IRS to Tax eBay and Other Auction Income - You Can’t Say that We Didn’t Warn You 4/16/2007 - 2,348 views, 3 Comments
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Two years ago we warned you that the IRS was going to look at taxing income made by selling things on eBay. Some of you didn’t believe us. Some even counselled not to worry about it. But sure enough, it’s almost certainly going to happen, and sooner, it would appear, rather than later. Last year the IRS requested of Congress that they require “information reporting on gross proceeds from sales conducted on Internet auction sites,” adding that “The IRS must have the tools needed to address underreporting of this income.” The request was repeated at least twice, and now Congress is finally paying attention. A Treasury Department report suggests that an online auction broker such as eBay “would be required to make an information return showing its customer’s name, address and Taxpayer Identification Number, as well as gross proceeds from the sale of tangible personal property.” And what is eBay’s response? Said an eBay spokesperson, “What’s happening is there’s this assumption that people aren’t reporting. There are a good number of people who are professional sellers on eBay. However, there’s no evidence or any kind of statistic out there to indicate those folks aren’t already accurately reporting to the IRS.” Uh huh. Said Steve DelBianco, of the Association for Competitive Technology, in an interview with Politech’s Declan McCullagh, “The IRS coveted this kind of data for years and they didn’t have a chance of forcing you to collect it from garages, from flea markets. But they have a chance in the online world. They’re getting the data because they can, not because it’ll generate significant amounts of income.”
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It’s already supposed to be taxed, just like you’re supposed to send your state a check for any non-taxed purchases you make online… the IRS is just changing enforcement of it, that’s all. This isn’t a new tax.
Comment by Jonathan — 4/16/2007 @ 6:23 pm
This type of income has always been taxable. Ebay sellers profiting from selling items on ebay need to be reporting their income and paying taxes on that income. If they’re not, then they’re breaking the law. Forcing ebay to provide 1099s to sellers isn’t a bad idea in my opinion. Power Sellers on ebay very likely report their income as they’re supposed to due to the amount of money that they’re making online. I believe that the mom and pop ebay sellers largely don’t report their income. Now this is likely more due to ignorance than intentional. A friendly form 1099 from ebay would go a long way toward curing that “ignorance” problem.
Comment by David Talbot — 1/18/2008 @ 6:05 pm
What if I sell my used items at a loss? Isn’t it just a return of equity? I already paid tax when I first bought the things! Come on!!! How many damn times do I have to pay tax on the same items??
Comment by S Cunha — 2/17/2008 @ 6:34 pm