Filed under: Business, Finance, Internet
Taxing online sales
As if there wasn't enough to complain about with the IRS, add this to the list. The US Treasury Department is making a charge at forcing Internet auction sites to turn over the identities and social insurance numbers of their users to the IRS so they can keep tabs on income made through these types of sales. Sometimes you read a story and you don't even know where to start directing your anger.
The first, and most obvious problem with these sites handing over the SSN of their users is that they don't have them. And why would they? The strange but loveable guy who runs the flea market parking lot doesn't take the SSN of the people setting up tables. If he did, far fewer people would sign up. Online auction sites are no different. It seems as though Internet auctions may be victims of their own success. It is reported that nearly 700,000 Americans make their primary or secondary income from online sales. This is income that could easily go unreported, prompting the Treasury Department to consider action. But at what cost? Sure, Amazon and EBay and the like will take a hit, but will continue to profit. But many of the lesser known sites may not have the physical or financial stability to stay afloat if they are required to obtain and report the identities of their users.
In the end, the small change in the tax gap certainly can't be worth cyber-ransacking these smaller companies and ruining people's lively-hoods. Unless of course it causes the all-too-fun term "cyber-ransacking" to catch on, in which case these small companies may be deemed as unfortunate but necessary losses.
Reader Comments (Page 1 of 1)
spencer.r said 2:32PM on 4-16-2007
Um...actually the flee market does require social security number information (or some other kind of federally recognized identification information) from people setting up booths. (some blatantly ignore that requirement but do so while facing criminal civil problems... so Why wouldn't the online equivalent of them be required to meet the same limitations?
God forbid those 700,000 be required to, ya know, pay like the rest of us... of course, this'd be a lot smaller of a problem if the national sales tax was in place.
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Chris said 8:52PM on 4-16-2007
If you don't want the goverment intrusion than don't sell online. People had to see this coming, with more and more people buying online it was inevitiable. Be prepared the states are going to want there share as well.
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MrCrumbles said 8:52PM on 4-16-2007
The title of this post is misleading. I thought they were imposing a sales tax for all online purchases. Instead they're just taxing the income of retailers who sell the goods. This seems fair enough. The author must have a lot of friends or family who scrape a living this way. And I don't buy his argument of "cyber-ransacking." He's being a bit dramatic there.
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Rich said 8:53PM on 4-16-2007
Your outrage is misplaced. The target is not the occasional person who is selling a few things through the site. The target is the person(s) operating a commercial business. If these folks were playing fair, they would already have a tax number and would already be reporting this income.
These folks are cheating all of us. We pay our taxes, so what moral reason can be given for these individuals to not pay theirs.
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Joe said 8:53PM on 4-16-2007
The Federal Income Tax is illegal and needs to be stopped... but then again so is the war in iraq :-(
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Doug Wiser said 9:23PM on 4-16-2007
Who says those receiving income from auction sales don't report it along with their other income?
The issue is government intrusion into private lives. This is a Bush mentality. He wants to expand government to spy on all Americans.
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Chris said 10:55PM on 4-16-2007
How are the social numbers going to be verified? Why not make up a number and move along? =)
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Dimplemonkey said 10:55PM on 4-16-2007
Can you show us the direct link on the gov't website that states this. I would like to read it and be thorough about it to other folks that may find this interesting. Thanks.
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RYAN said 10:56PM on 4-16-2007
online auction sites should already be making there users provide a ssn attached to the users account to prevent the millions of fraudulent transactions that they facilitate every year. The only reason they dont already is the users are commiting fraud against each other and sites like ebay still collect there fees. This may in fact just be a cover to force the industry into regulating itself and actually protecting its users from fraud instead of profiting from it.
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jason said 10:56PM on 4-16-2007
What about electronics junkies? I buy an inordinate amount of hihh tech equipmnet every year (computers, home theatre, etc) new from retail stores, or even on eBay. In order to make room for the new stuff, I have to sell the old stuff (usually on eBay). Last year I sold over $5000 on eBay, at a HUGE loss from what I originally paid for the items.
What is going to happen to people like me? This is NOT INCOME! What about people who sell their old cars on eBay? Even though the sale may be for several thousand dollars, the sale will almost always be at a loss!
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dan said 10:56PM on 4-16-2007
ok - people who sell online are shocked
that they might have to pay taxes on
their income?
he horrors!
now just go pay your taxes and vote and
quite crying.
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Ken B said 10:57PM on 4-16-2007
There are many people who buy a large amount of items from these sites. What is going to happen when the sellers have to pay taxes on their sales? They will raise the price of their good to make up for the difference. In the end this is going to lead to higher prices for everyone.
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Bob Bojangles said 8:41AM on 4-17-2007
Um, hello? FairTax people. Go vote. Say goodbye to the IRS.
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Dandy said 8:42AM on 4-17-2007
Fleamarkets don't generally require an SSN, but most require you to have a state resale permit, if you live in a state with sales tax, and often a city business permit, though there are temporary ones that most people can get for occasional events.
It is actually pretty dumb not to report eBay income, because most people use Paypal or receive checks that must be deposited. Paypal keeps records back to the day you signed up-- just check your "History" to see. If they were ever to turn over those records to the IRS, you would no be able to hide that income. Not to mention that anything you withdraw to your bank account has a paper trail there too.
The only way you could avoid a paper trail is to accept only cash or cashable money orders, (like those from the Post Office). Of course then the Post Office will have your driver's license on the money order when you cash it there, and who knows where that info goes. Also your business would suffer since nobody wants to pay that way. Better just to pay your taxes, if they could get Capone, they could get you too.
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Dandy said 8:42AM on 4-17-2007
Fleamarkets don't generally require an SSN, but most require you to have a state resale permit, if you live in a state with sales tax, and often a city business permit, though there are temporary ones that most people can get for occasional events.
It is actually pretty dumb not to report eBay income, because most people use Paypal or receive checks that must be deposited. Paypal keeps records back to the day you signed up-- just check your "History" to see. If they were ever to turn over those records to the IRS, you would no be able to hide that income. Not to mention that anything you withdraw to your bank account has a paper trail there too.
The only way you could avoid a paper trail is to accept only cash or cashable money orders, (like those from the Post Office). Of course then the Post Office will have your driver's license on the money order when you cash it there, and who knows where that info goes. Also your business would suffer since nobody wants to pay that way. Better just to pay your taxes, if they could get Capone, they could get you too.
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dt said 11:46AM on 4-17-2007
Honestly, this doesn't anger or surprise me. Just like any business where cash receipts aren't tracked, there's a tendency towards not reporting that income, and cheating. -- If there's 700,000 people (read: businesses) who aren't paying their fare share of taxes, what did you expect the IRS to do?
I have to pay my taxes. Why not everyone else?
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Mongo said 8:52PM on 4-17-2007
Did it say anywhere in this article that all those 700,000 people don't pay taxes? What it says is that "This is income that could easily go unreported". I'm betting that most of those 700,000 pay taxes on what they earn (no this isn't a fact or anything just a guess).
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JR said 9:18PM on 4-17-2007
Well, when the gov. can track all of the eBay trans.They will need to hire 100,000 more people to do it. Don't see that happening...
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alansky said 7:46PM on 4-25-2007
The self-righteous tone of some responses ("I pay my taxes, they should pay theirs.") is unsettling to me. The desire for the "guilty" to be punished (merely the suspicion of wrongdoing is evidently sufficient reason to label these small online merchants "guilty") is very reminiscent of the mentality that prevailed during the McCarthy Era in the US and most conspicuously in Nazi Germany. As if there weren't enough trouble in the world already without our own fellow citizens turning into ravenous wolves!
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