If you regularly sell items on online auction sites, you may find yourself on the Internal Revenue Service’s radar.
Recent legislation aims to help the IRS collect more taxes from online enterprises, many of which either don’t know about their tax obligations or are ignoring them, according to the agency.
The provision will require PayPal and other processors of online payments to report annual gross receipts to the IRS for all but the smallest online merchants.
The new reporting requirement is similar to a proposal the Bush administration has put forward in its most recent budgets as a way to ensure that taxes owed are being collected. It also applies to intermediary banks that process card payments for restaurants and brick-and-mortar retailers.
Congressional tax estimators predict the reporting change will help the IRS collect an additional $9.5 billion in taxes owed by online and traditional businesses over the next 10 years.
The payment processors will be required to file a 1099 form for each merchant to the IRS and to the merchant. They won’t have to file for merchants with less than $10,000 in gross sales and less than 200 transactions in a given year.
And they won’t start reporting until 2011, giving the banks and the merchants a couple years’ head start to make sure everything is in order.
Photo by bruno-free.
Online Sellers Face New IRS Rules
August 7, 2008 by Rich | 2 Comments
In Government, Self-employed, Taxes
CD Junior on August 7th, 2008 at 9:10 am
What I want to see is with eBay users reselling 37% of the worlds stolen and knock-off merchandise, when are the Feds going to shut them down? They should have put tighter controls on them years ago and their subsidiary PayPal. I once bought a $1,000 item from eBay and paid through Paypal. It was a serial con artist and I never got the product. Although Paypal and eBay had advertised secure transactions and insurance for this, they later told me to read the fine print and I had to pay a premium first. So no insurance. I did a charge back to my credit card and Payapal froze my account and tool all the money out of it. They did not refund me the balance for 6 months and they still stole the money I used for the chargeback. So it was like getting robbed by a thug on eBay and then getting robbed again when I called the police paypal.
cassy on August 16th, 2008 at 10:42 pm
If this happened to CD Junior, then people should be aware about this.