Entries Tagged 'Legal & Taxes' ↓

...eBay says,

"We're just a platform that connects buyers and sellers. That's all we do." said eBay spokeswoman Kimberly Rubey.

That comes from a recent Denver Post article on eBay and taxes.*

Excuse me is this 2001? I haven't heard that line in a long time. It's certainly not the tough talk dished out to sellers of late.

"You're supposed to report any profit from those sales," said IRS spokeswoman Jean Carl. "It's a voluntary system for taxpayers to report it, and people are trusted to do that."

What would you do if the IRS was watching? eBay shrugs and says in a kid-like innocent tone, "We're just a marketplace." To sellers though, eBay decides where you show in search results, what kind of comments you can leave, what you put in your description, and how you pay and get paid. Sounds like more than just "connecting" buyers and sellers.

Sorry eBay, the days of "we're just a platform" are long gone. It's offensive to thinking people.

What could the IRS do?

I'm no tax guy. But consider possibilities. If the IRS thinks eBay is more involved in transactions than just "connecting buyers and sellers," might they want just a little more from them? After all, eBay is the central point for all these transactions? Can you imagine the expense eBay would incur if they had to add the "tax" element to their platform?

Imagine a seller that wanted to sell their old clothes or books. What would they do if upon registration, they were faced with adding more personal information? If casual sellers, who normally fill out the short tax form, are faced with something that may complicate or add to their taxes, they will break out the Yard Sale signs instead.

I believe the IRS is going to find a way to do this. It may not be tidy, in fact I think it will kill a lot of business, but it's coming. If people think it's hard to deal with eBay or PayPal - how 'bout arguing with the IRS over the sale of grandma's spoon collection.

Sellers are already upset at eBay for changes this year. If the IRS becomes baked into the process, sellers will just leave instead of sharing more private information.

If you would like to find the best tax related books for eBay sellers visit my store here.

Do you think the IRS will continue to "trust" eBay sellers?

Source for quote: http://www.denverpost.com/business/ci_9508677

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From my inbox this morning:
How to use Your IRS Rebate check

As you may have heard, the Bush Administration said each of us would get a rebate check to stimulate the economy.

If we spend that money at Wal-Mart, all the money, will go to China. If we spend it on gasoline it will go to the Arabs, if we purchase a computer it will go to India, if we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala, if we purchase a good car it will go to Japan, if we purchase useless junk it will go to Taiwan and none of it will help the American economy.

We need to keep that money here in America. The only way to keep that money here at home is to spend it at yard sales, since these are the only businesses still in the US.

Popularity: 6% [?]

By [tag]Cliff Ennico[/tag]

Rules? You mean there are RULES?

Afraid so . . .

For many folks, selling on [tag]eBay[/tag] begins as a fun hobby, but then one morning you wake up and realize you’ve made $30,000 from all those tchotchkes in your attic. You’re cruising flea markets every weekend with a pickup truck, two illegal immigrants in back and a wad of hundred dollar bills, buying everything those little old ladies have on their tables. You’re clipping death notices from your local newspapers and sending flyers to the next-of-kin offering to clean out Uncle Irving’s house for a commission. You have 10 college kids (excuse me, “student interns”) in your basement grinding out [tag]auction listings[/tag], living on Diet Coke and Doritos, and sleeping on futons. The neighbors won’t talk to you because you get to their garbage before the sanitation department does. They’ve also turned you in to the local zoning board complaining about that “in-law apartment” with attached loading dock you’re building in your backyard. You bring packing crates and a forklift to your library’s annual used book sale. You know exactly where to score “cars formerly owned by drug dealers” and containers of Bobble-head dolls from Korea. You’re taking out ads in local newspapers with the tag line “I buy. I sell. I take consignments.” You’re in business now, chucko. Time to take things a bit more seriously.

Whenever you sell on eBay, you’re a “retailer”, and are subject to all of the laws, taxes and regulations that “brick and mortar” retailers in your town have to cope with. Here are some basic [tag]legal and tax tips for eBay sellers[/tag]:

• item descriptions – don’t “cut and paste” a description from another seller’s listing unless that item is 100% identical to your own;
• if you don’t know what it is you’re selling, say so in the description, and solicit input from other community members;
• don’t ask your friends to place phony bids on your items to drive the price up – that’s called “[tag]shill[/tag] bidding”, it’s a felony in most states, and if you’re caught eBay will not only boot you off the site but turn you over to your state Attorney General’s office for prosecution;
• make 100% sure it’s an “original Gucci handbag” before you put it up on eBay;
• if you’re selling stuff exclusively on one of eBay’s overseas sites (such as eBay U.K. or eBay Italia), you may be “doing business” in that country and may have to sign up for that country’s taxes and comply with their laws;
• if you’re making even One Dollar of profit selling stuff on eBay, you have to pay income taxes on it (sorry) – the [tag]IRS[/tag] doesn’t care whether you’re a “hobby” or a “business” if you’re making money at it;
• if you’re making more than $400 a year in profit selling on eBay, you’ve got to pay “[tag]self-employment tax[/tag]” (basically, Social Security and Medicare taxes) on top of your income taxes;
• if your state has a [tag]sales tax[/tag], and you sell something on eBay to someone who lives in the same state you do, you have to pay sales tax on the winning bid amount;
• in all your auction listings, be sure to say “Note to residents of [your state]: state and local sales taxes will be added to your winning bid” – if you don’t do this, you have to “eat” the tax out of the sale proceeds;
• if you buy something on eBay for your own consumption (i.e. not for resale) and don’t pay sales tax on it, you may have to pay a “use” tax to your state government – talk to a local accountant or CPA for details;
• lose the illegal immigrants and “basement interns”– there are laws about who you can and can’t hire and how you treat them;
• you must send [tag]IRS Form 1099[/tag] to each individual from whom you take consignments of inventory if you pay him or her more than $600 during the calendar year.

Paying taxes and dealing with laws ain’t fun, but it’s an essential part of doing business online. The federal and state governments have lost BILLIONS of dollars in tax revenue from online commerce, and it’s only a matter of time before the IRS starts going after eBay sellers who haven’t been paying up. Now’s the time to find out what your obligations are, and get into compliance before “they” find you.

Cliff Ennico is an attorney, small business expert, columnist for [tag]Entrepreneur[/tag] magazine, and author of two best-selling books: “Small Business Survival Guide” (Adams, $12.95) and “eBay Seller’s Tax and Legal Answer Book” (AMACOM, $19.95). His website is www.cliffennico.com and he can be reached at cennico@legalcareer.com.

Popularity: 6% [?]

About four years ago I taught a class at [tag]eBay University[/tag] in Kansas City, Missouri. A man came up to me and with a completely straight face said, "I sold over $100,000 worth of stuff on [tag]eBay [/tag]last year - when do I have to start reporting that?"

As many new stories have pointed out this week, the [tag]IRS [/tag]is interested in eBay sellers. The government wants to make sure people pay their taxes. That's their job. Contrary to a few groups that claim we cannot (constitutionally) be forced to pay income taxes at all - we pretty much all figure we have to pay each year. The fact is however, many do not understand it applies to them already when selling on the internet. I still hear people saying how great the internet is because it's "tax free."

According to SFGate.com:

The remedy, according to many federal officials, is to expand reporting requirements. The question is, which businesses and what kind of income should fall under the rules?

As part of his proposed federal budget for 2008, President Bush made what many believe is the first step to more vigorously collect taxes on online sales. Although vaguely worded, the proposal would require "brokers," or middlemen, to collect taxpayer identification numbers from clients and report their sales of personal property to the IRS on a 1099 form if sales surpass 100 transactions or more than $5,000 annually.

Under current law, eBay and other auction sites aren't considered brokers. But definitions can be changed.

There are problems with those simply guidelines as even a casual seller will tell you. Some people who sell over 100 items per year aren't making any real profit anyway. It's a hobby for these people. Then there are those who sell for other people - Trading Assistants. They often help people get rid of "stuff" they have lying around and get a few extra bucks for their client. How will they handle their taxes? Who pays? Will these sellers raise prices to make sure they make a profit, eliminating eBay as a place where you can find a bargain? Or will they simply stop selling this way?
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