Constant Opinions

It doesn’t surprise me at all to read that the IRS would like to require auction sites report the income gained by selling on these sites. I’m just not sure if they have the right to require the sites to do so.

This sounds like it is consistent with real world requirements of businesses that so far have not been applied to online business:

section 6405(c) of the Internal Revenue Code requires 1099 forms to be submitted by any person who, for a fee, “regularly acts as a middleman with respect to property or services.” (from the article linked above)

OK, so it makes lots of sense to the IRS. More income reported so they can see who isn’t reporting their earnings.

Of course, you are supposed to report what you earn from such things. If you’re earning just a tiny bit, you probably wouldn’t be noticed, but if you earn a living there, it’s best to report the income anyhow. Better safe than having to pay huge penalties.

This would be a huge inconvenience to the sites themselves. They’d have to collect that personal information just as though they were employers. Is that a reasonable requirement?

The next question has to do with identity theft. I can see a new rash of phishing emails asking for personal information quoting rulings relevant to this.

And of course, there’s the question of how many people are underreporting. Do most people report their online auction income or no, especially among the big sellers? How much of a difference will this requirement really make?

Of course, this should be considered a head’s up for those who sell on auction websites. If you aren’t reporting your income clearly now, it’s a good time to get moving on that. You do not want to get caught doing otherwise.

Technorati Tags: irs, taxes, online auctions, ebay, personal information, tax, 1099, reporting income

Filed under: Politics