Solve : IRS Coming After Online Auction Income?

1.	Solve : IRS Coming After Online Auction Income?
Answer» The days of easy cash from selling your baseball cards, comic books, and Pokémon figurines may be coming to a close. The IRS wants auction sites like eBay to start collecting Social Security numbers so users can be more easily taxed. Technically, income from auctions is no different than offline income. But few people report income from sales of used goods, nor are they required to. Online auctions fall into the same category as making money from a garage sale: You generally don't have to report income from sales of used household goods if you aren't making a profit on them. I don't have any statistics, but isn't this what the bulk of stuff on eBay is? Still, as of 2001, the CNet story linked above notes that the IRS estimated it was not receiving $345 billion owed to it due to underreported or unreported income. Naturally this proposal hasn't been met with much approval or excitement, probably because the IRS is only considering half of the equation. Business expenses are deductible against any income you make, so the raw materials you SPEND constructing the homemade dreamcatchers you sell on eBay can be used to offset any income earned. Auction fees are also deductible. In other words: I think it's quite likely that most people selling on sites like eBay aren't making any money at all. The few exceptions are people who run serious businesses off of auction sites, and I'm sure most of them are already paying taxes on their sales. Auction sites are only the latest online forums the IRS has targeted to scrape up a little extra cash. Late last year talk started generating about virtual assets like those in Second Life being subject to taxation. Naturally, it's casual sellers of used items who are going to get caught up in the IRS's messy web should this come to pass. I sell a fair AMOUNT of junk on eBay, but I've never made a profit on any of it against what I paid. Do I want to have to explain a few hundred or thousand dollars in income to the IRS every year that came at a price of several times higher? Really looking forward to it... http://tech.yahoo.com/blogs/null/25521#see_commentsAmericans! haha! this is going to stir UP Another hornest NEST !!! this is the first time I have actually seen this report on a mainstream internet site, this will be big-time news on TV within days! If you're making over $600(US) on your online auctions I think it's fair that you pay taxes like everyone else in the United States. I'm sure the simple one or two online sale person is not going to be affected.Although if these are used items, tax has already been paid on these once. That's where I would hesitate to get behind it.Quote from: GX1_Man on May 04, 2007, 09:20:46 PM Although if these are used items, tax has already been paid on these once. That's where I would hesitate to get behind it. Very good point.Users already have to pay a fee to list and sell items; I don't see why it's fair to have to pay taxes on top of it. It's no more than a large-scale swap meet... Quote Late last year talk started generating about virtual assets like those in Second Life being subject to taxation. Now, that's just flat-out ridiculous.If they pull this off,wonder how much shipping and HANDLING would be? Quote from: GX1_Man on May 04, 2007, 09:20:46 PM Although if these are used items, tax has already been paid on these once. That's where I would hesitate to get behind it. Well, I think you're talking about sales tax. But, the article is talking about income tax. And, since any income tax would be based on profit (i.e. net income which is revenue minus expenses) from the sale, it doesn't bother me. Indeed, it's only fair that such profit be taxed, just the same as profit from offline activities. As previous comments and the article have STATED, this would probably affect a rather small percentage of ebay sellers since many casual sellers are just getting rid of something they might otherwise sell in a garage sale, and are not making a profit. By the way, regarding sales tax on Internet sales, I think we can expect to see mounting PRESSURE by the states to start taxing these sales. They're well aware of the lost tax revenue under the present system regarding online sales and they're looking hard at it. The days of buying computer components and many other things online without paying sales tax on it may be numbered. Quote from: soybean on May 08, 2007, 08:12:08 PM As previous comments and the article have stated, this would probably affect a rather small percentage of ebay sellers since many casual sellers are just getting rid of something they might otherwise sell in a garage sale, and are not making a profit. And just how are they supposed to determine who's making a profit and who isn't?The auctions or other website operators do not make that determination. They would just issue an annual statement to the individual, a statement reporting the total amount sold through that website. The statement could provide a history of transactions for the benefit of the individual. The individual would then be responsible for determining whether he had a profit.

Answer»
The days of easy cash from selling your baseball cards, comic books, and Pokémon figurines may be coming to a close. The IRS wants auction sites like eBay to start collecting Social Security numbers so users can be more easily taxed.

Technically, income from auctions is no different than offline income. But few people report income from sales of used goods, nor are they required to. Online auctions fall into the same category as making money from a garage sale: You generally don't have to report income from sales of used household goods if you aren't making a profit on them. I don't have any statistics, but isn't this what the bulk of stuff on eBay is? Still, as of 2001, the CNet story linked above notes that the IRS estimated it was not receiving $345 billion owed to it due to underreported or unreported income.

Naturally this proposal hasn't been met with much approval or excitement, probably because the IRS is only considering half of the equation. Business expenses are deductible against any income you make, so the raw materials you SPEND constructing the homemade dreamcatchers you sell on eBay can be used to offset any income earned. Auction fees are also deductible. In other words: I think it's quite likely that most people selling on sites like eBay aren't making any money at all. The few exceptions are people who run serious businesses off of auction sites, and I'm sure most of them are already paying taxes on their sales.

Auction sites are only the latest online forums the IRS has targeted to scrape up a little extra cash. Late last year talk started generating about virtual assets like those in Second Life being subject to taxation.

Naturally, it's casual sellers of used items who are going to get caught up in the IRS's messy web should this come to pass. I sell a fair AMOUNT of junk on eBay, but I've never made a profit on any of it against what I paid. Do I want to have to explain a few hundred or thousand dollars in income to the IRS every year that came at a price of several times higher? Really looking forward to it...

http://tech.yahoo.com/blogs/null/25521#see_commentsAmericans! haha! this is going to stir UP Another hornest NEST !!!

this is the first time I have actually seen this report on a mainstream internet site, this will be big-time news on TV within days! If you're making over $600(US) on your online auctions I think it's fair that you pay taxes like everyone else in the United States. I'm sure the simple one or two online sale person is not going to be affected.Although if these are used items, tax has already been paid on these once. That's where I would hesitate to get behind it.Quote from: GX1_Man on May 04, 2007, 09:20:46 PM

Although if these are used items, tax has already been paid on these once. That's where I would hesitate to get behind it.

Very good point.Users already have to pay a fee to list and sell items; I don't see why it's fair to have to pay taxes on top of it. It's no more than a large-scale swap meet...

Quote

Late last year talk started generating about virtual assets like those in Second Life being subject to taxation.

Now, that's just flat-out ridiculous.If they pull this off,wonder how much shipping
and HANDLING would be? Quote from: GX1_Man on May 04, 2007, 09:20:46 PM

Although if these are used items, tax has already been paid on these once. That's where I would hesitate to get behind it.

Well, I think you're talking about sales tax. But, the article is talking about income tax. And, since any income tax would be based on profit (i.e. net income which is revenue minus expenses) from the sale, it doesn't bother me. Indeed, it's only fair that such profit be taxed, just the same as profit from offline activities.

As previous comments and the article have STATED, this would probably affect a rather small percentage of ebay sellers since many casual sellers are just getting rid of something they might otherwise sell in a garage sale, and are not making a profit.

By the way, regarding sales tax on Internet sales, I think we can expect to see mounting PRESSURE by the states to start taxing these sales. They're well aware of the lost tax revenue under the present system regarding online sales and they're looking hard at it. The days of buying computer components and many other things online without paying sales tax on it may be numbered. Quote from: soybean on May 08, 2007, 08:12:08 PM

As previous comments and the article have stated, this would probably affect a rather small percentage of ebay sellers since many casual sellers are just getting rid of something they might otherwise sell in a garage sale, and are not making a profit.

And just how are they supposed to determine who's making a profit and who isn't?The auctions or other website operators do not make that determination. They would just issue an annual statement to the individual, a statement reporting the total amount sold through that website. The statement could provide a history of transactions for the benefit of the individual. The individual would then be responsible for determining whether he had a profit.

Solve : IRS Coming After Online Auction Income?

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