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?

Comments

I support the IRS on this issue

[140Mandak262Jamuna]

A sale is a sale and income is income. If the law says there is a tax on income it should apply uniformly to everyone. Being a fully computerised market place, such reporting would not be too onerous on E-Bay. In fact small businesses, the mom-and-pop stores would find documenting their tax compliance more burdensome. Banks send out 1099-INT forms listing one dollar and two dollar interest earned. Why cant E-Bay?

When I came to USA first I was amazed to see how much of the expensive stuff is left around the homes completely unsecured. 1000$ grills, 800$ deck furniture, children's toys, garden tools, garden sheds are all left unlocked and no one would steal them. I have lost one tiny bottle of coconut oil left on the sill of an unlocked window in my hostel back in India. Then slowly it dawned on me that most Americans would not buy goods of doubtful provenance from shady sellers. Infact there is a market in b ombay called Chore Bazaar (thief market) which does brisk business. I would very much E-Bay not to degenerate into a giant "Chore-Bazaar.com"

Paying the Real Bills

[Doc Ruby]

How long before the same fate befalls the folks who make a living working the Massively Multiplayer secondary markets?

Why shouldn't they pay their taxes like the rest of us do, if they live in the US? They also count on the cops protecting their house and their jogging girlfriend (or sister), the firemen saving them and their cats from their careless neighbor leaving the iron on. They need the gas station attendant to read well enough that they don't damage their car while changing the oil. They want the courts to stop the chemical factory upstream from poisoning them. They want that border protected with at least the threat of reprisal in case China doesn't stop at Taiwan, and invades Alaska.

I know the rest of us do, and we pay for it. Why should we pay for them to be safe, too, just so they can work in a game in their pajamas?

What we should change is what we're paying for. We shouldn't pay the government for the money we earn, income taxes. We should pay the government for the services we consume, which benefit is just about proportional to what we consume. So we should pay zero income tax, and maybe about 25% sales tax: a $16T economy should support a $4T expense at Federal, state and local budgets. Easier to collect from fewer points, easier to shut down violators' business, and encouraging savings instead of wasteful unnecessary consumption, with a built-in "tax break" bonus. Just a few tweaks to make essentials like raw food, raw cloth, median primary rent/mortgage tax free, and equities at a nearly negligible rate.

That is reality. Just working in a virtual world doesn't mean your body isn't consuming services with a cost in the real world. Ducking the taxes is a losing game for the rest of us subsidizing them.

Re:MMO Black market

[apathy maybe]

I recall the story of a brothel owner in the US who was only prosecuted for running a brothel. She paid her taxes, had a good working environment for the workers, health insurance and all the rest. (Of course, I can't find a link to the story.)

Moral of the story? Don't get cause for speeding when leaving a bank robbery.

Or in other words, break only the law that you intended to, and not any other.

On topic to the story, in Australia at least personal items are not taxed if sold, and don't have to be declared for either Centrelink (the government handout department, they pay my way!) or the taxation department. As far as I know, hobbies also don't have to be declared (or maybe they do, but just aren't taxed).

3rd party seller

[ianchaos]

My Grandmother (89 years old) is quite net savy: email, instant messaging, and ebaying almost daily. The vast majority of the items that she sells on ebay however are for other people who live in her massive assisted living complex. Last year over $12,000 worth of goods went through my Grandma's ebay account. She only charges the people a dollar per posting (on top of the normal ebay posting charges). For her it's just a fun hobby, so her net income off of that amount was almost nothing. With this kind action by the IRS my Grandma would be held liable for the taxes on that $12,000, regardless of the fact that she didn't really make any kind of profit from it.

I'm sure that there are many people who sell an item here or there for a friend on their ebay account. There is no way for ebay to distinguish a personal sale from a 3rd party transaction, so for ebay to report this information to the IRS as profit could be wildly inaccurate.