Check this out at The Washington Post: The IRS Wants A Cut Of Your Online Sales
The IRS has plans to tax all that money you’re making online! Of course. This was prompted by an IRS agent who got caught selling designer accessories on ebay and failing to report tens of thousands of dollars in transactions that the IRS said was “income” and she said was essentially a perpetual garage sale of things she bought, tired of, and resold.
Beginning next year, a new law “requires the gross amount of payment card and third-party network transactions to be reported annually to participating merchants and the IRS,” according to an IRS summary. For their 2011 tax returns, “taxpayers who annually sell more than $20,000 worth of goods and have more than 200 electronic transactions” will receive a new IRS form, known as 1099-K, reporting the proceeds, said a spokesman for H&R Block, the nation’s largest tax preparation company.
I personally wonder how many people are making that many sales per year (about one per business day) and not running an actual business, but it’s another way to generate more paperwork and make it harder for solo entrepreneurs and small businesses to get business done.
One solution for all this paperwork this would be to enact the Fair Tax that abolishes the personal income tax and only charges the federal sales tax on new items, not used items. It’d be far easier to collect a sales tax and pay the proceeds monthly than generating more 1099′s.
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