IRS wants reports on online sellers
Lots of news lately about the IRS wanting to go after online sellers.
Much of the talk is focused on eBay and auction sellers, but I'm sure we fixed-pricers are in Uncle Sam's crosshairs too.
One thing that confuses me is all this talk about eBay and Amazon having to report our "Tax ID numbers."
Is "Tax ID" being used as a euphemism for Social Security Numbers? Or are we really talking about Tax IDs, which is usually the reporting number that businesses with employees file taxes under, not an SSN.
I have a feeling it will be a while before this is straightened out.
Anyone read the book Tax Loopholes for eBay Sellers? I'm wondering if it really has information specific to online sellers, or is merely the same advice everyone needs. I don't understand what special loopholes online sellers would have.
Much of the talk is focused on eBay and auction sellers, but I'm sure we fixed-pricers are in Uncle Sam's crosshairs too.
One thing that confuses me is all this talk about eBay and Amazon having to report our "Tax ID numbers."
Is "Tax ID" being used as a euphemism for Social Security Numbers? Or are we really talking about Tax IDs, which is usually the reporting number that businesses with employees file taxes under, not an SSN.
I have a feeling it will be a while before this is straightened out.
Anyone read the book Tax Loopholes for eBay Sellers? I'm wondering if it really has information specific to online sellers, or is merely the same advice everyone needs. I don't understand what special loopholes online sellers would have.
posted by Steve Weber at 11/22/2006
3 Comments:
Your Tax ID is either your FEIN or your SSN depending on how you report your taxes. If you are a business you should have an FEIN whether or not you have employees. It is another way to keep your business separate from your personal finances. If you are a business and have an FEIN and are properly reporting all your business income, then you have nothing to worry about. I think what the IRS is looking for are the people who are selling without reporting the income. Which, by the way, is illegal.
I have not read the "Tax Loopholes" book but I've heard a couple ofd interviews with the author and I think it is applicable to everyone but more specific to online sellers working from home. It talks about deducting for home office space and tracking mileage among other things, but the best thing to if you are confused is read the book! You read books as well as sell them don't you Steve? ;)
Have Fun!
Mike
www.partyvegetable.net
I am surprised that IRS does not collect ID and sales information from Amazon and Bay. I am a photographer and sell photos on line. DotPhoto the service I use has collected and reported Tax ID or SSN and sales information for two or three years. Their total sales probably would not even show up as a glitch plotted against Amazon and Bay. Maybe IRS did not force them to report info but rather their attorney got nervous and decided to get ahead of the system, just in case.
I hate the paperwork associated with being a small business. Taxes are a pain, but I do make an income, and it is only fair that I pay tax just like my customers do. I think we are lucky that the states have not figured out a way to impose a sales tax.
Mike
Biddingtree
I do pay sales tax to the state for in-state sales and here's why. I have a seller's permit that allows me to not pay sales tax on inventory I buy to resell which saves me hundreds of dollars a year. And although I do sell stuff in-state, it only amounts to about 5-10% of my business with the rest going out of state and overseas. Since I only have to pay sales tax collected from in-state sales, I actually end up with money in my pocket at the end of the year. The paperwork is a pain but the difference between paying $500 sales tax on stuff I buy vs. paying $20 sales tax on the stuff I sell makes it worth it.
As for Federal and state income tax, it is better to pay what you owe than get caught in an audit.
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