Are you ready for the ecommerce tax?
May 17, 2007 · Print This Article
If you operate an internet or eBay business, you’ve probably read articles or heard that the IRS wants to get it’s share of your profits.
Over 700,000 Americans earn income from eBay (2005 study – Information Rep0orting Program Advisory Committee), and the IRS knows they are losing billions of dollars each year in tax revenue.
The most recent development is language inlcuded in President Bush’s 2008 budget proposal. The IRS expects that this proposal, if passed, could generate $20 to $200 million in tax revenue.
In this proposal, online brokers – such as eBay and Amazon – would be required to collect and report information on customers who are earning money on the internet.
Brokers will be required to report names, addresses, and gross proceeds of each customer that completes more than 100 separate transactions and generates more than $5,000 in gross proceeds each year.
Most likely, companies will report this information for all of their customers because they won’t know who meets the criteria above until the end of the year.
This proposal could cause problems for smaller companies. Not only will collecting this information be costly, but smaller companies may not have the techonology to keep this data safe from hackers. The Center for Democracy and Technology is concerned about the safety of the personal data collected, and rightly so, given how much fraud and identity theft takes place today.
The proposal could have a negative affect on ecommerce as well, as some customers may shy away from doing business on the internet if they are required to provide Social Security numbers.
If passed, the proposal will be effective beginning January 1, 2008. There is no indication that there will be any retroactive treatment for the new law.
For some great eBay tax tips, please read our free special report, Tax Tips for eBay Sellers.
Tags: internet tax, ebay tax, income tax on ebay sales
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