Tax Prof Blog notes today that…
the IRS ruled that third-party payment processors such as EBay’s PayPal service do not need to collect taxpayer identification numbers or withhold taxes from sellers who have 200 or fewer transactions in a year.
Here’s the IRS notification…
A large number Ebay sales folks were about to have to try to unload their products on another platform like Craigslist as a result of this ruling and, of course, that could hurt their business and Ebay’s. If the items were personal use items, they might not have even been subject to tax, but the broad ruling made no such distinction (how could Ebay know for sure anyway?).
At 200 transactions a year, you’re selling about one item per business day on average. Unless y0u’re making $500 to $1,000 profit per item, it’s probably a nice little side income or part of a larger business mix. It may not be “net income” at all actually but the law made no distinction. Having to move from Ebay to Craigslist would have definitely reduced the odds of linking to customers in my opinion and hurt these businesses. Thankfully everyone got a reprieve!
Related Item (affiliate link): Want to sell your ebay items on Facebook? Here’s how….
Robert Truitt on June 14th, 2011 at 3:34 pm
Thanks for sharing this, but I always thought that it would have to be over $600 just to report it to the IRS.
Chuck on June 14th, 2011 at 3:38 pm
This is about what was EBAY’s reporting…. your personal reporting is still in full force.
IRS Reprieve Prevents Knick-Knack Exodus to Craigslist. | Evolv on June 15th, 2011 at 12:30 am
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