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IRS To Go After eBay Sellers
prostoalex writes "Fed up with numerous violations of tax law by individuals and businesses selling goods on eBay, Amazon Marketplace, uBid.com, etc., IRS is pushing Congress to make online marketplaces responsible for reporting the sales information to the tax man, in order to prevent under-reporting of the income. eBay's 'own statistics suggest that there are 1.3 million people around the world who make their primary or secondary source of income through eBay, with just over 700,000 in the United States', News.com says." How long before the same fate befalls the folks who make a living working the Massively Multiplayer secondary markets?
I don't understand what could be wrong with it.
I don't know about eBay, but I know for a fact, that there are people in Poland using local auction service that move tens if not hundreds of thousands $ worth of stuff monthly, without paying any taxes on that. Polish revenue service lately started monitoring it closely and collecting from those people, reassuring all the time, that they are not interested in people using internet auctions for a garage sale. As far as I know, that is true.
Whether you believe in taxes, is another matter, but I don't see why certain individuals should get a tax break just because it is difficult to hold them accountable. It's within a power of the state to levy taxes and create the law to help with it. And sometimes the state forces some reporting duties on some entities in order to help the state. Take for example your salaries: in most countries employers are forced to report the salaries of the employees to regulatory and/or revenue agencies, and I don't see anyone screaming bloody murder.
Robert
Bastard Operator From 193.219.28.162
There is no tax due in the UK on your personal property when disposed of, even if at a profit (personal effects are exempt from capital gains tax because they would mostly generate losses to be offset against other gains). If you trade stuff you acquire for re-sale, and you trade enough to go over the VAT threshold (which is quite high), you will have to account for VAT as a second-hands good trade (essentially, VAT is charged on the difference between the buy and sell price). On the upside, you can reclaim VAT on all the kit you use to trade (e.g. computers, fuel, etc.).
In the US and Canada things are a bit different due to sales tax. In Ontario, for example, everyone is required to send a cheque for PST to the Ontario finance minister for all sales of goods, no matter how small, no matter if a yard sale, no matter if a private sale. Of course, not one citizen abides by this crap law (except where the provincial or federal Government can track the ownership of private goods, such as cars, planes and boats). But once EBay are sending nice XML files straight to the Government tax weasels you can imagine a nice automated bill (applied directly to your EBay account, naturally).
The fact that you paid income tax already on your wages from your regular job is irrelevant.
It's "technically" "illegal" to sell most MMO stuff like gold and characters, at least for the most heavily populated. The irony?
No... It is not "technically" illegal. Violating an EULA does not actually violate any criminal laws. They can of course refuse you service or take you into civil court for a breach of contract but they cannot impose criminal fines or jail time on you for such an act.
Secondly, the IRS still requires taxes paid on money gained through illegal means. Drug dealing, gambling, bootlegging, extortion, and laundering all count under this aspect. Chances are if they can't prove you are doing something wrong they will nail you for tax evasion.
Happened to Al Capone since they couldn't get him any other way.
"I am the king of the Romans, and am superior to rules of grammar!"
-Sigismund, Holy Roman Emperor (1368-1437)
The system is quite fair, indeed.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Maybe for once your partisan republican ass should stop making blatant lies?
You're actually saying that, and then linking to an "analysis" that cites a fictional town with a flat tax rate as an example of why he's wrong?
Income, property, and other tax rates are NOT flat. They are largely "progressive," which translates to "punitive." Here are the numbers, released by the IRS, based on last year's taxes:
84.6% of all federal income taxes are paid by the top 25% of earners
96.7% of those taxes are paid by the top 50%
The top 1% pay over a third of those taxes.
And just to flesh out the picture: the lowest-earning fifth of the citizenry receive over $8.00 in government spending for every $1.00 in taxes paid. Middle income households receive $1.40 for every dollar paid, and the high end people receive $0.41 for every $1.00 they spend. Government spending aimed at the lowest-earning 60% exceeds that which is collected from them. It's simple redistribution, and the more you make, the more it tilts away from you. Your flat rate fantasy example is complete BS (but, you knew that).
Don't disappoint your bird dog. Go to the range.
1) You can sell an object for less than you paid for it and still owe taxes.
If you buy an item for your business, and deduct that purchase from your taxes, and then sell that item later, you owe taxes on it. You can't buy a $2000 laptop, deduct $2000 from you income, and then sell the laptop for $1500 and still retain the $2000 deduction. Beyond this basic fact, the exact tax effects get more complex because it depends on how you are deducting the original purchase of the laptop (either as a Section 179 expense, as purchased inventory in the laptop reselling business, or depreciated on a multiyear schedule).
2) You can't have a "business" that generates losses year after year
If you have a "business" that loses money too often, the IRS will start to get suspicious and they will try to declare the business as a hobby. The exact rules are unclear, but you need to be able to show the IRS that you really are trying to make a profit, are dependent on that income, etc.
As an aside, there is no fixed limit on the deduction of ordinary losses from a business (other than you other income sources). The $3,000 limit applies only to losses on purchases of capital assets.
Two wrongs don't make a right, but three lefts do.
Yes, true, but these numbers mirror the change in income and wealth distribution to the very top over that same time period as well . . . Just look at CEO compensation in 1979 vs 2007.
You're likely looking for this.
It's better to vote for what you want and not get it than to vote for what you don't want and get it.
- E. Debs
Schwab, Vanguard and Alex Brown send me 1099-(B/Div/Int) and it reports every sale I made last year, identify the security, date of transaction and net proceeds from the sale to IRS and to me. The data is machine readable. IRS checks to see if I have reported all these sales in my tax return. It is upto me to calculate the profit/losss/captial gains. It is my responsibility to prove the correctness of my calculations if I am ever audited. Ebay's responsibility is nothing more than what almost all the financial institutions have borne for ages.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
I think there are two distinct issues at hand here. You getting $45 for a stereo that cost you $150 new isn't one of them.
First, there are people who go yardsale-ing and pick up loads of crap for next to nothing and then turn a profit on Ebay. This is the same as the corner store buying crackers from Nabisco and selling them to you for a profit. That profit should be taxable income-minus expenses.
The next issue is tax depreciations. Several items when used in conjunction with a business can be depreciated over a useful life time. Usually this is between 3 and 5 years but can be more or less depending on what they are. Now, If you depreciate the cost of your work computers over 3 years, then turn around and sell them at a higher value, then their depreciated value, you are making a profit.
This depreciation is used commonly for work vehicles, computer software, office chairs and stuff like that. Machinery and tools are also depreciative. If i remember correctly, You can depreciate to 30% of the value over three years on most things and your can depreciate to scap ($0.00 value on some)over the expected lifetime of the item. So after going this route for three years on a $10,000 car, you have deducted the costs of an asset costing $10,000 to $3500 or so. But if you sell it for $5000, then you have to repay the taxes on the $1500 in deductions for depreciation as income. A common step is to re-appreciate the value if you know you will be disposing of it soon and you can offset the differences with other tax structures.
Now, It has been a while since I handled my own taxes so some things could have changed since then. This is also a grossly over-simplification of the situation concerning depreciating items but it serve the point of illustration well. I'm pretty sure this is the taxes that the IRS is looking for. The Ebay businesses and the sell off of depreciated items for more then their depreciated value. But in either situation, if your are making a profit, you are collecting income and should be paying tax on it.
This later is a confusing animal. It is like deducting the amount of taxes paid in 07 for the tax-bill that was owed in 06 from the return being filed in 08. This beast is best left to qualified CPAs as far as I'm concerned(err have found).