San Francisco Chronicle – February 24, 2007:
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.
Durzy said eBay doesn’t even know whether any given transaction is completed and therefore can’t report authoritatively about a user’s sales to the IRS.
This comes from the heart: “Frak the IRS!”
This is only one aspect of the online tax equation. Here in Illinois, you are required to calculate all your online purchases for the tax year and voluntarily submit your 5% sales tax to the state revenue department. This sales tax would apply to anything purchased on eBay or any online merchant that didn’t already collect state sales taxes. If they really wanted to crack down, they could get you on the selling and the buying end of the transaction. I always wondered how long they would let this slide.
There are too much vested interests in eBay for eBay to succumb to IRS pressure. I know for sure that many eBay Powersellers won’t be happy paying all the extra taxes to IRS.
Easy solution. Adopt the Fair Tax. By putting the burden of collection at the retail sales level, then the vast underground economy that is the stock and trade of non-reporters like criminals, “undocumented workers”, and yes, even Ebayers will dissappear.
Instead of the current broken system of relying on self-reporting income and then cross-checking and depending on snitches, why not chunk the whole thing and go to the revenue-neutral inclusive Fair Tax?
The answer is that Washington will not do this. The IRS code is the giant club that they hole over the heads of all of us. With it, they know our income, spending, investments, savings…basically everything. The income tax was a bad idea, it’s time to chunk it.
Ha. I have a friend in IL who’s purchased laptop computers and iPods off of Amazon and is an avid eBay user…probably spends hundreds of bucks per year there.
I’d bet he’s got no idea about this “voluntary tax” in Illinois. And good luck enforcing this “voluntary tax.” That by itself is an oxymoron.
This whole thing is stupid…from a federal and local/state level. Not having to pay tax is probably the main reason many skip shopping locally and buy online instead.
And why should some ebayer get out of paying taxes on a 6 figure income? We’re not talking about the people selling an old hard drive or an odd piece of china. Some of these sellers reap serious profits. Some are even back ends for other commerce sites and brick and mortars. Congress is going to spend the money anyway, share the burden.
“Durzy said eBay doesn’t even know whether any given transaction is completed …”
But don’t they charge fees based on the sales price of an item???
I’m sure by the time this is over, the average Joe will end up taking it in the ___.
Since this is the IRS, it has nothing to do with sales tax. I don’t have a problem with them making sure that people running an online business pay federal income tax. However, my personal opinion is that taxes, both federal and local, are way too high and the money is generally wasted.
next it will be Craigslist, then GARAGE SALES!
In reality, how would the IRS exactly propose that people selling their excess crap on Ebay, CL and in garage sales do the accounting for this? Let’s say you get rid of that garagefull of junk, you often sell it for less than your purchased it for, and how do you account for the years you “warehoused” the stuff? Do you (like any business) deduct depreciation, use, and the original purchase price? What about some nominal storage fees? What about washing and handling, photos and doing the Ebay ad? What about shipping and handling? The gas to drive to the Post Office or UPS? Seems to me that for 99% of the junk on Ebay all these things will offset any real “profit” to the point of NO TAXABLE PROFIT.
Except for the really big “stores” that are selling all new stuff….most of Ebay is just garage sale stuff. Why hasn’t the IRS gone after garage sales before now?
6) So what? Business success should have nothing to do with whether or not you should impose this tax on some people.
If you’re gonna do it, then fine do it. But don’t justify it because some people are better at entrepreneurship than others and that they need to pay their taxes more than the average joe. Flat tax everyone so it’s fair. Don’t belly ache because someone is making a six figure salary and someone else isn’t.
If income tax was left as a voluntary thing, I would think most people would refrain from paying into it regardless of how many digits one’s income is.
For once, I agree with Guyver. Flat tax may be regressive, but if it were applied evenly to every flow of cash between parties, everybody who does pay taxes would pay less and most corporations would pay a helluva lot more. A flat tax might be regressive, but evenly applied it would be far better than a progressive tax full of loopholes. That’s probably why corporations fight the idea.
“Tax evenly applied.” Right. ‘Scuse me, I gotta go chat with the tooth fairy now.
#10, If income tax was left as a voluntary thing, I would think most people would refrain from paying into it regardless of how many digits one’s income is.
Good thing it isn’t voluntary. This way we all get to contribute to Bushies little war. Even the children not born yet.
I would have thought most of the businesses using eBay would be paying Corporate Taxes already.
Corporate taxes, Mr. Fusion? When did that start happening? I thought they were moving headquarters out of the U.S. to avoid what little tax the many loopholes in the code give them.
#13, There is a computer store here in town that does 99% of his business on eBay. Now who buys bulk quantities of chips and crap on eBay? Geeze, the shipping would kill you. But most of his crap is computers and parts.
The one time I bought something from him, a used sound card on a Sunday, no tax, no receipt (he’ll remember me), and no bag. The money went straight into his pocket.
But I digress,…
see http://doted.info
“The money went straight into his pocket.” So what?
#16, I don’t think you understand.
In America, we have this thing called taxes. The store owner is responsible for collecting and remitting a sales tax to our state government, the same as most states. As pointed out, he didn’t do this. Now my child and possible grandchildren will be paying for a certain dirty little war in the mid-east. It would be oh so nice if this man, as well as you, paid their taxes.
If you don’t think the taxes are right, then let your representatives know about it. But don’t decide to evade your taxes and put more of a burden on people like me and my child.
The goal is to pile on the taxes until the amount collected exceeds the gross national product at which time we switch to a purely tax based economy.
This is just a start. Let’s say I buy a Turbo-Encabulator and pay my sales tax on it. Later I sell it used on E-bay, now paying a seller’s tax while the buyer also pays a sales tax. Isn’t it sweet? Taxes, taxes everywhere.
#17, people shouldn’t have to pay a sales tax for used items, used sound cards included, because the tax was already paid for that item when it was originally purchased. Now, if you want to bring up store owners dodging the collection of sales taxes on new items, then go right ahead.
Since you brought James Cameron back from the dead, the dates on the articles are wrong, and the number of comments does not match the number of comments. Are you sure James Cameron wasn’t in front of a blue screen showing the skyline of New York City half an hour or so before the (anti) gay Baptist minister was crucified? And did he leave a paper trail?