Sell Stuff on eBay? You May Now HAVE To Pay Taxes.

Sell Stuff on eBay? You May Now HAVE To Pay Taxes.

Posted on 21. Jun, 2008 by in Income & Expenses, Taxes

Within Senator Christopher Dodd’s 630-page Senate housing legislation is a provision that nobody knows about, but affects the privacy and operation of nearly all of America’s small businesses. The provision, which was added by the bill’s managers without debate this week, would require the nation’s payment systems to track, aggregate, and report information on nearly every electronic transaction to the federal government.

Payment settlement entities, including merchant acquiring banks and third party settlement organizations, or third party payment facilitators acting on their behalf, will be required to report the annual gross amount of reportable transactions to the IRS and to the participating payee.

What does this mean for you and me?

If you’ve ever sold your old iPod on eBay, chances are you won’t be affected since you’ll be getting only a fraction of what you originally paid for it and the income isn’t taxable. However, if you’re one of thousand of eBay sellers and other small business owners who accept PayPal or any other electronic form of payment… that information could be now reported to the IRS.

Of course eBay sellers and small business owners should have been paying taxes on this income all along, but the fact is… they haven’t. For example, if you make money online using Google Adsense, Google isn’t required to report your income to the government until you’ve earned over $600. And since the income isn’t reported, most people don’t report it as income on their 1040. In fact, the government estimates that this bill will bring in an additional $9.802 billion over ten years.

Whether you report your small business income or not, this bill could be an invasion on everyone’s privacy. If you’re concerned, be sure to write your representative.

6 Responses to “Sell Stuff on eBay? You May Now HAVE To Pay Taxes.”

  1. Chris

    22. Jun, 2008

    And it’s only a short hop from this reporting requirement to giving the sales data to every state’s taxing authority. Then we’ll be forced to remit sales taxes and presto! our Governor’s wet dream of taxing the Internet is realized.

    “Every man has a right to evade taxes if he can get away with it. No citizen has a moral obligation to assist in maintaining the government.” – J. P. Morgan

  2. steve jenings

    12. Aug, 2008

    Big brother again can’t we ever shake these guy’s

  3. Alice Spencer

    12. Aug, 2008

    It’s about time everyone must pay to keep to status quo

  4. Craig

    09. Nov, 2008

    Well it looks like Craigslist is going to grow in popularity. I haven’t been using eBay much because it’s increasingly sucky and now they are forcing me to accept some sort of Electronic Payment as one of the payment methods… So now I’m dropping stuff on craigslist to see what happens…

  5. Joe

    31. May, 2009

    So now we find out the REAL reason for eBay’s Paypal only policy. The government probably leaned on them for facilitating so many transactions and money transfers that were going unreported as income. Big brother is watching.

  6. Tami

    18. Jun, 2009

    Will they soon be asking us to pay taxes on what we make on Garage Sales?
    When will ‘Big Brother’ stop looking in my window, and start looking in their own? Did you know that any Legislator does not pay Social Security?
    No joke! They retire at their current salary, and even get cost of living increases!
    Call me crazy, but whatever happened to ‘government for the people, by the people, and of the people?’ I wish I was one of ‘the people’!

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