of it) cough up their taxes. And they included the 100 transactions provision so as not to include people selling a car or something similar, which normally isn't taxable as income.

[red-beard]

So, because someone makes money online, they shouldn't be reporting it to the IRS? I do not like the IRS, I do not like the amount I pay in Taxes, but if those who owe, paid their share, mine would be lower.

We need to abolish the 16th amendment. Who's with me?

[thrown_hammer]

Originally posted by red-beard
but if those who owe, paid their share, mine would be lower.

Keep telling yourself that.

[Paul_Heery]

I think the big question here is:

"Would you trust eBay with your Social Security Number?"

[red-beard]

You are probably right.

The WSJ had an analysis of the Taxes collected by the Federal gov't. What I found most interesting is that most of the talk is about reforming the "Income Tax" system. The problem is there are a lot more taxes out there that collect a lot more money. Medicare and Social Security bring in more than the regular Income tax. Why is this? Well, the income tax has become so graduated that many people in the lower incomes do not pay any income taxes. But they still pay Social Security and Medicare. And there are a lot more people paying SS and Medicare than regular income tax or AMT.

The bad thing is, that no one every talks about reducing SS or Medicare taxes. But they are not actually ties to those programs. It's like the gasoline taxes that are supposed to be spent on the highways, but are actually put into the highway fund. Or the Lottery money that is supposed to be spent on education, but also just goes into the general fund.

[Moneyguy1]

Do I detect a falling out with E-Bay here?

[stomachmonkey]

100 items and $5k seem reasonable limits. Anything more and you are more than likely running an income generating business.

If I'm an ebay powerseller I'd open a bunch of new accounts today and start selling.

7 months is enough time to build up enough positive feedback.

Problem solved.

[stomachmonkey]

Originally posted by Paul_Heery
I think the big question here is:

"Would you trust eBay with your Social Security Number?"

That would be a big fat NO!

What we need is a new system that allows people to be identified with their Tax ID but would not be accepted for opening lines of credit etc...

[red-beard]

You can do that. It's called a TIN. You can request a separate number from your SS number.

[berettafan]

Originally posted by RallyJon
I keep reading that, but I can't seem to find where they're going? Maybe Craigslist out west, but our local CL sucks.

Philly CL is big time compared to Maryland Eastern Shore CL. Darn thing hasn't been up for very long at all and already it's getting dominated by $3,500 2003 BMW's (spam, spam and more spam!).

[stomachmonkey]

Originally posted by red-beard
You can do that. It's called a TIN. You can request a separate number from your SS number.

Really? Gonna look into that.

Thanks

[cashflyer]

Originally posted by Paul_Heery
I think the big question here is:

"Would you trust eBay with your Social Security Number?"

No... but I'll trust them with Rusty Shackleford's info.