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….

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.

An Internal Revenue Service agent was found liable for back taxes and penalties for not reporting income on nearly 2,000 transactions on EBay Inc., the online auction site, according to the U.S. Tax Court.

Andrea Fabiana Orellana failed to report $41,842 in income in 2004 and 2005 from sales of designer clothing, shoes and other items, according to a Tax Court summary opinion. Orellana is liable for $12,428 in unpaid taxes and $2,486 in penalties.

Orellana, who represented herself, sold items under several names, including “BlackTheRipper,” the court document said. She could not be reached for comment.

“Petitioner’s attitude toward the preparation of her tax returns appeared to be cavalier,” the U.S. Tax Court opinion said.

Read it all here

The Ebay seller is an attorney so, instead of paying hefty attorney fees, he only has time involved in his suit. Most Ebay sellers would not have that advantage if they wanted to claim defamation.

Both of the participants involved live in Florida giving further advantage to the seller who likely knows the court systems much better and how to “play the game”.

Anyone selling online can have negative feedback. I remember selling a book on Amazon.com and some idiot gave ME negative after admitting he clicked the wrong button. And this was after he was never charged by Amazon.com and the whole incident was over before I even knew about the transaction.

Yes, I’d have liked to get some money from that jerk… but no I didn’t.

But if negative feedback is warranted… when does it become defamation?

Hey, maybe this victim of the lawsuit ought to sue Ebay because they induced him to leave feedback!

From Dane’s Blog

With toy store shelves and television commercials chock full of eye-popping video games and fancy tech playthings, it came as a surprise to many that some of the hottest toys this holiday season were inexpensive, relatively low-tech battery-powered hamsters imported from China called Zhu Zhu Pets, according to a story at CNet.com.

For avid eBay sellers, it was the perfect recipe for profits–if they managed to jump on the trend early enough.

Jorge, a field inspector for a Southern California insurance company, had no idea what Zhu Zhu Pets were when his daughter asked for one for her seventh birthday late in the summer. “She saw the commercial on TV and asked me for a Zhu Zhu Pet,” “I went to my local Toys-R-Us, where I have friends who work there. I asked for the Zhu Zhu Pets. They didn’t even know what it was. They had four of them, but they’d promised them to some lady in LA.”

This is what piqued Jorge’s interest: He, and his local Toys-R-Us, are hundreds of miles away from Los Angeles. Someone far away was looking for these toys, which signaled to him that they must have been, for one reason or another, difficult to obtain. This was relevant to Jorge because, as a side project, he’d been selling toys on eBay for about a year.

The story began, as so many do these days, with unfortunate circumstances induced by the recent recession. “The reason why I got into eBay was that I was laid off from work. I was off work for about 10 months,” he related to CNET.

As the parent of a young child, he had an in-house market research indicator. And when he found a new full-time job, he had to accept a significant salary cut, so he kept selling toys. “Going through eBay has afforded me to survive.”

He ended up buying seven Zhu Zhu Pets, all for the market price of about $8. He kept one for his daughter’s birthday. The rest, he put on eBay. They were sold the same day.

Continue Reading: “For eBay Sellers, A Holiday Hamster Hangover”

Photo by Cepia LLC.

Walk through any thrift store and you’re bound to bump into an eBay Powerseller or two replenishing their eBay inventory. The truth is there are still good bargains available at thrift stores for resale on eBay if you’re astute enough to spot them.

While it’s true you’ll probably pay more at a thrift store than you would at a garage sale, the prices for some items are still low enough for you to make a decent profit. The key, of course, is to do enough research on eBay to know what types of used items are hot sellers. And, I don’t mean a quick little glance. I mean really do your homework.

For example, if you’re interested in buying and selling used men’s shirts, go to eBay and perform searches for “used men’s shirt,” “nearly new shirt,” “gently worn” and all the other synonyms you can find for “used.” Go through the “vintage” category and the “collectibles – cultures, ethnicities” for Hawaiian shirts. Research the labels. Note any patterns and colors. Do some sizes sell better than others? (I always found I had a harder time selling men’s shirts in size small).

Do the same type of research with all the used items you may find at a thrift store: clothing, shoes, boots (especially used cowboy boots), purses, books (don’t ignore cookbooks – they can sometimes sell very well, especially the Betty Crocker Pie Cover cookbook).

When you find a thrift store or two (or, hopefully, more) that offers good quality used products go back often as new items are added every day.

With used clothing it’s very important to thoroughly check for any tears or stains, because once you buy it, it’s yours, you can’t take it back. I once bought several collectible Hawaiian shirts I had checked for tears and stains, but failed to check the collars. When I got them home I found they all had a bad case of “ring around the collar” which didn’t come out in the wash. Of course, I had to disclose that in my descriptions on eBay. The shirts sold, but for less than what they could have sold for in better condition. Also, check for any odors that may be tough to get out with washing or dry cleaning. (Do make sure you wash or dry clean all used clothing you list on eBay.)

While it’s true that used clothing and other items do sell well on eBay, your research will help you spot items with which you’ll actually make a profit. There’s a thought out there among some that you can slap anything on eBay and make money. Not true. If you don’t do your research you may find yourself losing money. Don’t just assume there’s a sucker born every minute and that anything will sell on eBay. Without proper research you might end up finding out the sucker is you.

It’s about what they consider their “Accepted Business Model”. The things that stood out for me were:

*Publishers may only place links and/or promotional content on sites they own. Affiliate links on third party sites such as Craigslist, MySpace, etc. are not allowed.

*You will not redirect any traffic to middle servers for the sole purpose of masking your referring source of traffic. This includes the use of URL shortening services (including but not limited to tinyurl.com, short.to and cloakedlink.com).

Ok, I understand the concept in general.

But why on earth would they stop someone with an affiliate account from seeking traffic from MySpace or another third party site? I can see how posting Ebay affiliate links on Craigslist would probably violate Craigslist’s terms of service, but bands and local businesses could have a presence on MySpace (the site seems pretty well ranked for some local search keywords). Why not link to items they don’t sell on Ebay?

I can see why you wouldn’t from the affiliate’s point of view… hand posting individual links that may constantly change would be a time consuming nightmare. But I don’t see Ebay’s complaint on the surface of things.

How do you react to these new changes? Will they affect your ebay business?

You can read her sales page here (affiliate link): Summer Toy Guide

I’ll let her describe it in her own words, but I think the logic is sound. Toys sell at the best prices during the upcoming holiday season. NOW is the time to get inventory from yard sales and thrift stores that go for pennies and can be resold for significant markups when there is a more active, hungry market for the items as Christmas approaches and the bargain hunters come out of the woodwork:

EBay sellers are frustrated this time of year because many markets go into a summer slump. Used toys ARE SELLING right now with huge profit margins!

Look at this email I just got from Heather – she just made over $200 on ONE USED TOY AUCTION a couple
of weeks ago!

“I just wanted to drop you a note and let you know, just how much you have helped me. I bought your
Holiday Toy Guide and did very well with the information that you supplied. After the new toy market
dropped in January, I was at a loss.

Thanks to your persistance in sending me new information about selling used toys, I have found my niche.
I have started garage selling and am absolutely hooked! Now, if I could just get enough time in the day to
list all the great deals I have gotten. I bought a Playmobil house with lots of accessories at a garage sale for $20. It just sold Sunday for $238.50. Woohoo! I have bought the Summer Toy selling guide and hope to find lots more great deals.

Thanks so much! – Heather”

The Summer Toy Guide comes with a downloadable ebook with strategies and tips for selling used toys -
but, honestly, the real value is in e weekly report that is emailed out.

The regular price for 3 month’s of weekly reports is $45… but, the Summer Toy Guide includes 3 months
and is only $27. Not to mention all of the other goodies in the Summer Toy Guide package.

You can read her sales page here (affiliate link): Summer Toy Guide Check it out if this sounds like a market you want to tap into!

You can go to the site right now and see a list of current sellers.

It’s a legitimate $70 value for $27!

You can read her sales page here (affiliate link): Summer Toy Guide

I’ll let her describe it in her own words, but I think the logic is sound. Toys sell at the best prices during the upcoming holiday season. NOW is the time to get inventory from yard sales and thrift stores that go for pennies and can be resold for significant markups when there is a more active, hungry market for the items as Christmas approaches and the bargain hunters come out of the woodwork:

EBay sellers are frustrated this time of year because many markets go into a summer slump. Used toys ARE SELLING right now with huge profit margins!

Look at this email I just got from Heather – she just made over $200 on ONE USED TOY AUCTION a couple
of weeks ago!

“I just wanted to drop you a note and let you know, just how much you have helped me. I bought your
Holiday Toy Guide and did very well with the information that you supplied. After the new toy market
dropped in January, I was at a loss.

Thanks to your persistance in sending me new information about selling used toys, I have found my niche.
I have started garage selling and am absolutely hooked! Now, if I could just get enough time in the day to
list all the great deals I have gotten. I bought a Playmobil house with lots of accessories at a garage sale for $20. It just sold Sunday for $238.50. Woohoo! I have bought the Summer Toy selling guide and hope to find lots more great deals.

Thanks so much! – Heather”

The Summer Toy Guide comes with a downloadable ebook with strategies and tips for selling used toys -
but, honestly, the real value is in e weekly report that is emailed out.

The regular price for 3 month’s of weekly reports is $45… but, the Summer Toy Guide includes 3 months
and is only $27. Not to mention all of the other goodies in the Summer Toy Guide package.

You can read her sales page here (affiliate link): Summer Toy Guide Check it out if this sounds like a market you want to tap into!

You can go to the site right now and see a list of current sellers!

You can read her sales page here (affiliate link): Summer Toy Guide

I’ll let her describe it in her own words, but I think the logic is sound. Toys sell at the best prices during the upcoming holiday season. NOW is the time to get inventory from yard sales and thrift stores that go for pennies and can be resold for significant markups when there is a more active, hungry market for the items as Christmas approaches and the bargain hunters come out of the woodwork:

EBay sellers are frustrated this time of year because many markets go into a summer slump. Used toys ARE SELLING right now with huge profit margins!

Look at this email I just got from Heather – she just made over $200 on ONE USED TOY AUCTION a couple
of weeks ago!

“I just wanted to drop you a note and let you know, just how much you have helped me. I bought your
Holiday Toy Guide and did very well with the information that you supplied. After the new toy market
dropped in January, I was at a loss.

Thanks to your persistance in sending me new information about selling used toys, I have found my niche.
I have started garage selling and am absolutely hooked! Now, if I could just get enough time in the day to
list all the great deals I have gotten. I bought a Playmobil house with lots of accessories at a garage sale for $20. It just sold Sunday for $238.50. Woohoo! I have bought the Summer Toy selling guide and hope to find lots more great deals.

Thanks so much! – Heather”

The Summer Toy Guide comes with a downloadable ebook with strategies and tips for selling used toys -
but, honestly, the real value is in e weekly report that is emailed out.

The regular price for 3 month’s of weekly reports is $45… but, the Summer Toy Guide includes 3 months
and is only $27. Not to mention all of the other goodies in the Summer Toy Guide package.

You can read her sales page here (affiliate link): Summer Toy Guide Check it out if this sounds like a market you want to tap into!

You can go to the site right now and see a list of current sellers!