Selling On eBay? You Better Be Giving Uncle Sam Its Share.

The IRS is being urged to request eBay and other auctions sites to report user’s earnings to the government so they can levy taxes on these earnings, reports SFGate.

When it comes to paying income taxes, eBay’s legions of small-time entrepreneurs are on an honor system in which they are supposed to declare their profits to the Internal Revenue Service. Many users, however, ignore the law or are unaware of their obligation.

Now a growing chorus of tax experts is hoping to crack down on the cheating by requiring eBay — and other online auctions, such as those on Yahoo, and Amazon — to track users and report their gross sales to the federal government. Armed with such information, the IRS could better seek any taxes owed, potentially reaping millions of dollars in extra revenue for the U.S. Treasury.

But requiring eBay to out its sellers to tax collectors could send a shockwave across its vast online bazaar, where users trade everything from Ferraris to Ugg boots to pepper spray. Paying Uncle Sam could significantly reduce their profits or even make their businesses money-losers.

I’d be shocked if the IRS doesn’t start investigating sellers, looking to make examples out of some of the bigger tax evaders. If you’re selling on eBay, I think you better start reporting your auction income, if not already. Otherwise you’re just inviting trouble.

I’m not a CPA, so I’m not giving tax advice. Please consult a CPA or tax professional.

usrbingeek is a Commercial, Wedding, and Portrait Photographer in Vermont and is also a Global Admin on the WyldRyde IRC Network. WyldRyde offers a free chatroom that can be added to any web site or blog and is home to the Lockergnome Chat.

[tags]ebay, IRS, tax, taxes[/tags]