The Internal Revenue Service is going to be able to get a better look at eBay transactions starting next year, and thats going to mean many online sellers will probably have to start paying taxes on their sales.
The changes will occur when a new statute goes into effect in 2011 that requires the gross amount of payment card and third-party network transactions to be reported annually to participating merchants and the IRS. The provision was originally enacted as part of the Housing Assistance Tax Act of 2008.
The IRS has already been giving greater scrutiny to eBay transactions, as in a case decided just last month by the Tax Court involving an IRS employee who didnt report her own eBay sales to her own agency (see
Not all eBay sales will be taxable, of course, as many sales are of secondhand items and are effectively sold at a loss. Taxpayers can also go the route of arguing that the sales constitute a hobby and not a business, as the Washington Post noted in a recent
One beneficiary may be Craigslist, which acts as an online classified ad site, but doesnt process transactions like eBays PayPal service, as an interesting
Whatever the outcome, the IRSs new information reporting requirements are going to be one more issue for eBays increasingly pressured sellers to figure into their calculations.