The Tax Man Cometh
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Post Posted: Thu Mar 31, 2005 4:54 pm 
 

http://www.azcentral.com/arizonarepubli ... bay28.html

  

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Post Posted: Thu Mar 31, 2005 5:00 pm 
 

Thanks, Jupp. I try.


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Post Posted: Fri Apr 01, 2005 5:36 pm 
 

Actually, the low income audits DO have a purpose behind them. (I asked my tax person last year . . . .) Apparently, the biggest tax cheats of all are the ones who make hundreds of thousands or millions of dollars, but only claim incomes well below $100k. So the IRS goes looking for someone like the thought the guy in Mike's story was, where they can prove that you are spending $200k a year in expenses but claim you only earn $20k . . . .

Also, lots of people who are medium level (say, in the $85k range) will take invalid deductions, which will bring their incomes into the range targeted by the IRS.

As for the eBay taxes and such, if you've bought ANYTHING online from anywhere and haven't paid sales/use tax on it (unless you live in a state with no sales tax) you are already in violation of the tax codes. EVERY PURCHASE made from a state with a state sales tax is taxable, even if the seller doesn't collect the taxes. If it's bought out of state, then it's a "use tax," which is the same as the sales tax. If you buy something overseas, it's even worse - you pay the VAT there when you buy it, and then still owe use tax on it when you bring it back to your home state.

(Bizarre, yes, but true - Google "use tax" and see what I mean.)

So you are all already tax cheats and criminals, so no need to worry about it . . . .  :twisted:


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Post Posted: Fri Apr 01, 2005 6:25 pm 
 

Are you really a criminal if you break a law the state does not bother to enforce and everyone knows it doesn't bother to enforce?

I would say no.  If a law is impractical it won't be enforced(at least not consistently) but it could easily sit on the books without the legislature bothering to do anything about it.

  


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Post Posted: Fri Apr 01, 2005 9:22 pm 
 

The sad thing is that some states are starting to enforce it, at least selectively . . . . NY state has snagged the records of one of the major art shippers in the area and is sending use tax bills to collectors who have had paintings shipped to them from out of state.


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Post Posted: Fri Apr 01, 2005 9:29 pm 
 

tsrart wrote:So you are all already tax cheats and criminals, so no need to worry about it . . . . :twisted:


Wow, nice way to play "party pooper". ;)  :lol:


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Post Posted: Fri Apr 01, 2005 11:36 pm 
 

I do my humble best . . . . and hey, I could have pointed out to everyone that the IRS could easily monitor these boards and probably has auditors headed to the homes of everyone involved in this discussion, but I resisted the temptation!

You'll all find out soon enough anyhow . . . . :twisted:


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Post Posted: Fri Apr 01, 2005 11:46 pm 
 

tsrart wrote:You'll all find out soon enough anyhow . . . . :twisted:


You need a "Mwahhahhahhahhahhahhah" icon for that post. :)


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Post Posted: Sat Apr 02, 2005 1:44 am 
 

tsrart wrote:if you've bought ANYTHING online from anywhere and haven't paid sales/use tax on it (unless you live in a state with no sales tax) you are already in violation of the tax codes.


Please. :roll:

Look, I can understand businesses making sure they do every single thing by the book, but (for now, at least), there's just no way any given state could hope to keep up with eBay's dizzying pace, most of which is driven by plain old everyday individuals:

* Over $1,000 in goods sold every second.
* More than 125 million registered users.
* More than 30 million items available at any given moment.
* More than $32 billion in sales recorded in 2004.

And state legislatures or taxation boards are supposed to keep with this? And to know how "remote tax" laws work in the other 49 states? And to enforce all of these statutes in a timely fashion? And to track every single eBay user in a given state?

Or, to put it another way: you cite an example of an art dealer in New York, and it's a perfectly valid example. That guy is probably going to take a hit. My question, though, is what is Albany doing about the other God-alone-knows-how-many other New Yorkers who happened to buy a CD, or a book, or a module, or a Chia Pet, or a pair of used skate blades, or whatever on eBay in 2004? Unless there's a news story real soon about how 1,000 extra auditors just suddenly showed up in Albany, I think we all know the answer. In terms of the "average" eBay user, the remote tax is utterly enforceable — there's just too much eBay to police.

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Post Posted: Sat Apr 02, 2005 2:04 am 
 

dave wrote:If a law is impractical it won't be enforced(at least not consistently) but it could easily sit on the books without the legislature bothering to do anything about it.


Ironically, this is exactly what has happened.

Most states have had use tax laws for decades, and, in many cases, have never really done much with them. The only reason we're even discussing this now is that most state legislatures, like just about everyone else, are currently scrambling for money. So, they say to themselves, "Mmmm ... internet; mmmm .... eBay" and their eyes glaze over and they're thinking they're about to solve all their problems. Until they run up against the sheer scale of eBay's hugeness (detailed above; don't want to beat on this dead horsie for too long). Then they realize they're going to need about six HAL 9000's to keep track of everything ...

Universal tracking and enforcement might happen one day, maybe even in the very near future. But not in the 2004/2005 tax season.

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Post Posted: Sat Apr 02, 2005 11:42 pm 
 

That guy is probably going to take a hit. My question, though, is what is Albany doing about the other God-alone-knows-how-many other New Yorkers who happened to buy a CD, or a book, or a module, or a Chia Pet,


THEY'RE COLLECTING TAX ON CHIA PETS NOW?  WHERE OH GOD WHERE WILL IT END!  FIGHT THE POWER!

Mike B.

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Post Posted: Sun Apr 03, 2005 12:54 am 
 

Oh, agreed . . . . I don't really think any of us have to worry about the tax man suddenly showing up and demanding his 6% on that fuzzy haired troll figure. (Chia pets, interestingly enough, could potentially be non-taxable in PA if you argued that you could eat the plants . . . .)

So there isn't really any cause for general alarm, which was kind of my meaning in sarcastically pointing out that we were all criminals already anyhow. After all, any law that made criminals out of the fine, upstanding citizens here at the Acaeum MUST be silly/outdated/unenforceable! :wink:

There ARE certain circumstances, however (though not eBay!), where the use tax can rear its ugly head and bite you in the butt, so I think it's a good thing to be aware of. Rattlesnakes may be rare, but it's still a good thing to know not to step on one if you see it . . . .


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Post Posted: Sun Apr 03, 2005 1:07 am 
 

If nothing else, this HAS been an interesting thread. That AP reporter probably got a good laugh last week when she filed her story, knowing full well that the reaction of most non-business users would be "Huh? Seriously?" I Googled it after she filed her story, and something like 258 news outlets had picked it up (and posted it on their sites, obviously) within the first 12 hours ... yikes.

That's also kind of the ironic part — a lot of people are being educated by an Associated Press business reporter. Everyone else — eBay, Treasury, and most states — have totally dropped the ball in terms of helping the average taxpayer understand what the issues are and how to deal with them. It's no wonder very few non-business users have any intention of declaring eBay sales as income ...

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Post Posted: Tue Apr 05, 2005 6:18 pm 
 

Hi,

I have not been around much recently, but since I am a tax professional, I thought I might toss in a few comments.

As mentioned before, sales tax laws have been on the books for years.  Many states have a line on the State tax return to enter any purchases for which no sales taxes were paid.  Aa for any Federal Sales tax on ebay I would file with along with the rumor that the USPS is going to start placing a tax on emails.  At least until I see something in writing.

Xaxaxe gave a good list of deductibles if you choose to file a schedule C (Business Income or Loss).  Someone else mentioned the Hobby expenses were deductible... yes, but... Hobby expenses are deductible to the amount of hobby income, furthermore they are deducted on Schedule A and fall under misc deductions that are only deductible if they exceed 2% of your AGI.

Any questions, PM me, I am not sure I will have a chance to check this thread much during the next couple weeks.

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Post Posted: Tue Apr 05, 2005 10:24 pm 
 

McDuff wrote:Hi,

I have not been around much recently, but since I am a tax professional, I thought I might toss in a few comments.

Any questions, PM me, I am not sure I will have a chance to check this thread much during the next couple weeks.

One wonders why that would be.....  :roll:  :wink:
Try to get some sleep BEFORE the fast break starts.
Or has it already started?


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