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Internet IRS Wants to Tax Online Sales
Tuan Nguyen (Blog) - May 8, 2007 9:30 AM
Print E-mail del.icio.us 138 comment(s) - last by Skullaria.. on May 23 at 1:49 AM
Millions of users from eBay and other sale sites could soon be required to file reports with the IRS for personal sales

A quick search for the latest gadgets on eBay can quickly reveal that there are literally millions of users selling and buying stuff on a daily basis. May of eBay's users are simply people at home who sell their belongings or other things for cash. A camera, a CD, clothes -- just about anything. For the most part, many people can make a moderate and even lucrative side income from selling products on eBay.

All this is about to change for millions of eBay users according to a report on a proposal being drafted by the U.S. Treasury Department. The IRS now wants a cut out of sales that occur on eBay and other popular user-to-user sale sites such as Craigslist. A proposal is being drafted that will require all major market sites to store, track and send user information to the IRS. This information includes transaction details and other personal information.

The Center for Democracy and Technology (CDT) reports that the new IRS proposal is all part of President Bush's 2008 budget proposal. The intention is for the IRS to track down small business income that is generated from the sale of personal property. If you make more than $5000 USD per year on 100 or more sales online, you may soon be forced to file income statements with the IRS. This means that users of sites such as eBay, Craigstlist and Amazon.com will be required to fill in more personal information as well as social security numbers.

Demanding that sites such as eBay request more personal information from users is already looked upon as a bad thing according to the CDT. Many Internet users are already up in arms over privacy concerns. Identity theft and other unfortunate situations can occur from storing user information online. Since the beginning, eBay users have experienced account hijacking and other malicious attacks, so storing information such as a social security number will become a big concern for many.

According to the Treasury Department, Americans owe it billions of dollars and this would be a legitimate move into getting some of that lost revenue. But the CDT indicates that the Treasury Department has not yet convinced Congress that this proposal is necessary.

CDT deputy director Ari Schwartz indicated that collecting personal information such as social security numbers is a big no-no for end-user security. "Such data retention proposals would force the creation of massive, privately maintained databases of personally identifiable data that government investigators could tap at their leisure," said Schwartz. "Sites that currently ask consumers for their [social security numbers} are very likely to be related to illegal 'phishing scams," added Schwartz.

The IRS claims that such a move is a necessity due to the "explosive" growth of the Internet. "One of the more popular business opportunities is the selling of new and used items through online auction sites such as eBay, Ubid, etc.," noted the IRS report.

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By Eurasianman on 5/8/2007 9:41:21 AM , Rating: 2
This is stupid. As if we don't file enough taxes as it is. Also, the fact that this might require us store personal data (specifically our S.S.N.) is the dumbest thing I ever heard of... especially on a site that's already been hacked a few times here and there. IRS should just lay off!!!

Next thing you'll know, we'll start having to pay taxes for our items on sites such as Newegg, ZipZoomFly, mwave, etc.!

This is so ridiculous! If this goes all the way through, I think many will see internet sales and purchases go down in no time!!!




By akugami on 5/8/2007 9:47:44 AM , Rating: 2
You can move to Delaware. No taxes, or at least no sales tax. I'm in the process of looking for houses there.


By jskirwin on 5/8/2007 10:15:18 AM , Rating: 2
Delaware makes up for the no sales tax by hitting you with a higher state income tax - at least for those in the middle - upper tax brackets.


By encryptkeeper on 5/8/2007 10:46:31 AM , Rating: 3
Oregon does the same thing. Don't EVER fool yourself into thinking you won't be taxed. You want a government? You're going to be taxed, deal with it.

People are always going to die, and they'll always be taxed. I admit, it already sounds like a lot more paperwork than is necessary for selling a George Jones CD for 7 bucks. But almost every other sale is taxed. About the only thing that isn't is a garage sale. MILLIONS are floating around Ebay, and they want their cut but if the tax reporting procedure is too difficult it will wind up killing EBay, and creating a whole new site. I used the garage sale analogy because if they want to kill this, they'd better use that as precedent. Sales Tax is traditionally levied on RETAIL goods, not items sold by a second or third party.


By nayy on 5/8/2007 11:22:26 AM , Rating: 3
And where do I move to if I don't want a government?
jk

I agree that makes no sense to tax small personal sales that occur online, but there are some people doing some serious profits selling new items online, and they should be taxed.


By Justin Case on 5/8/2007 12:08:17 PM , Rating: 5
>And where do I move to if I don't want a government?

Iraq?


By jskirwin on 5/8/2007 12:55:11 PM , Rating: 4
quote:
Iraq?


If you are looking for anarchy, I might suggest Somalia, parts of Congo and of course, the Northwest territories of Pakistan. In anarchic situations you become the government as long as you have the biggest/most powerful force.

Otherwise you end up dead/enslaved.

Life in Delaware would seem idyllic by comparison - even with the high cancer rates.


By Some1ne on 5/8/2007 6:09:17 PM , Rating: 3
Your post is self-contradictory. If there is an individual/entity with a "biggest/most powerful force" (or multiple ones trying to fight it out for control), then there is no longer anarchy. Anarchy refers specifically to the lack of such concetrated/centralized sources of control.

Don't confuse "anarchy" with "chaos". That's just what those fat-cats in Washington want you to do.


By awer26 on 5/8/2007 7:41:12 PM , Rating: 3
Sealand?


By CollegeTechGuy on 5/8/2007 6:41:25 PM , Rating: 2
Go get an island, get some people to move there with you. Get some small country to sponser you as a country. Declare War on the U.S.A. then after they start to attack surrender and you'll be rich. Look at how much money we have dumped into other countries we have attack.
:D


By crleap on 5/10/2007 5:55:11 AM , Rating: 2
We can all learn a bit about this strategy made famous by the Duchy of Grand Fenwick.


By qdemn7 on 5/9/2007 5:59:10 AM , Rating: 2
quote:
And where do I move to if I don't want a government?
Luna sounds good! Brass Cannon!


By decapitator666 on 5/10/2007 1:04:20 PM , Rating: 2
The montana mountains.. be sure to wear camouflage to fit in with the gun toting locals


By iFX on 5/8/2007 12:18:10 PM , Rating: 2
Use your brain. This proposed tax had ZERO to do with funding government. The goverment has operated just fine for hundreds of years before people starting selling things on the Internet.


By Rockjock51 on 5/8/2007 1:22:49 PM , Rating: 2
What's the national debt these days?


By BladeVenom on 5/8/2007 6:18:44 PM , Rating: 2
Taxing ebay items sure isn't going to fix the debt.


By ZmaxDP on 5/8/2007 2:04:28 PM , Rating: 5
Use your brain. Before the internet existed, people didn't sell things online, and instead had untaxed garage sales (comparable to selling a few items a year < 100 or <5000$) or took them to legitimate businesses like Pawn Shops which are taxed, or to illegitimate businesses that didn't report taxes but should have legally speaking.

Along comes the internet and you have what amounts to Internet Pawn Shops where you or I can take our old digital camera, have some guy sell it for us on E-bay, we get most of the cash and he gets a fee. His income should be taxed, though my part of the income shouldn't be as it was a personal item. You also have some sleaze balls buying items from Goodwill and other donation based charity stores and then selling them online for their real value. That should flat out be illegal, though there's no real way to regulate it currently. Get something like a tax in place for people who break a certain item or monetary limit and you're discouraging that directly and creating a paper trail as the people who continue would need to have documents on the items in case they get audited.

Or, just use common sense. If it is a tax, it has everything to do with funding the government, as that is all it goes to. The government. What else is this tax about pray tell? Getting back at the little guy? Doing evil upon the masses? There are very few people in the world who operate on vindictive reasoning or spite just for the fun of it. Most of those who do don't go into government. It is too much of a pain with too little reward.

This tax is completely justified and long overdue in its intent. The question is are they writing the law properly so that it targets the people it is meant to, so that it corrects bad behavior and doesn't prohibit good behavior, and so that the market isn't badly disrupted as a result.

I think 100 items and 5000 bucks is too low. I know that I've got several digital cameras and a few other items I might sell this year that will surpass that amount of money, though not that amount of items. I'm not who this is supposed to target, but it looks like I might fit the profile anyway.

I think they should up the item level to 200, and the monetary level to $10,000 with qualification occurring at either benchmark (don't have to hit both, just one).

Then, I think e-bay should create a tiered account structure where typical users who don't think they'll hit that amount can sign up as they currently do.

Any users operating in a commercial fashion on e-bay need to be required to open a storefront (or similar) account where they have to enter a tax ID number or a SSN.

If you are treating e-bay as a commercial marketplace to make profit, then you take on the additional risk of identity theft. If not, then you don't take on that risk.

Sure, crafty people could try and open multiple accounts to stay under the umbrella restrictions, but I'm sure some equally clever people at e-bay could find some way of tracking that down using some less sensitive information.

Point being, the government survives based on taxes, and in this case I think that certain people have found a loophole in tax laws that comes as a result of new ways of doing business (online). It is perfectly rational and justified for the government to change the law to close the loophole. The sooner they do it, the better considering how we're building up debt at the moment. Given, this is only a small drop in the bucket, but every little drip helps. Now if we could only get our representatives to stop bleeding the money out of the treasury like it was a hemophiliac...


By herrdoktor330 on 5/10/2007 11:59:47 PM , Rating: 2
Here's an Idea:

What if someone opened up an off-shore auction site in a place that didn't have to comply to US regulations? Say... I dunno... Vietnam? New Guinea? New Zealand? Uzbekestan? Anywhere.

Couldn't you in theory get away with keeping "business as usual" and collect your income that way? Then all the profits from the sales online go to one of those countries who won't turn over that information.

<rant>
Look... it's bad enough there's a silent war against the middle class of this country, with the elimination of blue collar jobs and lack of equitable employment for the masses. Do they have to stick it to those trying to eek out a living even more?
</rant>


By Skullaria on 5/23/2007 1:35:04 AM , Rating: 2
Good point. Chances are, if you're rich, you are donating your old stuff and not bothering to sell it on ebay. Unless you are really weird, because it is a lot of work to sell some crap on ebay for a little bit of money.


By borismkv on 5/8/2007 2:07:26 PM , Rating: 3
Alaska. No state income or sales tax. There are local sales taxes, but some cities don't levy any tax at all. In fact, the state pays you to live here.


By djc208 on 5/8/2007 2:46:05 PM , Rating: 2
They almost have to. I was there last year, and while it is very pretty, it's also crazy expensive to live there since, like Hawaii, everything except the fish and lumber has to be imported and, unlike Hawaii, the weather is only nice a few months out of the year.


By borismkv on 5/8/2007 3:11:07 PM , Rating: 4
Yeah. I blame environmentalists. If they'd just let this whole global warming thing go faster, I'd be living on beach front property :D


By Sandradj on 5/8/2007 2:22:43 PM , Rating: 2
OK, people... You don't think well.. Don't change goverment change country... LOL...At least in your accout data... EBAY is INTERNATIONAL auction site... So, if EBAY don't ask for other users, from Brasil, Europe itc. to put SSN - because they don't have that, than you just have to change data on EBAY for your account... register yourself as Nigerian or whatever... LOL... That's how you don't have to put SSN or pay taxes.... Don't ask what your country can do for you, aske what you can do for your country...)))):


By rushfan2006 on 5/8/2007 2:30:54 PM , Rating: 2
LOL...not a bad idea.....except if you were caught (assuming you are a US citizen/resident - else why would you need to do this anyway) that could be construed as defrauding the government. You see in the US you can rape, you kidnap kids, you can even murder -- and you'll get a lighter sentence than if you steal money or attempt to steal money from the government - then you'll get the proverbial "book" thrown at you.


By Plasmoid on 5/8/2007 3:58:33 PM , Rating: 2
Many other people would like to register for paypal as being in a different country then they are, due to paypal being pretty awfull in some countries (no support for bank accounts, getting your money out, treat you like a criminal, crippling exchange rates etc etc) but they cant, because "they have ways"

Since ebay are the same crowd i dont see it being hard to catch people with false countries put down. Not to mention its hard to complain about not getting your goods when it was shipped tot that fake address of yours and no one trusts a mexican seller that claims to live in delaware.


By HrilL on 5/8/2007 6:14:25 PM , Rating: 2
Yeah but its really easy to see that so and so registered with an American IP address so they would be caught pretty easy. I mean yeah you could use a proxy that


By psypher on 5/8/2007 10:53:27 AM , Rating: 2
Best of both worlds... get a house on the pennsylvania side of the delaware border... more reasonable income and property taxes, with sales tax free shopping a mile or two away... And if you can afford to live in chadds ford, the school district is great too.


By Aikouka on 5/8/2007 12:03:18 PM , Rating: 2
You're required to list your out-of-state purchases on your state-filed income tax :P.


By yacoub on 5/8/2007 12:27:58 PM , Rating: 2
And you'll probably get the free gift of cancer from all the chemical plants in DE, especially if you are raised there. Ugh. I've never seen more cases of childhood cancer than in folks who grew up in Delaware.


By jmunjr on 5/9/2007 2:47:52 AM , Rating: 1
New Hampshire. No income tax. No sales tax. There is tax on income from capital gains and interest though.

Regardless, the IRS cannot show you in writing the law that requires US citizens to pay Federal income tax. Do some research! You'll find this to be true!


By Ringold on 5/10/2007 2:53:22 PM , Rating: 2
It's the 16th Amendment.

The income tax was originally (and correctly) ruled by the Supreme Court to be unconstitutional.. so Congress changed the constitution such that it no longer would be. That's government for you.


By Oregonian2 on 5/8/2007 1:35:21 PM , Rating: 1
I don't think they're after sales tax (I'm in Oregon, none here). They're after income taxes for home based companies.

Couple problem points. Will employees of companies like "ebay stores" that sell for other people want to put their personal SSN on the line (so they get to pay the income taxes on it)?

Does this mean that if I sell a lot of my junk on eBay that they're actually going to force me to document the losses I'm taking (it's a virtual garage sale, pretty much all is at a loss) and REDUCE my taxes?


By BMFPitt on 5/8/2007 1:45:11 PM , Rating: 2
eBay stores who sell for others will have to give up their "Business SSN" or whatever that's called. They pay taxes on their commission profits, regardless of the profit or loss on the items they sell. A business such as that almost certainly would have been paying these taxes all along.

I don't know the details of how it works, but I think losses have to take depreciation into account. If you buy a new gaming laptop, use it for a year, and sell it for $1500 then you got $1500 worth of use out of it. Otherwise everybody would be claiming massive tax losses on their cars. And I know that you can't get a tax credit for losing money, you can at most get an offset on future profits (at least that's how it works with stocks.)


By Oregonian2 on 5/9/2007 8:45:23 PM , Rating: 1
So if I buy something for $1000 and sell it for $500 they're going to want me to pay income tax on $400 because they think the unit used is worth $100?


By Skullaria on 5/23/2007 1:32:01 AM , Rating: 2
NO, a business can take losses - for so many years. There is a year limit to it - I can't remember - maybe 5. Something like that. Then you either have to show a profit, or quit taking deductions.


By jpeyton on 5/8/2007 4:41:33 PM , Rating: 3
There are a lot of holes in these new proposed laws.

How do you define profit, and how would eBay calculate an income of $5,000? I could have sales of $10,000 with a 50% margin and make $5,000, or have sales of $50,000 with a 10% margin and make $5,000. Or I could get rid of all my old computer and electronic equipment, for which I already paid a sales tax, and recoup $10,000 with $0 profit.

eBay knows that enforcing this new legislation is a logistical nightmare, but they also know Congress cannot make them ask each and every user what their profit margins are, and if they are selling new goods for a profit or used goods for a loss.

Most likely, the IRS will spend more money enforcing this new legislation than they will gain from new income tax collections.

What many of you fail to realize is that the really big Powersellers already report their business to the IRS; the small guys typically do not, but their taxable income is paltry. It's the IRS's policy to go after big tax law offenders first, to recoup the most money per man hour spent chasing.


By darkpaw on 5/8/2007 5:41:50 PM , Rating: 2
You would show your Profit/Loss on your Tax return. The $5000 is a gross sales figure. If you hit 5000 gross sales with at least 100 transactions when Ebay would have to send something like a 1099-Misc form that tells the IRS you sold $xxxx worth of stuff.

On your taxes you would show the $5000 worth of income and then claim your expenses or whatever against that to show the "business" net profit/loss.


By BMFPitt on 5/8/2007 10:07:12 AM , Rating: 5
This isn't anything new. There has never been a point in time when businesses on eBay (not individuals selling old junk here and there) were not subject to income tax on the profits. The IRS is just making them report it. It's the same as working under the table at a restaurant.

Now feel free to carry on with your rants about this evil new tax.

(P.S. I have to pay taxes on NewEgg because they have a warehouse in my state.)


By glitchc on 5/8/2007 10:13:23 AM , Rating: 2
Websites such as Newegg, ZipZoomFly, etc. that are based in Canada already charge GST and PST to all Canadian residents (PST dependent on which province you're in).

Even Ebay auctions conducted by sellers who are legitimate in Canadian provinces generally charge GST and PST on completion of transactions.

Note that GST is a nation-wide Goods and Services Tax while PST is Provincial Sales Tax and differs per province. Some provinces actually combine the two and charge a single HST (Harmonized Sales Tax).

Hence, I believe that the IRS is absolutely fair in its claim to the tax since many businesses build virtual storefronts specifically for EBay. These are obviously not private sellers. EBay is also a safe virtual haven for people selling stolen goods, and some accountability will definitely reduce that type of activity. Equipment stolen from my university has ended up on EBay. It was spotted by technicians and the user was prosecuted.


By BMFPitt on 5/8/2007 11:01:25 AM , Rating: 5
1) This is not a new law. This is the law as it has always been. All income is always required to be reported. This is just a reaction to people not reporting the vast amount of income the comes from a source where it can be tracked.
2) Let's pretend it is a new law. Who would have enacted it? Isn't it like the House of...something? How did they get their job enacting laws?
3) Learn how to spell.


By OrSin on 5/8/2007 11:02:31 AM , Rating: 1
What country are you living in. Taxation without representing means you have no vote but must pay taxes.

First of all that a white man's line. Black and women could not vote for 150 years and they was still taxed.

Second of all internet purchused was al ways suject to taxation. It just that the IRS never inforced it. If you you read your tax code all online purchuse you should declare and pay taxes on. THe only thing happening now is they are forcing auction sites to do it for the large sellers. This is very similar to what they did to online site that had B&M stores or warehouse in your state.

They are just enforce a law that was always on the book.

And third I wish the USA was more like Canada, then the whole world would not hate us.


By kiwik on 5/9/2007 3:01:04 AM , Rating: 2
"Learn to spell and what grammar is before trying to voice what you think is an intelligent opinion."

Irony to it's best.


By Ringold on 5/10/2007 3:01:14 PM , Rating: 2
quote:
And third I wish the USA was more like Canada, then the whole world would not hate us.


Correct. They'd look at us like the international community looks at Canada; Like children. Occasionally nice to feign listening to but not worth paying serious attention to because Canada (or an America like Canada) doesn't have the military capacity to enforce anything nor the public will to change the situation much. Except it'd be much worse, because Canada gets minimal respect because Canada's defense is gaurenteed by America, but if America is also weak... Two weak, ineffectual little countries, whining about injustice in the world just like the EU but also like the EU unable and unwilling to do a damn thing about any of it.

And black people? Black's aren't a whole person, they're 3/5th a person, and 3/5ths a person can't vote for themselves!


By Tsuwamono on 5/8/2007 11:37:46 AM , Rating: 2
who said canada wasnt being represented? i live like 20 minutes from the capital and guess what? Our government actually listens to us because we can throw them out at a moments notice


By FITCamaro on 5/8/2007 12:42:47 PM , Rating: 1
And how again are you not represented?

Regardless of whether they tax ebay sales, you're represented by your congressmen and state representatives.

And since when does the government ever ask the US people whether or not they want a tax cut or raise? They vote for it in the house and senate. This bill will be no different.

The only thing I'm concerned with here is if you're going to be taxed on only a few sales a year regardless of the amount. If I sell just a car on Ebay, I don't want to have to pay taxes on my sale. I paid taxes on it when I bought it.

I say this because I sold my Camaro last year on ebay (to one of our fine Marines no less) for $8000. I would have been pretty ticked if I had to pay taxes on that one sale just because it was over $5000. Now the article says "more than $5000 USD per year on 100 or more sales online".

So to me that means if you make over $5000 USD per year on less than 100 sales, you won't be taxed. To me what it needs to be is "more than $5000 USD per year on 100 or more sales online OR more than a certain amount in total." And there should be a loop hole where if you sell just one or two items privately that total over that certain amount, its not taxed.


By rushfan2006 on 5/8/2007 2:37:16 PM , Rating: 2
quote:
this is NOT Canada. The U.S. was founded on the idea of preventing taxation with out represenatation. Any personnwhich makes more than 5000 dollars now is required to report that income on their income statements. If a person chooses not to do so, that is tax evasion


Um dude....yeah you are trying to sound like a tough guy to the person you are replying too but really you just are making a fool of yourself.

You have no idea what taxation w/o representation even means do you? ;)

The US STILL holds true to taxation w/o representation, that bridge was crossed a tad bit more than 200 years ago. You are taxed, you can vote. You vote to elect officials wo represent your voice - this is the whole concept as to why we elect officials. Its why the House is called House of REPRESENTATIVES....."represent". Therefore, how are you being taxed w/o representation...explain this to me please.


By zombiexl on 5/8/2007 2:49:53 PM , Rating: 1
let me play the devils advocate here and get flamed..

Lets assume for a moment that people who make their living from the gov by collecting SS (not retirees but lazy people who pretend they are crazy), welfare, and other gov funded money didnt vote.

Then remove the people who dont follow polotis at all from voting.

Now remove the people who follow politics through musicians and famous people who are heavily biased (Michael Moore, Bono, Howard Stern, Rush, Hannity, etc).

Ok so now you're down to about 3 people per elected representative.

I'm guessing they vote for whoever will reform taxes, stop wasteful spending, etc.


By bhieb on 5/8/2007 10:52:06 AM , Rating: 2
Depending on the state you live in you are most likely already required to pay tax on Newegg stuff. The laws (in TX at least) state that Newegg does not have to collect out of state sales tax. However the TX law states it is always the responsibility of the Buyer to pay sales tax, it is the collection by the seller that is exempt. Hence you have to report any "mail order" items and pay the appropriate sales tax.

Now they have very little ability to enforce this law, so most people don't do it. However it is illegal non the less.


By Oregonian2 on 5/9/2007 8:51:16 PM , Rating: 1
I *always* have to pay my state's sales tax when buying from NewEgg!!!

('Course, that's because we don't have sales tax here, although the government tries and tries and tries to make believe that other taxes will be lowered to compensate (duh, like for a month).)


By kamel5547 on 5/8/2007 11:19:20 AM , Rating: 2
At least in certain states you do have to pay sales tax on all online transactions whether or not the vendor charges it. In CA there is a line for such transactions on your tax return, and has been for a while (at least 2 years).

I ahve no issue with this in principal, but I do agree that eBay (or any online company) can't be trusted with SSN's. Its bad enough people keep losing records as is. As far as the taxes go, there are enough people using eBay as a business who do not pay taxes that I think something should be done. Perhaps if they only ask for your information once you've completed the number of transactions in a year (as opposed to up-front) it would be a good compromise for those of us who mostly buy and rarely sell stuff.

I doubt we'll see internet sales fall anytime soon, many sites charge sales tax nowadays and their prices are still well below big box stores...


By Tsuwamono on 5/8/2007 11:24:36 AM , Rating: 2
been taxed on online sales in Canada for years. The way you get around it is that if the company is based in another Province/state you only have to pay the federal sales tax.


By zornundo on 5/8/2007 12:33:00 PM , Rating: 2
This is NOT a tax.

This would create a reporting requirement on the part of ebay, etc. that they issue sellers a 1099 (most likely) when sales reach a certain level. It's just like getting a w-2 for working or 1099s for other stuff like stock sales or nonemployee compensation.

It won't make a difference for anybody who purchases online or casually sells stuff online. This is geared towards those individuals or businesses that appear to make a living selling stuff online.


By zombiexl on 5/8/2007 1:37:09 PM , Rating: 2
so you're saying if i sell a car (for exmaple) online for over 5k I should be taxed on the income, which most likely isnt income becuase i've already paid for it?

So then by this logic if i trade in a vechicle and get more then $5k on the trade I should pay income tax on that as well?

I agree people doing business over ebay should be paying income taxes, in they use that as a source of income, but many people use ebay just to get rid of stuff or as a backup to selling via traditional methods (classifieds).

I guess next the newspapers will have to report anytime someone lists an add in the classifieds? Maybe the sales will have to be handled via the news paper so they can report true sales?


By zombiexl on 5/8/2007 1:42:57 PM , Rating: 2
Guess htis was a bad example, becuase i misread the 5000 on 100 sales or more.

I guess the loophole is to sell only 99 items and then use your spouse to sell the next 99, etc. Before anyone jumps on me about that comment... I've only sold like 20 things on ebay in my life so I'm not saying I'd do this.

Still I cant see too many people turning their SSN's over to ebay.


By ZmaxDP on 5/8/2007 2:13:28 PM , Rating: 2
"So then by this logic if i trade in a vechicle and get more then $5k on the trade I should pay income tax on that as well?"

Uh, yeah. You do. If you use the money as a down payment for another vehicle, you don't. If you just trade your car in for cash you do have to pay sales tax on it in places like Texas. I'd imagine that in states without sales tax you have to report it in your state income tax. And as for federal income tax, I believe you have to report it there as well if it is over a certain amount, though I don't know for sure. I'll let someone else speak on that.


By BMFPitt on 5/8/2007 2:28:12 PM , Rating: 2
Unless you are somehow selling your used car for a profit, you don't need to report it. Even so, you would report it and not the dealer, because it is assumed that this rarely to never happens.

On the other hand, people doing massive amounts of sales on eBay generally are making a profit, and are not reporting it. That is why they want eBay to report for them.


By zornundo on 5/15/2007 1:35:20 PM , Rating: 2
quote:
so you're saying if i sell a car (for exmaple) online for over 5k I should be taxed on the income, which most likely isnt income becuase i've already paid for it?

So then by this logic if i trade in a vechicle and get more then $5k on the trade I should pay income tax on that as well?


You're only taxed on any gain on the transaction. If you sold the car for more than you bought it for, you would be taxed on the gain. That's the simple pictures. Having said that, you cannot take a loss on nonbusiness assets. For business assets, it's a little different, and a bit beyond the scope of this discussion.


By Skullaria on 5/23/2007 1:39:39 AM , Rating: 2
I think they should stick with a MONEY limit and not an item number limit - otherwise, tons of homeschool moms selling used curriculum at a loss are going to be considered a business.


By zombiexl on 5/8/2007 1:31:56 PM , Rating: 2
Not sure where you live, but in PA we are already required to pay sales tax on internet purchases. Of course this information is self-reported on our personal tax forms, and I suspect most people don't claim what they bought. I would guess most people dont even know about it.

I dont see the Federal Gov deserving taxes though. We dont have a national sales tax. If we move to the fairTax or soemthing then fine, but even the fairTax doesnt tax on used goods.


How many times can you tax a dollar
By hlper on 5/8/07, Rating: 0
RE: How many times can you tax a dollar
By ghost101 on 5/8/2007 10:08:49 AM , Rating: 2
I dont know exactly how it works in the US, but im sure there will be tax exemptions for businesses when buying products to avoid duplicate taxes.

Also, what do you mean tax on money.


RE: How many times can you tax a dollar
By BMFPitt on 5/8/2007 10:30:51 AM , Rating: 5
This isn't a sales tax. This is the income tax that businesses are already required to pay. They only pay tax on profits.

By "tax on money" he means that he has no idea what he's saying.


RE: How many times can you tax a dollar
By TheDoc9 on 5/8/2007 11:08:27 AM , Rating: 2
Maybe you don't work for a living and have a trust found or your parents pay for everything. Anyone who does knows exactly what he's saying. This is how taxes are broken down in the u.s.

First tax - From your paycheck, approx. 25-30%

second tax - sales/energy tax, everything you buy has at least an 8% sales tax, oil and energy include additional taxes.

New Third tax - additional tax when you want to resell your items.

Death tax - when you die, the gov. needs the rest of their fair share and will take 40% or more of what you have left.

As any rational minded person can see, these taxes are not low. They leave very little to workers for spending, all under the idea of someone else spending your money better than you can.


RE: How many times can you tax a dollar
By BMFPitt on 5/8/2007 11:24:15 AM , Rating: 2
New Third tax - additional tax when you want to resell your items.

When was this "new" tax enacted? Who sponsored the bill? Why haven't I heard anything about it?

Death tax - when you die, the gov. needs the rest of their fair share and will take 40% or more of what you have left.

If you're really worried about the "Death Tax" you must be the one with the trust fund. It doesn't even apply until you're over $2 million or something.

As any rational minded person can see, these taxes are not low. They leave very little to workers for spending, all under the idea of someone else spending your money better than you can.

They are really low compared to other countries, but then again most other countries don't have all the debt we do.

In reality, the government (which is one of the most wasteful entities on th planet, with the exception of other governments) can spend people's money better than at least 50% of the population. Let's face it, we have a lot of morons in this country.

But as long as you're complaining, tell me what you'd like to do about it. There's one party that always increases government spending: whichever one happens to be in power at the time. If you voted for one of them, you're part of the problem.


RE: How many times can you tax a dollar
By mjcutri on 5/8/2007 12:09:14 PM , Rating: 1
umm, the death tax is very real and applies to just about anyone who isn't bankrupt when they die because they tax you on your total worth, not just how much money you have. It is a progressive tax that starts at 18% for under $10,000 (most cars are worth more) and works up from there. I generally don't like wikipedia, but they actually have a pretty informative article on the tax.
http://en.wikipedia.org/wiki/Estate_tax_(United_St...

the worst thing about the tax is that there are loopholes that allow you to get around it if you know how (ie have enough money to pay a lawyer and accountant to set it up)
so it is actually worse for you if you are middle class cause most rich people know how to "hide" their money. Just ask the Kennedys


By CABCDEFG on 5/8/2007 3:26:08 PM , Rating: 2
quote:
umm, the death tax is very real and applies to just about anyone who isn't bankrupt


That's some excellent misinformation there.

While the "death tax" is very real, it doesn't apply until you have an estate greater than $2 million , an amount which goes up to $3.5 million in 2009. See I.R.C. § 2010

So despite all the fear mongering, it doesn't apply to most individuals.


RE: How many times can you tax a dollar
By BMFPitt on 5/8/2007 3:28:33 PM , Rating: 2
From the Wikipedia article you linked to:

"For a person dying during 2006, 2007, or 2008, the "applicable exclusion amount" is $2,000,000, so if the sum of the taxable estate and the "adjusted taxable gifts" made during lifetime is $2,000,000 or less, there is no federal estate tax to pay."

So as I said before, the tax doesn't apply until $2 million. And that's only with the Estate Tax version of a standard deduction. There's a bunch of other stuff you can deduct as well.


RE: How many times can you tax a dollar
By Some1ne on 5/8/2007 5:48:15 PM , Rating: 1
Stop being so short-sighted. $2,000,000 is just the exclusion rate for 2006-2008. In 2009, it goes to $3,500,000, and then in 2010 the death tax doesn't apply for the year, and then in 2011 it comes back with an exclusion rate of just $1,000,000. Isn't tax law fun?

Also, although a net worth of $2,000,000 seems high, it's pretty attainable even within the middle class. If you take someone earning a salary of $50,000 over 40 years, you've got your $2,000,000 right there, and that's without them even doing smart things like investing parts of it wisely, and without taking into account 40 years worth of appreciation in the property value of the house they bought when they were 30, and so on. So trying to downplay the tax by saying "well it only applies if you're rich, so who cares" isn't really correct.

Besides, regardless of how much money you have to have before the tax actually applies, it's still pretty screwed up that it exists at all. They should just make the 2010 thing permanent.


RE: How many times can you tax a dollar
By CABCDEFG on 5/8/2007 6:14:42 PM , Rating: 2
quote:
If you take someone earning a salary of $50,000 over 40 years, you've got your $2,000,000 right there


Yes, $2 million is $50K times 40 years. But that assumes someone can save 100% of their pre-tax income, which is absurd. Moreover, its important to note the tax only applies to your net estate - which means any remaining mortgages, credit card debt, etc. reduces the amount of your taxable estate.

Amassing a net worth of $2 million dollars is not nearly as easy as you make it sound - this tax only applies to the relatively rich.

As far as the sunset provision starting in 2011, no one expects Congress to simply let the applicable exclusion fall back to $1 million.


RE: How many times can you tax a dollar
By TheDoc9 on 5/8/2007 7:36:14 PM , Rating: 1
My financial situation is no concern of yours BM.

The original point was that the tax exists in the first place. And yes, the new proposed tax would be taxing resold items if you make a business out of it. The key here is that the items are being re-sold - That's a blatant double tax right there and there really is no excuse for it. But, as long as we're willing to accept it, it will happen. Complacency is often so subtle, yet it is one of the greatest evils in the world.


By CABCDEFG on 5/8/2007 9:05:42 PM , Rating: 2
As pointed out by other posters, it's not a new tax . It's the same income tax that everyone pays.

The proposal described in the article is simply a means of tracking potential income, along with a new reporting requirement.

Would you consider the payment of capital gains tax (an income tax) on the sale of a home a "double tax" simply because the house is being re-sold?


By BMFPitt on 5/8/2007 7:14:25 PM , Rating: 2
So the lesson to be learned here is: If you're planning to kill a billionaire uncle for the inheritance, make sure to do it in 2010.

Yes, $50k salary over 40 years is $2 million. So long as you don't throw any of it away on stuff like food and shelter. Seriously, you aren't dumb enough to have thought that argument made any sense.


RE: How many times can you tax a dollar
By ghost101 on 5/8/07, Rating: -1
By zombiexl on 5/8/2007 1:46:27 PM , Rating: 2
Businesses usually have a tax ID and are required to collect state taxes (where applicable) and usually dont pay taxes on items that are for resale.


RE: How many times can you tax a dollar
By hlper on 5/8/2007 4:10:02 PM , Rating: 2
There's no need to be emotional here. By tax on the money used to buy the item, I meant income tax. I assumed I was not the only person here with some experience with this form of taxation.

The problem is that sales between private individuals have generally never been treated as taxable income (with some exceptions like capital gains on some home sales). That's why you can sell a book at a garage sale for $.50 that you bought last week for $.25. If the government wants to start treating some private sales differently, it's an enormous can of worms. Right?


RE: How many times can you tax a dollar
By BMFPitt on 5/8/2007 4:18:00 PM , Rating: 2
Do you plan to sell at least a hundred used books a year for at least $5000?


By Oregonian2 on 5/9/2007 8:53:54 PM , Rating: 2
Could be 99 of those books and a single used car for $5K.


RE: How many times can you tax a dollar
By bhieb on 5/8/2007 11:02:30 AM , Rating: 2
Big key here, it is a tax on $5000 that you made (aka profit). If you bought a PC for $1000 and sell it on ebay for $300 there is no income so no tax. Now if you build it for $500 and sell it for $1000 and set up and ebay store that sells 100 of them a year. Then yes you should have to pay tax on that $50,000 income you made just like any other business. I could be wrong but I doubt selling nick nacs at a loss would be taxable. You may have to file a form, but if the net result was a loss it may even get you a refund.


RE: How many times can you tax a dollar
By zombiexl on 5/8/2007 1:50:47 PM , Rating: 2
Good point, but.. how exactly do you rpove the loss? I doubt most people use quick books (or the like) to store their info.


By Clienthes on 5/8/2007 9:53:47 PM , Rating: 2
If you think you might eventually sell your used stuff on eBay, you better start saving your receipts when you make purchases


RE: How many times can you tax a dollar
By yacoub on 5/8/2007 12:33:10 PM , Rating: 2
It all starts with a tax on the $1 you earned at work.

$1 your employer pays you, minus about 25-30 cents for income tax. Then take your 60-65 cents to the store to buy something with it and lose another 5-8% of the item's cost on the sales tax on the item. But that's assuming you can even purchase something for 60 cents anymore when the government's printing so much money inflation is going up at a pretty good pace yet your income most likely isn't matching that pace.

Now say that dollar went towards buying a home. A home with property that you pay property tax on. Or a car which you are mandated to have insurance for.

House of cards, folks, house of cards. ;)


This is NOT Sales Tax
By SocrPlyr on 5/8/2007 10:43:21 AM , Rating: 3
FACT: The Federal government does not levy or collect.

Read very carefully, this is only for income tax. Companies are selling on Ebay exclusively and thereby the Federal government has no traditional way of tracking their sales figures. Companies have realized this and taken advantage of it. Anyone selling on Ebay who does not report their income is guilty of tax evasion (there may be minimum amounts that are ok, I cannot remember). The government is just trying to find a way to collect from those individuals. The Federal government is also not looking to impose any new taxes here, only collect what is already owed to them. Thus, this only really affects sellers that sell a lot.

The only issue is that will they come up with a way to only collect identifying information to those who need to report their incomes. (Possibly only allow certain levels of sales volumes to certain types of accounts or something like that.)

Also, to those mentioning Delaware, you might be worse off because income reported to the Feds is automatically reported to states. Delaware will most likely have a higher income tax due to not having sales taxes etc.

Please read what articles say before posting.




RE: This is NOT Sales Tax
By SocrPlyr on 5/8/2007 10:45:45 AM , Rating: 2
whoops, editing screwed it up.
First line should read:

FACT: The Federal government does not levy or collect sales tax.


RE: This is NOT Sales Tax
By Grast on 5/8/2007 10:57:23 AM , Rating: 2
You may be correct! But this is the typical government response. If they are trying to collect on people engaging in tax evasion, that is privy of the IRS. That is the reason they require us to file tax statements.

Leving a new tax on an arbitrary number of sells per year and requiring auction houses to maintain detailed personal information about their sellers and buyers is NOT the awnser.

later..


RE: This is NOT Sales Tax
By bhieb on 5/8/2007 11:05:50 AM , Rating: 2
Don't think it mentions tracking buyer's records only if you sold more than the minimum amount.


RE: This is NOT Sales Tax
By BMFPitt on 5/8/2007 11:10:27 AM , Rating: 2
What is this new tax that has been levied?

Why should income not be reported?

Do you think the government would get it's share if we just trusted everyone to report their own income? I made $1 last year, how about you?


RE: This is NOT Sales Tax
By zombiexl on 5/8/2007 1:57:09 PM , Rating: 2
So lets all store all of our personal information in as many databases as possible. Sounds like a good fix..

The easier way is to kill the income taxes, move to a sales tax and then you get taxes on unclaimed (drug, unclaimed, etc) money as well.

Have you ever filed taxes quarterly? It's amazing how much you pay and how much more you miss the money. If everyone had to do it there would be a lot more complaints about the current tax system.


RE: This is NOT Sales Tax
By SocrPlyr on 5/8/2007 2:36:15 PM , Rating: 2
I agree with the privacy issues, but you also have to remember that for the most part your average user is unaffected. You must also remember that anytime you have a job you must give out your SSN. Here selling on Ebay is a job (or business).

As for doing away with income taxes, if you think putting more people farther into poverty while taxing rich people less is easier, ok.

Actually, everyone with a job already makes payments far more often than quarterly. Have you ever seen a paycheck? The fact is that many of these people are in business for themselves and are not paying taxes. They are not sharing their part of the tax burden. As for will there be complaints, sure, but there are always complaints about having to pay taxes. Sales through traditional auction houses must be reported, so why not online auctions.