IRS wants Amazon and eBay to report seller income
Did you report your bookselling income on your tax return last month? Lots of part-time sellers don't -- they figure they aren't required to report income from a "hobby."But if the IRS has its way, marketplaces such as eBay and Amazon will report our income next year on a Form 1099. They won't withhold any of your income for taxes, but they'll issue the 1099, just like you get a W-2 from a regular job. And since there was no withholding, you'd have to pay quarterly estimated tax payments.
How would Amazon and eBay do this? They'd require us to provide our Social Security number (or employer tax ID) as a condition of selling on their site. That's exactly what is proposed in the Bush Administration's 2008 budget: If you conduct 100 transactions totalling $5,000 or more during the year, your income would be reported to the IRS by Amazon, eBay or any other company that "brokers" online transactions.
According to this story at ComputerWorld, the reporting would begin on January 1, 2008.
The idea is unpopular with lots of people, including this policy group. They warn that providing our Social Security numbers to selling venues can increase the risk of identity fraud.
What do you think?
Labels: taxes
posted by Steve Weber at 5/09/2007
15 Comments:
I've ben saying this for the last year ,that the day is coming when you will have to have a tax id.
The way they will set up will proably be something similiar to this.
" xyz bookseller" creates an account with Amazon and starts selling books. After they hit a certain amount a email will be fowarded with something like, "you have reached your limit,please provide tax id number.
This is the best news I have heard in ages. This will get rid of 70 percent of sellers and the marketplace items will start going up instead of down in price.
Amen
Love it. Love it. Love it. I agree with the first poster that it will get rid of the "problem sellers" ie. low ballers, poor customer service, etc. I only wish that the threshold was lower than $5000.
This will definetely lead to more cases of identity theft, if people use their social security number. One way around this however is to get a employer tax id number. I definetely have to agree it will weed out many of the part time or small sellers.
I think venues being required to issue a 1099 is a great idea. That will make it more difficult for sellers to break the law.
If you're making money on Amazon, for example, and not paying taxes, you belong in jail. If you are not breaking the law, you won't have a problem with this.
As for having to provide your SSN, some of the venues ask for this anyway, so it's no big deal. Your credit card number can do much more immediate damage than your SSN.
Stop whining because the government wants you to follow the law, and stop worrying about identity theft problems that will probably never happen.
I don't agree with both points expressed here:
- it will get rid of low ballers - NOT! Although some of the lowballers are small/part-time, most of them are megasellers.
- it will make small players pay taxes and this leave - not really. 1099 will report revenue, not income. I can go ahead and buy 1000 copies of the Secret from Amazon at $13.17 and resell at $9.99 probably within a week. I will generate $9,900.00 in revenue, which is higher than proposed threshold. So what! I just generated hundreds of dollars in losses. In other words, I suspect this will be revenue-neutral event for IRS - a lot of small players will be able to show enough losses (postage, driving to PO, computer equipment, ISP charges, etc) to offset reported revenue, or even generate further losses against their ordinary income.
I think it is terrible.
When will we know this is going to be definite?
Wow! You mean I shouldn't have bothered to pay Federal taxes for the last 5 years? Or state taxes or sales taxes?
This doesn't affect me since I have always paid taxes on my income from online sales even if it was $2000 in gross sales. I guess having worked for the IRS makes me more paranoid than the other paranoids.
Stop whining about giving out your SSN and get a free EIN from the IRS web site. You can fill out an online form and they instantly give you an EIN.
This shouldn't be "blamed" on the Bush administration. It was inevitable and that idiot just happened to be in office when the IRS got the idea to put this in the budget.
I don't love paying taxes but it's the law so get with it, stop whining and if you don't like it do something about it.
You are all wrong! there is no law that says we are to be taxed on income period the federal gov. has perpetrated a big lie on the american people. This is just another way to steal our money!
I'm no tax expert and i'm no thief.
Two questios...
1)What if the books you sell are from your own vast collection and you have already paid for them?
2) What if you are the head of a non profit 501 C3 corporation who earns money through the sale of books to benefit the charitable or educatioal nature of the corporation?
I'm not a thief.
Take Care, LLP
The end result of this is that prices will rise, ecommerce will shrink, small sellers will go out of business, mega-sellers will profit, and most ironically, government tax revenues will also shrink. Stupid!
This makes no sense. Since you're only taxed on NET INCOME, not REVENUE, how the heck is the government going to determine your PROFITS? "I see you sold $5000 worth of books, son? "Yes sir, and they cost me $5001, so I owe you nothing."
In that case, you're either falsifying (and therefore a criminal) or you're operating at a loss and you might as well go out of business!
Exactly! But how is the government, going just off your revenues, going to determine your profitability?
I don't yet sell online but I'm Canadian....I do have a tax and GST number, I pay the IRS ???? Get an email telling me to pay the IRS?
How is the government, going just off your revenues, going to determine your profitability? You'll have to keep a record of what every book cost, what every shipment cost, what Amazon kept in fees, what Amazon provided for shipping costs, the cost of your home office in terms of rent, electricity, and computer depreciation... You do keep records of everything, don't you?
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