Treasury aims to collect $2bn in extra taxes (eBay)

Treasury aims to collect $2bn in extra taxes (eBay)
http://www.ft.com/cms/s/657692b0-c03...b5df10621.html

Ben got started as a seller on eBay when he had to get rid of unwanted
wedding gifts and old junk to make room for a new baby in his small home
near Kansas City.

But he quickly "caught the bug" and became one of more than 4.3m people that
make a significant chunk of their income from eBay.

The full-time engineer says that in his spare hours he buys up discounted
items such as downhill skis "that people don't really need" in the Midwest -
"where it is pretty flat" - and sells them online to people in places "where
there are more hills".

What makes Ben stand out is that - unlike many eBay users - he will in April
voluntarily declare this income to the Internal Revenue Service and pay US
business tax rates.

Kristine McKinley, his accountant, says this is the first year that clients
have come forward to her main street practice because they "are making
enough from eBay that they are concerned about whether or not they need to
pay tax".

People's caution in coming forward has prompted the Bush administration to
propose compelling eBay and auction businesses such as Sotheby's to report
to the IRS any customer that carries out more than 100 transactions a year
worth at least $5,000 (?3,850, £2,565).

The Treasury expects to collect $2bn in extra taxes from the new regime, due
to come into force on January 1 2008.

But eBay is fiercely resisting the proposal and has mobilised its extensive
lobbying operation on Capitol Hill to question the legality of the proposed
changes.

Representative Rick Boucher, who has received campaign donations from eBay,
said he had been contacted by the company and shares its view that the
Treasury and IRS would be stretching the limits of their authority by
extending rules that cover "brokers" to the website.

The online auction group argues it is not a "broker", or a "middle man" or
an "auctioneer" or an "auction house". So what is it then? It offers an
"auction-style" service but is more "like a shopping mall," a spokesperson
says.

In turn, the company argues that the Treasury's plan would be unfair because
it regulates in such a way that exempts competitors like Craigslist that
have different business models based on plain classified ads without the
auction or payment tools of eBay.

EBay says forcing it - and not Craigslist - to snitch on customers would be
the equivalent of requiring indoor shopping malls to report tenants'
behaviour but not open-air strip malls.

"Business owners would relocate to the strip mall," says a spokesperson.

But it is precisely eBay's solid business structures and overarching
customer service that has helped attract the unwelcome attentions of the
overworked and cash-strapped taxman.

Ebay already tracks the volume and value of its customers' transactions,
notifying them when they reach key milestones and soliciting them with
customised services.

The Treasury proposal would open the way for the financially stretched IRS
to piggyback on the company's systems by requiring eBay to report to
authorities when customers hit milestones.

The company says it will cooperate with the IRS in investigating named
individuals and entities, but does not want to act as a "go between" for
customers "en masse".

It wants tax collectors to rely on their own wiles and defends the hands off
approach to tax that is apparent from interviews with eBay users.

Elena Neitlich, who runs a highly successful online store from home called
Moms on Edge, says eBay appointed a special adviser to coach her almost
daily on every nuance of her auctions from catering to different timezones
to the optimal names for potty training toys.

But the award-winning eBay seller says she cannot recall ever being reminded
of her tax liabilities.

"I don't remember anyone saying to me that now we needed to go through the
tax issues. No, that didn't happen," she says.

The eBay spokesperson says: "We believe that it is the seller's
responsibility."

Ben - who asked that his last name be withheld because he runs a blog that
details a lot of personal finance information.

"What I do is just like any other small business, so I should pay tax," he
says.



--
"If they pull a knife, you pull a gun. If they put one of yours in the
hospital, you put one of theirs in the morgue."
Sean Connery, "The Untouchables"

Jim Higgins wrote:
Treasury aims to collect $2bn in extra taxes (eBay)
http://www.ft.com/cms/s/657692b0-c03...b5df10621.html
[...]
The online auction group argues it is not a "broker", or a "middle
man" or an "auctioneer" or an "auction house". So what is it then? It
offers an "auction-style" service but is more "like a shopping mall,"
a spokesperson says.

On the one hand, eBay is using their old song and dance about not being
responsible. But on the other hand, *this* time a win is good for the
sellers.

Weird.

--
Jim Seymour

On Feb 19, 12:19 pm, Jim Seymour wrote:

On the one hand, eBay is using their old song and dance about not being
responsible. But on the other hand, *this* time a win is good for the
sellers.

Weird.

--
Jim Seymour

If they start taxing eBay income, it makes it that much easier to
deduct eBay losses. If I buy a microwave for a $100 and sell it on
eBay two years later for $10, do I get to deduct the $90 loss? Dirty
socks, broken dishware, used oil filters?
--
Zamboni

On Feb 19, 10:40 pm, "Zamboni" wrote:
On Feb 19, 12:19 pm, Jim Seymour wrote:



On the one hand, eBay is using their old song and dance about not being
responsible. But on the other hand, *this* time a win is good for the
sellers.

Weird.

--
Jim Seymour

If they start taxing eBay income, it makes it that much easier to
deduct eBay losses. If I buy a microwave for a $100 and sell it on
eBay two years later for $10, do I get to deduct the $90 loss? Dirty
socks, broken dishware, used oil filters?
--
Zamboni


No you don't unless you are operating a business and are materially
involved in it. Income on the other hand is taxable regardless of
whether your are a business ir just an individual.

Representative Rick Boucher, who has received campaign donations from eBay,
said he had been contacted by the company and shares its view that the
Treasury and IRS would be stretching the limits of their authority by
extending rules that cover "brokers" to the website.

intresting my local rep speaks up - to bad he didnt do that over the
online gambling bill