IRS Wants a Cut of Sales On eBay and Craigslist 517
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."
How's this news? (Score:5, Insightful)
Death and Taxes (Score:4, Insightful)
The Works of Benjamin Franklin, 1817:
"'In this world nothing can be said to be certain, except death and taxes."
I see how this could be tracked on EBay - especially "Power Sellers" with 1000's of transactions.
But on CL? that's going to be interesting to see happen.
Re:Deductions (Score:3, Insightful)
You don't sell on Craigslist; you meet in person (Score:5, Insightful)
Abolish the IRS! (Score:1, Insightful)
Of course anybody who says that is labeled a loony teabagger... Good job guys... Effectively discrediting all opposition to the government was the plan all along, wasn't it?
Re:Privacy (Score:1, Insightful)
I believe you're under-estimating Facebook.
Re:How's this news? (Score:5, Insightful)
It's news, because the tax code does cover sales such as the ones on eBay and Craigslist, but the users have been notoriously non-compliant.
No news here, but no new taxes either. Just even-handed enforcement of the existing tax code.
Re:it's worse than that (Score:5, Insightful)
I'm looking at this from a slightly different point of view. If I, as a small business, accept credit card payments, I'd be insane not to expect the IRS to have its hooks into data on my receipts. But if I pay someone $600 for stuff, the IRS is going to expect me to track this for them? That means I'll have to get taxpayer IDs from any vendor I buy stuff from.
Try this some time: Walk into a local shop, buy a load of crap and then whip out your 1099-K [irs.gov] form and ask them for their social security (or taxpayer ID) number. Odds are that the clerk will think you are nuts.
It's worse than it looks. (Score:5, Insightful)
Re:Already taxable (Score:5, Insightful)
And if you actually read the details, you have to sell over $20,000 and have 200 transactions in order for it to be reported. This is not for people who sell their cell phone every 3 months.
$20K is nothing; I can sell my classic car in my garage and exceed that amount. And since the regulations are not yet written (1099K is still in draft), the "and 200 transactions" is still up in the air. Knowing the desire for tax revenues, my opinion is that it'll end up being $20,000 OR 200 transactions.
Additionally, if I sold my classic car for $25,000 (about what it's worth, and about about what I've put into it over the years), and had two garage sales where I sold a lot of my old clothes, computer parts, records, and trinkets (easily beyond 200 items), I could end up having to report. Having 50 transactions at a single garage sale is not that uncommon; having 4 garage sales a year (especially if someone is out of work and looking to raise money by selling assets) puts you into this new "you're a business even though you aren't" category.
Re:Privacy (Score:3, Insightful)
Preventing me from cheating on my taxes is working against me?
I guess all laws that inhibit me from doing what I want are working against me.
About time! (Score:2, Insightful)
Those people have been scamming the system for far too long, I'm very glad to hear this. Unfortunately they're still not doing enough to go after the mega-corporations and their thousands of tax loopholes.
Re:business opportunity (Score:3, Insightful)
Taxes pay for my lifestyle?! I am paying for my lifestyle, with all the work and all the bills.
Bankers, those get paid for their lifestyle from the Fed but not from taxes, purely from a money printing press.
Re:Loophole / workaround (Score:4, Insightful)
How about having to give your taxpayer ID number (SSN for most of you... yes, that same SSN they promised not to use for anything but your retirement accounts, you stupid suckers) to Ebay for starters. Then, when you try to open account #2, they say, oh, wait, we already have an account for that TIN, sorry, no more accounts for you.
Fake TIN/SSN? Jail.
Don't worry; while the government isn't bright enough to keep from screwing the citizens, it is bright enough to keep the majority of citizens from screwing it.
It's just going to keep getting more and more like this. They conned the public, and the supreme court, into giving up 4th amendment guarantees on privacy a long time ago -- no legal recourse remains.
Re:Well for starters (Score:2, Insightful)
it means that they will have to collect your Taxpayer ID number and then validate it.
so no illegal alliens can use E-bay.
Since they will be reporting SSNs to the IRS it will also be interesting if the law enforcement agencies sniff this for fugitives. Supposedly SSNs are not supposed to get used for law enforcement but they are.
I wonder how they will deal with people who claim not to be US citizens.
How to solve all of these problems in one fell swoop: dispose of the income tax, disband the IRS, eliminate the ridiculously lenghty income tax code, and replace all of them with the Fair Tax. A national sales tax (NOT the same as a VAT) has none of these problems, carries no need to track income, is much more difficult to cheat, is paid by foreign nationals who visit this country including illegals, is paid by people who deal drugs and other contraband not currently tracked by the IRS, and has a much lower cost of compliance to businesses than the current ridiculously complex tax code.
Why it won't happen: an income tax has one "advantage" (though not for us) over all other systems of taxation. It makes it very easy to use carrot-and-stick methods to manipulate behavior and to give kickbacks to your special interest buddies. A national sales tax, on the other hand, would apply equally to everyone whether or not they are your buddies and whether or not they behave the way you want them to.
Re:Cue all the teabaggers blaming Obama... (Score:5, Insightful)
I work with some of those tea baggers. Sometimes I can't believe the stupid shit they say & think
Never mind:
* The record national debt run up by Smirky & Snarly
* The national/global economic crash caused by 8 years of complete republican control
* 2 Unwinable wars in muslim nations for the benefit of the American multinational energy and military industrial complex corporations
disclaimer for the trolls: I hate all politicians and believe they all need to be dragged into the street and shot as traitors
Re:Abolish the IRS! (Score:5, Insightful)
Flat taxes are disproportionately hard on low-income earners, while they give the wealthy a huge break. They're not fair, stop pushing them.
Re:it's worse than that (Score:5, Insightful)
It's a method that is bound to gain enormous complexity - as it has - as the definition of "income" is stretched and mutilated by the government.
Actually it seems like the idea of income taxes is incredibly straightforward. Any "income" (easily definable as any wealth you receive) is taxable at a certain rate.
Complexity comes from tax deductions and tax breaks, not the taxes themselves. The sheer number of tax deductions and various rules you can use to reduce your taxable income is crazy. If you drive a blue car on Tuesdays and Fridays but never on Wednesday and you have at least 4 children (but not more than 7) then you're eligible to get a $500 deduction for the Nancy Drew Blue Family Living Credit.
I agree that the system could be simpler, but for many people with simple incomes, it already is pretty dang simple (single 1040, maybe a 1099-INT for bank interest). It's when you have a large income and/or from many sources that it gets complex, and again, almost entirely due to tax breaks and reductions.
and... (Score:5, Insightful)
They also do harmful things, and they acquire funding for that through taxes as well. This is one (of many) reasons that government powers and government funding should be severely limited. The main reason we have an out of control government is because they control their own funds, and now also their powers (the constitution no longer governs them.) Not only do they tell you how much you have to pay them, and how often, and why, and for what, and what words like "income" and "profit" mean, they can print money (via the banking scam), incur unlimited debt (stroke of a pen, no approval required), and spend it all any way they want -- and all without you getting a word in edgewise.
Legally speaking, you can't do squat about it. In the case of the US, that's the hallmark of a government that is not in the least responsible to the people who originally put it in place. That connection has been well and truly severed.
Re:Well for starters (Score:5, Insightful)
With the IRS, you are guilty until proven innocent. The burden of proof is on you to show the IRS is in error, not the other way around.
Re:Well for starters (Score:4, Insightful)
Entering or remaining in the country without authorization is a civil infraction; dodging your taxes is a felony. One is slightly more serious than the other.
No, dumbass. (Score:3, Insightful)
Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
http://en.wikipedia.org/wiki/Keynesian_economics [wikipedia.org]
The Keynesian experiment was back in the 1950s and 1960s, when the American middle class was the envy of the world. Countries like Canada, Germany, and France have Keynesian economies and strong government regulation, and are doing much better than the United States in terms of quality of life, external debt, and life expectancy.
In short, they are like parents who send their kids to college, but stop sending them money if they find out it's all going towards coke and hookers.
Here in the states, we've discovered the raging brothel, and continue to hand money over to corporations that do nothing economically useful with the money. The problem is not investment and full employment as a goal of government policy, but the corruption and colossal failures of American governments since 1980.
Re:Cue all the teabaggers blaming Obama... (Score:1, Insightful)
The tea party is half Ron Paul libertarian, half Sarah Palin neo-conservative, which is why its doomed to fall apart as soon as they have to take a foreign policy position.
Also, be careful comparing "budget" numbers, as Bush & Congress were running both wars outside of the budget.
But.... but... (Score:3, Insightful)
Re:Well for starters (Score:4, Insightful)
People give their SSN to eBay? Really??
That just sounds stupid -- that's not the kind of information web sites should have about you. That's not what it's for.
Re:Cue all the teabaggers blaming Obama... (Score:2, Insightful)
Yeah, the debt run up by Dubya was a pittance compared to what's going to be run up by the Democrats this cycle. The numbers they _lied_ about were ridiculously high, the real numbers will be insane. You think the cast of Dubya's 8 years was a snaggle toothed bunch of villains? Wait until you see the extent to which these current scoundrels have lied about how much all this shit they're doing is going to really cost.
It's even funnier when left wing nuts blame the Republicans for the housing meltdown than it is when right wing nuts blame the Democrats and CRA. It was a bubble - just like the Internet bubble. Sorry, lefty, government is not the solution to all of our problems.
2 unwinnable wars? Maybe. One of them was legitimate (Afghanistan), one questionable. I think Dubya was a liar too, but my viewpoint is softening on the old scoundrel a little bit. Iraq might have been some plan to create a battlefield with Al Qaeda that was well away from US civilians. Draw them to us where we can fight them at least a little more on our terms. I don't know - they sure as shit lied about it, whatever the real reasons. I think the "durr, it was for multinational evil corporations" screed the left wing loons rant about is a bit facile.
Re:and... (Score:5, Insightful)
No?
Commerce clause? Ex post facto laws? Most of the bill of rights thrown out the window? Unjust wars? Insane debt levels? Financial system based entirely on an illusion? Judges asserting section five powers that there are no mention of in article three? Intellectual property laws that do more to deter innovation than to encourage it? Educational system that result in large percentages of the population indulging in rampant superstition, and largely unable to read, write or think at a level I'd accept for secretarial work, never mind the tiny (and largely wrong) collection of "facts" they bring with them? Have you noticed that almost our entire manufacturing base is no longer present and accounted for? I could go on - for pages - but it's pretty depressing.
Wait -- I should have asked -- do you live in the USA? Because that's the government I was speaking of. If you live somewhere else, you might, I suppose, have a government that's just fine. I doubt it somehow, but I accept the idea in principle. The US government, however, is an utter clusterfuck. You'd have to be the most servile kind of blinders-wearing sycophant to think otherwise.
Re:Well for starters (Score:5, Insightful)
And I suppose you don't care that the Fair Tax is a ridiculously regressive tax? Because it taxes buying power, it disproportionately effects those who do not save or invest but, instead, live paycheck to paycheck. So, if you're poor and you have to spend all your income on rent and food, the fair tax hits you hardest. If you're rich, and you are able to invest half your income, and you spend the rest, you're only taxed on half your income. Thus, the rich pay a lower real tax rate than the poor. (Add to this the fact that the marginal value of $1 is far less to a rich person than to a poor person to begin with and the system starts to look downright dystopian.)
The obvious way to fix this that I've heard some propose, is to allow exemptions for the poor, etc. But now you're getting back where we are now, where individuals have to keep track of their finances and report to uncle sam for their rebates. Except now individuals have to keep track of every single purchase, rather than just their annual income from their employer.
And this gets at the broader point: taxation is a powerful and legitimate tool for achieving public policy goals. But if you use a national sales tax, you either are robbed of those tools for the sake of keeping taxation simple, or you and up with the worst of both worlds: a highly regressive taxation system that is still a nightmare to administer.
Re:Abolish the IRS! (Score:4, Insightful)
20% flat tax with a one-time $50,000 exemption for every tax payer in a household (but you don't get a refund if you owe negative tax). How does that screw low-income earners?
Re:Abolish the IRS! (Score:3, Insightful)
> How does that screw low-income earners?
It doesn't, of course. It screws someone much more powerful: the enormous bureaucracy and industry that has grown up around the present insanely complex and capricious system. Even more important, it takes away the power of politicians to reward interest groups and punish scapegoats with special deductions, exemptions, and punitive taxes. It also makes it impossible to conceal tax increases.
Re:Already taxable (Score:3, Insightful)
Re:Is a man not entitled to the sweat of his brow? (Score:4, Insightful)
Bullshit. You pay taxes to pay for highways, schools, cops, fire departments, and lots of other stuff that benefit YOU, and the more you have the more it benefits you. Like one guy's sig says, "I like paying taxes, with them I pay for civilization.
An attitude like yours smacks of sociopathy.
Re:Abolish the IRS! (Score:2, Insightful)
Given this reality, it's easy to see how poor people spend the vast majority of their money on consumption, while the rich spend far less. If the tax is based on consumption then it's inevitbale that it will be disproportionate.
Re:But.... but... (Score:5, Insightful)
Why, by running high inflation and heavy regulation & taxing of businesses.
High inflation ensures that this big miserly border-line treacherous criminal will lose any money he saves in banking account, etc, forcing him to invest that money into businesses, if he wants to maintain the value of his money.
Once you've forced him to put the money into businesses, then you take the money from the businesses with various fees and what-not. (Some tweaking and fixes will be necessary, such as banning of owning gold and silver by members of public, as well as a ceiling on interest rates banks can pay on savings, but the general idea remains the same.)
There are many, many ways to "spread the wealth around" even without a progressive income tax. Progressive income tax just makes it easier.
Re:Well for starters (Score:4, Insightful)
Given the many things the Federal government does in excess of the authority granted by the Constitution, I'm sure this could be legitimized without a Constitutional amendment. After all, Prohibition required an amendment, and now it doesn't (just affects a different product). There are few politicians who give a damn about what the Constitution says. Sadly, it's already almost completely irrelevant, with the exception of a couple amendments. They'd just say the Commerce Clause covers it, which is their rationalization for almost everything they do now.
Re:and... (Score:3, Insightful)
Who says we have an out-of-control governmnent?
It's always perilous to put words in dead peoples' mouths, but IMHO it would be quite a stretch to think that the authors of the Constitution wouldn't consider today's Federal government to be "out of control." You're right in saying that the founders were hardly paragons of justice themselves, but they did have some very definite ideas regarding the proper limits of central power, and we've strayed a long way from the path they had in mind. Fyngerz's original reply only hints at some of those departures.
Re:Well for starters (Score:4, Insightful)
Apparently, this "revenue neutral" legislation will reduce the taxes on everyone. Either someone's taxes have to go up, or it can't be revenue neutral.
Perhaps everybody who pays taxes now will have their taxes go down, and the scofflaws and low-income people who presently pay no taxes will make up the difference. In other words, it could be a semantic trick: everybody who presently pays taxes WILL have their tax bill go down if the large number of people who pay no taxes start doing so.
There are a large number of people who not only have zero federal income tax liability, but who actually have a negative fed. income tax liability. Their income levels plus various exemptions etc. zeroes out their tax liability and they are still eligible for various credits, particularly the Earned Income Tax Credit.
Of course such people still enjoy the services and protections provided by government. Thus in purely financial terms, they are engaging in parasitism. This is a big step towards the welfare state, the nanny state, or whatever you prefer to call it. It works because there are large enough numbers of these people that their votes can easily sway elections and they vote in uniform blocs with little diversity of opinion among them. The number of adult voters with no federal tax liability was 38% prior to the recent stimulus bill and now sits around 47%. For any election, that's absolutely huge. Any politician who sees something wrong with this and wants to change it would immediately have 47% of the voters against him, so you see how it entrenches itself.
Politically, the purpose of creating and encouraging this class of taxpayers is to engage in class warfare. The game is to get a large percentage of the population dependent on government subsidies for their day-to-day living. Those people will then defend and re-elect the politicians who feed that dependency no matter how unreasonable their policies may be. The fact that the Baby Boomers have largely forgotten how to prepare for their own retirements and are utterly dependent on Social Security (no matter how bankrupt) and the fact that proposing changes to that system is political suicide is a good example of this game.
There is a second benefit to our rulers. The more "rich people" and "poor people" see each other as adversaries the more our politicians can play both sides against one another to entrench their power. It's classic divide-and-conquer.
Re:and... (Score:3, Insightful)
Why would we care what the founders thought about governmental theory?
Um, because those thoughts, as encoded in the Constitution, are supposed to be the foundation for our laws?
Re:Well for starters (Score:3, Insightful)
The real problem isn't regressive or progressive nature of a given tax, it's the idea that the government is making value judgments as to who is "rich" and who is "poor."
In the past, many middle-class people have supported Federal and state tax increases that "soak the rich," only to find that, oh, by the way, they are now considered "rich."
That absolutely serves them right. It's what you get when you use an emotional desire to nail other people as your basis for sound public policy. The only bad thing is that as tax law applies to everyone, people with more enlightened points of view are also paying for their shortsightedness.
We don't have a VAT in the US. Not yet. (Score:4, Insightful)
The "intent" of the eBays and Craigslists of the world is supposedly to let people sell things they don't want around (more or less). If I buy something with my income, and pay sales taxes on it, then sell it later on then so be it. If I'm lucky enough to make a little money on the arrangement (like if it turns out to be collectible), that's splendid. But it's not a business. Taxes due at each step of a transaction are a VAT, and we don't do that here.
If I'm buying goods wholesale or as an investment and I'm trying to sell them at a profit as my means of earning a living, though - well, that's taxable in this country and that's just all there is to it.
I run a services business (as an S Corp), and I could probably pay a little less tax if I weaseled appropriately and just buried all my income as "expenses". I don't. The business pays what are real, legitimate expenses (I don't buy an iPod for my kid and call it "computing equipment" or any of that kind of shady stuff). I keep my business and personal money separate and I pay myself and my employees a salary. I could probably make a few more bucks being really aggressive about things, but I know I'm doing the Right Thing and I'm not in line for an eventual trip to Federal Pound Me In The Ass Prison.
In other words, if you're trying to live free of the IRS by doing a cash business on eBay, screw you. Pay up.