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The IRS "eBay" Case
Old 05-31-2010, 07:14 AM   #1
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The IRS "eBay" Case

washingtonpost.com

"The Internal Revenue Service claimed Orellana hadn't reported more than $41,000 of income from about 1,800 eBay sales of designer clothes, shoes and other items during 2004 and 2005 and said she owed nearly $15,000 in taxes and penalties."

The Tax Court wasn't sympathetic to Orellana's case. Perhaps because she's an IRS employee.

I found this interesting:

“As online commerce grows, it is drawing increased attention from tax collectors. Beginning next year, a new law "requires the gross amount of payment card and third-party network transactions to be reported annually to participating merchants and the IRS," according to an IRS summary. For their 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, reporting the proceeds, said a spokesman for H&R Block, the nation's largest tax preparation company.”

Imagine getting a 1099-K with no back up on your expenses. That would be a major bummer. This won't impact most of us because "income from auctions that resemble a garage or yard sale "generally" isn't required to be reported".

No mystery why this is happening. Uncle Sam needs the money and raising taxes is a political minefield. So enforcement is stepped up.

Here's a link to the IRS site: Tax Tips for Online Auction Sellers
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Old 05-31-2010, 09:27 AM   #2
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Imagine getting a 1099-K with no back up on your expenses.
Somewhere in a college dorm, a couple students are putting together the startup's bid to subcontract eBay's 1099-K business... and Amazon... and Google Checkout...
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Old 05-31-2010, 09:58 AM   #3
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Yup, there's money to be made on this. Lots of folks who were flying under the radar are going to need help. Incorporating, setting up business, keeping records, filing tax returns, dealing with IRS audits, etc, etc, etc.

Maybe some folks from this forum should start a business to fill this need. We got folks with the talent and time to get 'er done. Wait a minute....wouldn't that be like w*rk
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Old 05-31-2010, 11:12 AM   #4
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The IRS/Congress is getting more interested in tracking income. We rent out our second home. Beginning in 2012 we will need to send 1099s to any organization we make any payment to for goods or services. That includes Home Depot, the electric utility, and so forth. Currently the 1099 requirement only applies to individuals providing services, e.g. our housekeeper.
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Old 05-31-2010, 11:18 AM   #5
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The IRS/Congress is getting more interested in tracking income. We rent out our second home. Beginning in 2012 we will need to send 1099s to any organization we make any payment to for goods or services. That includes Home Depot, the electric utility, and so forth. Currently the 1099 requirement only applies to individuals providing services, e.g. our housekeeper.
Here is a recent thread discussing the new IRS rules: Independent Businessperson's Burden
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