Government Tax Agencies Think Online Selling Is Easy Money

by: sasikat9

Its really hard to feel sorry for anyone who doesn't have the common sense to file an income tax and include income from Ebay etc on it.

They should all be jailed and the key tossed.

Don't ya all know Obama needs the money to fund all his programs.

by: The End

We pay all taxes.
WE own and control the government.
WE will remind it in the coming elections.

by: Damariscotta

Speaking only for the U.S., there is nothing special about on-line selling. Any activity that produces income needs to be considered. Truly "casual" sellers will likely face no (or minimal) tax consequences providing they keep records of all expenses.  

by: Al G

You try to fly below the radar, you could hit the side of a hill.

The IRS, HMRC & other agencies of that ilk are not amused when your name comes to the top of the list. And the publicity of transgressors is the best way to instill a patriotic sense of citizenship.

In the US, whistle-blowers on income tax evasion get a 10% 'finders fee' to boot.

by: timeaftertime

Tax dodgers create problems for us honest sellers who do collect and remit tax on purchases.

(1) They only add to government determination to make all of us small businesses collect/remit taxes on every state, not just the one where we live. The only reason this hasn't happened is because so many of us would fold -- devastating because small business is THE basis of every local economy.

(2) By not remitting taxes on profits, tax dodgers are part of the reason government is levying increasing taxes on us all. (It's not limited to Obama - with a tiny % exception, they ALL are part of the tax-and-spend ''machine''!) Do not condense, do not fix, do not do anything constructive, just throw more money at every problem!! If only the massive amounts of money tax cheats keep were collected, it would reduce the NEED for government to demand increasingly more. (Note I said ''NEED'' not ''DESIRE'')

(3) As a small business person doing my best to collect/remit taxes on sales (I want to sleep restfully at night), I (and the rest of us) expect to be swept up in the nets cast by government auditors who are after the tax dodgers.

I/we will have to afford whatever it takes to prove our innocence (no, it is not innocent until proven guilty - you will be treated like a criminal until you can prove to their satisfaction that you are not!) Even if you are pure as the driven snow, and are keeping records to the best of your ability, this is going to cost you! You will still have to incur the cost of hours of wasted time and who knows how much actual dollar costs (like hiring a lawyer?) to convince auditors that you are doing your best to be honest.

(4) ebay and other online marketplaces too long have been a ''haven'' for people who think they can get away without remitting taxes on sales, and are a great target for tax enforcers. Yet, here in NY, any individual (not business owner) who earns income from more than an occasional garage sale or two, is required by law to register with the state and report that income - like the people who advertise $1,000 puppies for sale in the paper - I wonder how many actually do.....

(5) WHY do you suppose your eBay selling and purchase ''HISTORY'' was changed rather recently to include YEARS of sales and purchases !? How easy to hand over records to government officials! Cheaters be warned!

by: timeaftertime

Sorry!! My first sentence should have read "Tax dodgers create problems for us honest sellers who do collect and remit tax on SALES."

by: Basset

I have no formal accounting education.

Years ago before opening eBay store I called our accountant & asked - what do you need me to keep track of ?  I had an idea of what was involved, but he mentioned things I had not thought of.  

Since I had to start keeping track of stuff almost a year before the next tax season, I was glad I called - it certainly made the final gathering of figures a lot easier!

by: RKTOYS

I don't understand why people think this is hard.  Keep your product invoices.  Keep your sales records.  I wrote a Windows application but the less technologically-inclined could probably make do with a simple spreadsheet.

by: JLynnPro

I have no issue with this.  I am an  honest business person.  I feel that all who are in business should abide by the law.

by: Biglouis

I like to sleep at night so I am registered with HMRC. There are so many cowardly stitches on these sites anyone who trades would be foolish not to inform the tax man.

by: rhodyart1960

I have had a state sales tax permit for years, ever since the first show I sold in. I also keep records of my expenses which outweigh what I make (I'm a VERY tiny seller). I've never had to file federal taxes as my Etsy shop is considered a hobby because I have not made a profit in 3 years. Although I do not directly charge a sales tax to my customers, I state in my policies that I do pay sales tax (from my price) to my state. Recently my state has instituted a policy where handmade goods are no longer taxable - I still have to file a return every quarter even if I don't have taxes to pay, but like someone said above the slight inconvenience this causes helps me to sleep at night knowing I'm doing what is right and not trying to get away with anything

by: rhodyart1960

I should note, in case someone thinks I'm nuts for continuing to sell on Etsy even though I'm not making money-artists usually don't make money but we're compelled to do it, it's therapy for me, and it's cheaper than a therapist

by: Moonwishes

Prior to Obamacare, my husband was hospitalized for several days with no health insurance. When we tried to make an application to Medicaid (the welfare program NOT Medicare for seniors and the disabled), as hubby is self-employed with a very erratic income, when we tried to show our income vs. expenses ALL that Medicaid would look at was the income. As far as they were concerned If we had brought in $100K with expenses of $90K in a year, the $100K is what we had to live on and why would we need Medicaid. Actually our amounts of income was something in the $25K range that year and they still turned us down. So it isn't just the taxing authorities that don't understand that just because a seller sold a lot, it doesn't mean that they made a lot. Even trying to guesstimate income for this new national health program is a joke. How can a self-employed person guess 12 months ahead of time what their income will be, especially when we don't know when google will lose its collective mind and small on line sellers incomes drops in half in one year. So yes, by all means keep very good records!

I have been amazed over the years that people on forums that we all know sell on line admit to never declaring their income from that activity. They seem to have told themselves a lie that the money that they make without benefit of a W2 is income they can ignore. I saw a seller once in total panic mode when the new rule about the 1099's for on line sellers came out. She apparently hadn't kept track of any expenses and had never declared her income and was hounding the board for what to do and how could she hide the pittance she had earned.

If you don't make much, you still want to report, not only because it is the law but also because that 'little' bit may make a difference in the amount of SS you will receive when you retire. You may think that it won't make much difference, but let me tell you, even a $10 initial difference in your SS becomes worth more in time especially as COLA come about hopefully every year. When you are on SS an extra $10 can make a huge difference as well and can be the difference between a prescription or some groceries.

There is never any reason to try to cheat the government when it comes to your income and the penalties for doing so are severe.  

by: Chicago48

It's difficult to tax a purchase when you're a small seller  Each state has its own tax % and policy.  You would need special software to figure it out for each buyer.  Besides, I believe small sellers should be exempt.  Many times, we're just making enough money to buy a hamburger.

by: RichieC

                 it is never enough  

by: Basset

Moonwishes - Did you appeal? You may have had a worker who did not know how to process self employment applications.  There was never much training on that and that was a common error that eligibility workers made.  

It has been years since I worked in it and it always differs SOME by state but Medicaid has many across the board federal rules.  Adjusted Gross income - NOT gross income for self employment was always the rule.  


For many states though - there is no Medicaid qualification unless you have deprivation of parental support of a child involved - and most middle age folks don't.  I used to hate turning middle aged folks away from Medicaid, those who had heart attacks bad burns, etc... who would have qualified if only they had a child in the home. It always seemed a discriminatory rule to me.  

Another qualifier is to be determined disabled by Social Security Disability or SSI - I don't know if it is still the same but if you apply for Medicaid in conjunction with applying for SS Disability or SSI, they used to hold your Medicaid application date until you received a determination of eligibility of SS Disability - and THAT can take months considering you usually have to appeal a couple SS denials before approval.  Medicaid  would consider any Social Security Lump sum back payments as unearned income - but many still qualified for Medicaid with a Spend Down (like a deductible) - which served to at least help chisel down the medical bills.  


Again, this may have changed but only a politician with their head up their butt would vote to count Self Employment GROSS income instead of Adjusted. States that did NOT expand Medicaid for Obamacare MAY still be following the policies above.  And with online applications, I'm not sure how much interaction with a human applicants have.  

Just thought I'd throw that out there in case anyone has to deal with Medicaid. Although it is in fine print, many don't understand their rights and it can get pretty confusing. Be sure you understand your rights - no matter what state you are in.


And I agree with paying into Social Security being a secondary reason to report your income.  Easier for me to say since I am between 50 and Death, Millennials may feel different on that!

by: serioussellers

With the much discussed cutbacks at the IRS, our experience might be unique and never replicated.

Extremely helpful IRS staff (who had received some reports of income that actually belonged to other taxpayers & not to us) strongly encouraged us to file amended returns & actually declare & document all business losses (since significant overhead costs continued while eBay sales disappeared thanks to search invisibility). We had not used our business losses (as most people probably would have) to reduce our small tax liability.

The IRS experts in several offices were quite amazed that eBay's and PayPal's annual totals for a seller's transactions don't always match reality (as has been reported before by other commenters here & elsewhere).

The IRS experts' strong encouragement to reveal/submit all of the actual (and embarrassing) losses (in amended returns) yielded refunds that we could apply to student loan debts.

If we had been reading this site 2 years before we first became avid followers, we would never have closed our B & M shops with the intention to expand on eBay while also expanding our consulting business.

We know of other struggling antique dealers who think that they cannot repeatedly show their losses (which are often due to the burdens of longterm commercial leases) on their tax filings.  Some of their accountants have told them to manipulate the figures to show that they broke even or that they had a tiny profit -- instead of showing the genuine loss.

The experts at the IRS realize that real life/problems/crises/challenges sometimes mean hardships and losses --  and as long as you have the documentation, they certainly expect you to properly and accurately reduce your tax liability.  In fact, some of them thought that it was hysterically funny and almost unbelievable that we had overpaid. Once some of them recovered from fits of laughter, they told us about the ''opposite'' types of stories in which businesses with genuine big (and under reported) profits created phony losses (with very little or no documentation) to zero out their tax liability.

Perhaps our experiences with IRS special offices and experts were out of the ordinary, but the lessons learned can perhaps help others (who, unfortunately, might never again be able to get through to a human being on the IRS' scaled back customer service phone system).

by: gizmo

Over taxation, without representation. The American way. Lest yee forget the boston tea party. Screw governments.

by: AnotherTime

Question:  Is a US citizen with no physical base in UK still subject to UK tax because of selling on an internet site that offers items in that country too?

by: AnotherTime

Question:  Is a US citizen, with no physical presence in UK, subject to UK taxes because of sales offered through an internet site in that country?