The Tax Man Cometh
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Grandstanding Collector
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Post Posted: Tue Mar 29, 2005 8:10 am 
 

In the good ole' USA the Federal Tax Man will soon be taking more of your money through on-line sales, such as from E-Bay auction transactions.

From what I understand, both sides of a transaction will be federally taxed (if both the seller and buyer are located in the USA) in addition to the already well known State taxes that many re-sellers (And E-Bay stores) make mention of in US based Auctions (8-1/4% Tax if Both seller and buyer are located in North Texas, etc.).

I have no idea how they plan to take more of the overseas bidders/sellers money, but I am sure they will soon be finding ways to pick their pockets too.....

I think this will cause sites like this one to spring up everywhere, and somewhat less activity on E-Bay (And the other auction web sites, pathetic as they may be), with more so-called off-line transactions being made through E-Mails, snail-mail, long-distance phone conversations, etc.... Not to mention that sellers (If they be clever enough and computer savy enough) will start Off-Shore accounts to avoid the pesky little Tax Man. Of course this will soon bread new international laws and other unforseen problems.

The cat is out of the bag and the bag is now filled with snakes.....


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Post Posted: Tue Mar 29, 2005 8:14 am 
 

i've always said "man's greed will always be his downfall" and it's true.



  

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Post Posted: Tue Mar 29, 2005 8:39 am 
 

Would someone please post stats for that reclusive beast? A breif description would help. I understand they are often assisted by 'snivelling auditors' as well.


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Post Posted: Tue Mar 29, 2005 8:41 am 
 

Do you have a link to the news item or source for this?

I haunt a number of political journals/blogs/forums and this would make for a good post...not only that but I had not heard about this and definitely want to do some research.


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Post Posted: Tue Mar 29, 2005 9:12 am 
 

I am following this with great interest as well.  I know that they have been "rattling the sabre" for a long time with this, but I haven't heard anything that is specifically in the works yet. Based on our currently elected government, I will not be suprised.


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Post Posted: Tue Mar 29, 2005 9:28 am 
 

So far all I have been able to locate was information on buisness taxes.  If you run your EBay store/auctions as a business (track inventory, profits and losses, hire employees etc...) then you have to pay taxes as would any business.

However nothing I found would seem to effect personal transactions, selling on EBay is no different than selling through a classified ad as far as the Taxman is concerned.  That being said it is too damn early in the morning to wade through http://thomas.loc.gov/ to find any new tax bills.

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Post Posted: Tue Mar 29, 2005 9:42 am 
 

Just to let know our friends on the other side of the ocean, in Old Europe EVERYTHING you buy from a company (not an individual via ebay) has a stiff VAT tax attached, be it for personal use or company use.

In Italy this is around 20% of the total value.

Actually, since if u are a company then you have to pay VAT on the services you're selling, you write down the VAT u've been paying on what you've bought from this amount.

Personal transactions pay NO VAT if conducted in the same country, or in Europe - but it seems that the seller have already paid the tax when he bought the object.

We have already been ripped off by the taxman, thanks....

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Post Posted: Tue Mar 29, 2005 9:56 am 
 

There was a story on CNN this morning on this topic.  Here is the link.

CNN.com - Page not found

  


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Post Posted: Tue Mar 29, 2005 10:33 am 
 

I believe you have to pay personal income taxes on any personal transaction, through the classifieds or Ebay, if you make a profit.
Any profit must be declared as income.

If you sell used items for less than you originally paid, you don't have to pay taxes on them.

You are supposed to pay state sales tax on anything you purchase outside of the state. For example, you are supposed to pay Maryland sales tax on any item purchased in Delaware, which has no sales tax. The state tax manuals usually have supplemental forms for paying this tax.

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Post Posted: Tue Mar 29, 2005 10:59 am 
 

The Lidless Eye wrote:There was a story on CNN this morning on this topic.  Here is the link.

cnn.com/2005/TECH/internet/03/28/taxes. ... index.html

 
zhowar1 wrote:I believe you have to pay personal income taxes on any personal transaction, through the classifieds or Ebay, if you make a profit.
Any profit must be declared as income.

If you sell used items for less than you originally paid, you don't have to pay taxes on them.

You are supposed to pay state sales tax on anything you purchase outside of the state. For example, you are supposed to pay Maryland sales tax on any item purchased in Delaware, which has no sales tax. The state tax manuals usually have supplemental forms for paying this tax.


This really does not change anything, it is the way it has always been.  Aneoth siad he saw that the (US)Fed was going to try to implement an additional tax on internet transactions like EBay.  This would suck, and would be worth writing my representitive/congressman about.

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Post Posted: Tue Mar 29, 2005 11:10 am 
 

The IRS can feel free to try and figure out if I am making money on my Ebay transactions. I think this only really affects large sellers who do it as thier only source of income, because the cost of trying to monitor that for alittle fish like myself, would far outweigh the amount of revenue that they would create by trying to tax me on my sales. Fact is at this point I am still building my collection, so I am currently not making any money. However, when I do decide to sell off my collection, the IRS can kiss my white a$$ if they think that they will be having their grubby little hands in my pocket, because they will have to prove that I am actually making money based on the amount I actually spent in order to obtain my collection.


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Post Posted: Tue Mar 29, 2005 11:25 am 
 

It's the same as it ever was.  My understand from reading a few of these articles is if you're selling used goods at a loss (less than MSRP) then you're not expected to pay tax as there is no profit.  If you're buying a bunch of goods at wholesale and then selling them on eBay at a markup then you're supposed to pay, but just like you're supposed to pay state sales tax when you buy off Amazon or other online stores, how many people actually do it?  Not many, because most of us feel we already pay enough tax with states/local sales taxes, property taxes, income taxes and payroll taxes.  Thank goodness we don't have a federal consumption tax a la the European VAT yet, though noise has been heard at the Fed and in the White House that this may be next...  :(

  


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Post Posted: Tue Mar 29, 2005 11:34 am 
 

"The IRS can feel free to try and figure out if I am making money on my Ebay transactions."

I know what you mean. And I believe you get to add all of your gains and losses together for a year. But the only problem is the way I understand it, if they audit you, they will place the burden of proof on you to document your purchase prices and gains and losses, etc. Otherwise, they may assume that whatever you sold is profit, and tax you accordingly. But I agree they will probably not come after anyone with small number of sales - unless they have some evidence you are hiding a larger number, etc.

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Post Posted: Tue Mar 29, 2005 11:42 am 
 

I have been buying and selling for 6 years now.  IRS tax records can only go back per law 7 years.  How can they say for certainty that I didn't buy my whole collection back in 1999 for $50k(my collection is not worth this much by the way) and and now I am selling if off at at huge loss.  It would be almost impossible to refute my claim.


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Post Posted: Tue Mar 29, 2005 1:18 pm 
 

This discussion comes up every April, and every April I say the same thing: relax, at least for another year.

For individual sellers (not businesses who also happen to be involved with eBay), here's three things to remember:

1. The IRS has traditionally not taxed what could be called "hobby" or "non-dependent" income, unless, for some reason, both parties wish to be taxed. Dependent income would be a full-time job, or major freelancing projects, etc. — income needed to live and eat. Non-dependent income is just what it sounds like.
2. eBay has NOT provided buyer and seller data to the IRS (at least not yet), so the horror stories you've heard about paying back taxes from 1998 are simply not true.
3. All sides involved here have a LOT of details to work out before any of us start paying eBay taxes. There's state laws, federal laws, interstate commerce laws, the dependent-vs.-non tradition mentioned above, the "who pays?" and "how much?" questions, etc.

Bottom line: if you are making the majority of your income on eBay, need eBay to eat and pay rent, or are running an eBay-based business, then, yes, it's probably a really, really good idea to claim your eBay sales as income. If you're just a D&D fan who wouldn't mind making a buck or two on eBay, then don't give it a second thought (and stop believing everything you hear from those fine reporters on the Today Show).

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Post Posted: Tue Mar 29, 2005 1:54 pm 
 

Another component I have heard but have not really investigated is that you supposedly can write off a lot of expenses related to hobbies.  I have no idea what this really means but I would think for most of us we would classify as hobbyists, and therefore could write some stuff off.

  

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Post Posted: Tue Mar 29, 2005 2:30 pm 
 

Tax Man

Frequency: Rare
No. Appearing: 1
Armor Class: 10
Move: 12"
Hit Dice: 1-4 Hit Points
% in lair: 0%
Treasure Type: Incidental
No. of Attacks: 1
Damage/Attack: 1-2
Special Attacks: Audit
Special Defenses: See Below
Magic Resistance: Standard
Intelligence: Very
Alignment: Lawful Evil
Size: M
Psionic Ability: Nil
   Attack/Defense Modes: Nil


One of the most feared creatures in the realm, the Tax Man usually appears as a nondescript, well-dressed human, but is in fact a resident of the Nine Hells. Controlled by the ArchDuke of Hell, Uncle Sam, it is drawn to wealth and power; the more of these an individual has, the greater the chance of being detected by the Tax Man. Once it has selected its quarry, the Tax Man will appear at the prey's lair or place of residence. Once arriving, it will subject the victim to an Audit, a merciless attack that drains the individual of will and reason, leaving only an empty, worthless shell. Once the victim is destroyed, the Tax Man will collect any valuables it can find, and bring them back to Uncle Sam, who adds them to his bottomless vault. There is no saving throw versus an Audit.
Attacking a Tax man usually results in disaster. If a Tax Man is damaged or slain, Uncle Sam will release other minions to deal with the offender, such as the FBI Man and Police Man. These creatures will hunt down the offender and attempt to capture him. If successful, they will transport the individual to Jail, located on the seventh plane of Hell.


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Post Posted: Tue Mar 29, 2005 3:01 pm 
 

Aneoth wrote:In the good ole' USA the Federal Tax Man will soon be taking more of your money through on-line sales, such as from E-Bay auction transactions.

From what I understand, both sides of a transaction will be federally taxed (if both the seller and buyer are located in the USA) in addition to the already well known State taxes that many re-sellers (And E-Bay stores) make mention of in US based Auctions (8-1/4% Tax if Both seller and buyer are located in North Texas, etc.).


I call BS on this post.

As others have pointed out, you already owe income tax on any gains you make selling online. There is no "will be". And if you are implying that ebay will set up some federal income tax witholding entry on each auction page, there is no way it can be implemented. You can't know how much of a profit was made, or what income bracket the seller is.

Buyers cannot be federally taxed, because there is no federal sales tax.

If sellers have a business online(eBay or elsewhere), it is up to them to report to the IRS, just like every other self-employed shmoe in the country.  If you don't have a business, and are selling stuff out of your closet on ebay, the IRS is about as likely to come after you as they are people holding garage sales.

  

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Post Posted: Tue Mar 29, 2005 3:03 pm 
 

My wife told me that what I am doing is not a hobby, but a stupid and highly expensive compulsion...... 8O  :?

She went on to explain that a Hobby was something that gets you off of your arse and into some form of physical activity.
(I countered that she was thinking of Sports......) oops...... gulp..........

She then said that vegetating in front of a screen bidding on E-Bay auction listings is NOT a hobby..... :?

OK, so now I am a vegetable..... 8)


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Post Posted: Tue Mar 29, 2005 3:17 pm 
 

Hey Aneoth if you were to buy and then maybe resell a few things for a tidy profit I bet the bitch would shut her trap real fast hehe.  Just tell her its an investment your stuff will be worth more one day, the 200 pairs of shoes she's bought will not :D  I bet that SW Orange B3 you got is worth much more then you paid for it :D

  
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