IRS Wants a Cut of Sales On eBay and Craigslist

Ponca City, We love you writes "In 2009, $60 billion worth of items were sold on eBay, meaning 'extra' money for many sellers, whose activities may provide them with taxable income. Now the Washington Post reports that beginning next year, a new law will require 'the gross amount of payment card and third-party network transactions to be reported annually to participating merchants and the IRS.' Also, for 2011 tax returns, 'taxpayers who annually sell more than $20,000 worth of goods and have more than 200 electronic transactions' will receive a new IRS form, known as 1099-K, for reporting the proceeds. The new tax issues shouldn't be a concern for people who sell just a few small items online for less than they paid for them, because as the IRS points out, income from auctions that resemble a garage or yard sale 'generally' isn't required to be reported. But if an online garage sale turns into a business with recurring sales and purchases of items for resale, it may be considered an online auction business. 'Generally, transactions resulting in a gain are reportable, regardless of whether the taxpayer is conducting a business,' says Gil Charney, principal tax researcher at The Tax Institute at H&R Block. The real reason behind the law is simple: Research shows taxpayers do a much better job of reporting taxable income when they know the IRS is receiving information about their transactions."

Comments

it's worse than that

[larry bagina]

starting in 2012, businesses (that includes me and many other people who do work on the side) need to file a 1099 if you pay more than $600 in goods or services from someone.

Re:it's worse than that

[BitterOak]

Am I supposed to now itemize EVERYTHING I spend? I try to do that now for business expenses, but now if I walk into Walmart to buy a $3.00 can of shaving cream because I ran out that morning mean I have to keep track of all that shit?

Only if you're claiming that can of shaving cream as a business expense. This law covers only those items you will claim as a business expense, which as you say above, you already keep track of. Items for personal use, regardless of how expensive, are not covered by these new reporting requirements. So, if you buy a $700 computer at Staples for your home business which you will claim as a deduction, you will now have to get Staples' taxpayer ID and fill in the paperwork. If you buy the same computer for your kids to do their schoolwork, you don't have to.

Re:Well for starters

[LynnwoodRooster]

it means that they will have to collect your Taxpayer ID number and then validate it.

so no illegal alliens can use E-bay.

Perhaps you weren't aware that illegal aliens can get a ITIN (Individual Taxpayer Identification Number) from the IRS, and can actually report and file 1040s every year with that same TIN. Even when here illegally (thus making their entire income illegal).

The IRS doesn't care as long as you pay taxes, unless they feel you didn't pay enough, then it's up to you to prove you paid enough not up to the IRS to prove you didn't.

Re:Well for starters

[TheRaven64]

It's also worth noting that the IRS is prohibited by law from sharing information with other government departments, so illegal immigrants can pay taxes, even admitting to being illegal on their tax return, without fear that this information will be shared with the immigration department. Apparently getting money from people is more important than enforcing laws.

Re:Well for starters

[Anonymous Coward]

IRS can't share the information with other agencies on its own, but other agencies can request the said information. You know, the FBI can subpena your tax return and IRS will have to give it to them. What IRS can't do, is take your tax return and share it with other agencies without such a subpena.

Re:Cue all the teabaggers blaming Obama...

[Low Ranked Craig]

Most of the tea party people I know hate Bush only slightly less than Obama...

Having said that, the 2009 and 2010 deficits are almost 3 trillion dollars. The biggest deficit 2000-2008 was about $480 billion. So, while I believe that $480 billion dollar deficits are bad, $1.5 trillion is 3 times worse, and 2011 isn't going to be much better. The record debt under Bush looks very conservative compared to the actual 2009 and projected 2010-2012 budgets, and as usual the deficits are likely to be larger than the projections...

I hate all politicians and believe they all need to be dragged into the street and shot as traitors

That would be too good for them. I think stripping them of their power and assets and forcing them to get real jobs would probably be a fate worse than death for most of them.

Re:and...

[rubycodez]

http://en.wikipedia.org/wiki/File:US_incarceration_timeline-clean.svg

it's a big business, and also helps the ongoing transition to a police state.

Re:Well for starters

[LynnwoodRooster]

You proved my point: you had to prove your innocence otherwise you were automatically guilty and subject to those fines and interest. If you didn't write back it would have been levy and lien time for you, regardless of the actual truth of the matter.