IRS tryin to get that EBAY loot!!!!!
flatblackplastic 1,207 Posts
edited February 2007 in Strut Central
http://www.ft.com/cms/s/d042705c-c087-11db-995a-000b5df10621.html saw this on that other site that im not registered to post on. HELL YEAH I'M MAD DOGGIE!
it kept triggering an error when i tried to open it.
is the irs going ot track peoples paypal usage?
By Eoin Callan in Washington
Published: February 19 2007 17:45 | Last updated: February 19 2007 17:45
Ben got started as a seller on eBay when he had to get rid of unwanted wedding gifts and old junk to make room for a new baby in his small home near Kansas City.
But he quickly ???caught the bug??? and became one of more than 4.3m people that make a significant chunk of their income from eBay.
The full-time engineer says that in his spare hours he buys up discounted items such as downhill skis ???that people don???t really need??? in the Midwest - ???where it is pretty flat??? - and sells them online to people in places ???where there are more hills???.
What makes Ben stand out is that ??? unlike many eBay users ??? he will in April voluntarily declare this income to the Internal Revenue Service and pay US business tax rates.
Kristine McKinley, his accountant, says this is the first year that clients have come forward to her main street practice because they ???are making enough from eBay that they are concerned about whether or not they need to pay tax???.
People???s caution in coming forward has prompted the Bush administration to propose compelling eBay and auction businesses such as Sotheby???s to report to the IRS any customer that carries out more than 100 transactions a year worth at least $5,000 (???3,850, ??2,565).
The Treasury expects to collect $2bn in extra taxes from the new regime, due to come into force on January 1 2008.
But eBay is fiercely resisting the proposal and has mobilised its extensive lobbying operation on Capitol Hill to question the legality of the proposed changes.
Representative Rick Boucher, who has received campaign donations from eBay, said he had been contacted by the company and shares its view that the Treasury and IRS would be stretching the limits of their authority by extending rules that cover ???brokers??? to the website.
The online auction group argues it is not a ???broker???, or a ???middle man??? or an ???auctioneer??? or an ???auction house???. So what is it then? It offers an ???auction-style??? service but is more ???like a shopping mall,??? a spokesperson says.
In turn, the company argues that the Treasury???s plan would be unfair because it regulates in such a way that exempts competitors like Craigslist that have different business models based on plain classified ads without the auction or payment tools of eBay.
EBay says forcing it - and not Craigslist - to snitch on customers would be the equivalent of requiring indoor shopping malls to report tenants??? behaviour but not open-air strip malls.
???Business owners would relocate to the strip mall,??? says a spokesperson.
But it is precisely eBay???s solid business structures and overarching customer service that has helped attract the unwelcome attentions of the overworked and cash-strapped taxman.
Ebay already tracks the volume and value of its customers??? transactions, notifying them when they reach key milestones and soliciting them with customised services.
The Treasury proposal would open the way for the financially stretched IRS to piggyback on the company???s systems by requiring eBay to report to authorities when customers hit milestones.
The company says it will cooperate with the IRS in investigating named individuals and entities, but does not want to act as a ???go between??? for customers ???en masse???.
It wants tax collectors to rely on their own wiles and defends the hands off approach to tax that is apparent from interviews with eBay users.
Elena Neitlich, who runs a highly successful online store from home called Moms on Edge, says eBay appointed a special adviser to coach her almost daily on every nuance of her auctions from catering to different timezones to the optimal names for potty training toys.
But the award-winning eBay seller says she cannot recall ever being reminded of her tax liabilities.
???I don???t remember anyone saying to me that now we needed to go through the tax issues. No, that didn???t happen,??? she says.
The eBay spokesperson says: ???We believe that it is the seller???s responsibility.???
Ben ??? who asked that his last name be withheld because he runs a blog that details a lot of personal finance information.
???What I do is just like any other small business, so I should pay tax,??? he says.
Copyright The Financial Times Limited 2007
or would paypl be under the microscope too?
i haven't read anything about paypal in connection to this IRS thing yet. but as stein said, it's been a long time coming... if they're not targeting paypal right now, i'm sure they will at some point
guess its back to the good ol' fashioned way: slangin them vinyls at the record shows. maybe that ain't such a bad thing
i know a powerseller dude (sells all sort of stuff) whose been reporting ebay income in detail to the IRS since 1998.
one might laugh at him for doing it needlessly to date - but watch: the IRS can go back years if they want to, once the rule is in effect.
get yer biz straight if youve been banking big $ on the bay.
BUT... i bet this gets held up, tied into the long stalled internet sales tax stuff.
i am more of a collector than a dealer, the records i sell are mostly out of my own collection, the rest are the odd bits around town that i would be a fool for leaving in the crate. i probably spend an almost equal amount on records as i do selling them. so its like, im getting taxed when i buy them in the first place, and then taxed again if i happen to sell them. am i supposed to keep every single receipt i get??? and lets face it sometimes there is NO receipt.
another aspect is what about those morons who win something and never pay?
also money we spend on shipping?? gas?? time???
shit is just crazy to me
2008 take it back to the set sale, no paypal bullshit either. registered letter with cash. those europeans were right all along. i gotta say also, for the 6 or so years i've been selling crap on the side, i've never not gotten cash that someone had sent me.
sales over $5,000 - which will, of course, effect
most of you full-time sellers, but anybody not selling
$450 a month can rest easy and continue cheating the Feds
So they basically the feds are too lazy to do their job and they want ebay to just round up all the people who make the most money and point them out to the IRS?
On a related note.. who is the biggest record baller/power seller around and how would they stack up against other ebay power sellers in other categories...?
Rough estimate on Craig Moerer.. looks like he pulled at least $25K in the past two weeks.
Especially when you consider the number of record transactions that tsake place off the books (fleas, house calls, garage sales, etc.). How could they ever accurately estimate profits? Who's to say you didn't pay $300 for the record you just flipped for $450, you know?
There's probably a simple answer to these questions, my knowledge of taxation doesn't extend much past sales tax.
If the IRS thinks you are 'running a business' then you should be reporting your sales and paying taxes every year (whether you made it on ebay or not). The q is are you running a business? If your actions are consistent with the actions of a business, then the IRS would likely consider you a business.
Having said that, the answer is 'no'.
a good rule of thumb: if it can be tracked, they can find a way to tax it. this is just the chickens coming home to roost on the ebay thing.
their argument would be: so you spent all your profits on personal luxuries (i.e. other records), well, so what? its not our fault you didnt put aside 15% or whatever of your sellers income to pay your taxes with.
like other small biz tax things, youd claim expenses vs your profits - gas, postage, shipping supplies. youre not supposed to get taxed on gross profit, only net profit (i think??? any tax lawyers in the house?)
not sure where they came up with the $5000/year thing, but that will of course exempt most casual sellers.
i think its a "tax of opportunity" because ebay has been convieniently tracking every penny youve earned on their website since day one.
again, regardless of all the BS, i dont see this getting too far: the "internet sales tax" proposal has been dead in congress for years, and i cant see how ebayers would get taxed before everything else on the internet did.
I spend $5000 a MONTH[/b] in untracked cash on records - no receipt, no withdrawal notice, no carbon, no NOTHING.
Try writing THAT shit off.
Motherfuckers have been making some good money on records with little to no liability. Now it's time to pay the piper. Time to get creative, start really hustling.
You can write off miscellaneous cash expenditures in small amounts but if you are spending thousands a month in cash and making double or triple on paper it's time to rethink that.
There are still a lot of ways to sell records for cold cash money. But these weekend warrior born again ebay types are going to need to think of another way.
As far as set sales go, it's really not the issue of how much you are auctioning *on ebay* but how much money you are going to draw from paypal. Because if I were you... and I'm not, but if I was, I would assume that paypal will be reporting as well.
If anyone wants to PM me about serious shit like this I am more than willing to talk about how I run my ship.
That's correct. The IRS is only concerned with net income. You can protect yourself to an extent by saving all receipts for shipping, gas, supplies, etc., to write off your expenses. Where record dealers are gonna get screwed is all the flea market and record show transactions, where receipts are all but non-existant.
multiple ebay seller accounts that shutdown after 30 or 40 transactions
multiple bank accounts
off shore bank accounts
putting stuff in your girl[s] name
save every recepit all the time even when you but toilet paper or food
collect receipts from people you are friends with
write off everything
move out of the US [one more reason to]
too bad for big ballers like funk you and up pig etc.
where will your money [2 billion]go???
sorry to thread jack-but here it is-the elephant in the room we are paying for
that and more prisons/war on drugs
cause in effect
The 15-month proconsulship of the CPA disbursed nearly $20 billion, two-thirds of it in cash, most of which came from the Development Fund for Iraq that had replaced the UN Oil for Food Program and from frozen and seized Iraqi assets. Most of the money was flown into Iraq on C-130s in huge plastic shrink-wrapped pallets holding 40 ???cashpaks,??? each cashpak having $1.6 million in $100 bills. Twelve billion dollars moved that way between May 2003 and June 2004, drawn from accounts administered by the New York Federal Reserve Bank. The $100 bills weighed an estimated 363 tons.
Once in Iraq, there was virtually no accountability over how the money was spent. There was also considerable money ???off the books,??? including as much as $4 billion from illegal oil exports. The CPA and the Iraqi State Oil Marketing Board, which it controlled, made a deliberate decision not to record or ???meter??? oil exports, an invitation to wholesale fraud and black marketeering.
Thus the country was awash in unaccountable money. British sources report that the CPA contracts that were not handed out to cronies were sold to the highest bidder, with bribes as high as $300,000 being demanded for particularly lucrative reconstruction contracts.
The contracts were especially attractive because no work or results were necessarily expected in return. It became popular to cancel contracts without penalty, claiming that security costs were making it too difficult to do the work. A $500 million power-plant contract was reportedly awarded to a bidder based on a proposal one page long. After a joint commission rejected the proposal, its members were replaced by the minister, and approval was duly obtained. But no plant has been built.
Where contracts are actually performed, their nominal cost is inflated sufficiently to provide handsome bribes for everyone involved in the process. Bribes paid to government ministers reportedly exceed $10 million.
Money also disappeared in truckloads and by helicopter. The CPA reportedly distributed funds to contractors in bags off the back of a truck. In one notorious incident in April 2004, $1.5 billion in cash that had just been delivered by three Blackhawk helicopters was handed over to a courier in Erbil, in the Kurdish region, never to be seen again. Afterwards, no one was able to recall the courier???s name or provide a good description of him.
Paul Bremer, meanwhile, had a slush fund in cash of more than $600 million in his office for which there was no paperwork. One U.S. contractor received $2 million in a duffel bag. Three-quarters of a million dollars was stolen from an office safe, and a U.S. official was given $7 million in cash in the waning days of the CPA and told to spend it ???before the Iraqis take over.??? Nearly $5 billion was shipped from New York in the last month of the CPA. Sources suggest that a deliberate attempt was being made to run down the balance and spend the money while the CPA still had authority and before an Iraqi government could be formed.
The only certified public-accounting firm used by the CPA to monitor its spending was a company called North Star Consultants, located in San Diego, which was so small that it operated out of a private home. It was subsequently determined that North Star did not, in fact, perform any review of the CPA???s internal spending controls. Today, no one can account for billions of those dollars or even suggest how the money was spent. And as the CPA no longer exists, there is also little interest in re-examining its transparency or accountability.
Bremer escaped Baghdad by helicopter two days before his proconsulship expired to avoid a possible ambush on the road leading to the airport, which he had been unable to secure. He has recently been awarded the Presidential Medal of Freedom, an honor he shares with ex-CIA Director George ???Slam-dunk??? Tenet.
Considerable fraud has been alleged regarding American companies, much of which can never be addressed because the Bush administration does not regard contracts with the CPA as pertaining to the U.S. government, even though U.S. taxpayer dollars were involved in some transactions.
Many of the contracts for work in Iraq were awarded on a cost-plus basis, in which an agreed-upon percentage of profit would be added to the actual costs of performing the contract. Such contracts are an invitation to fraud, and unscrupulous companies will make every effort to increase their costs so that the profits will also increase proportionally.
Halliburton, Vice President Dick Cheney???s former company, has a no-bid monopoly contract with the Army Corps of Engineers that is now estimated to be worth $10 billion. In June 2005, Pentagon contracting officer Bunny Greenhouse told a congressional committee that the agreement was the ???most blatant and improper contracting abuse??? that she had ever witnessed, a frank assessment that subsequently earned her a demotion.
Halliburton has frequently been questioned over its poor record keeping, and critics claim that it has a history of overcharging for its services. In May 1967, a company called RMK/BRJ could not account for $120 million in materiel sent to Vietnam and was investigated several times for overcharging on fuel. RMK/BRJ is now known as KBR or Kellogg, Brown and Root, the Halliburton subsidiary that has been the focus of congressional, Department of Defense, and General Accountability Office investigations. Defense Contract Audit Agency auditors have questioned Halliburton???s charges on a $1.6 billion fuel contract, claiming that the overcharges on the contract exceed $200 million. In one instance, the company charged the Army more than $27 million to transport $82,000 worth of fuel from Kuwait to Iraq. Halliburton has also been accused of billing the Army for 42,000 daily meals for soldiers, though it was only actually serving 14,000. In another operation, KBR purchased fleets of Mercedes trucks at $85,000 each to re-supply U.S. troops. The trucks carried no spare parts or even extra tires for the grueling high-speed run across the Kuwaiti and Iraqi deserts. When the trucks broke down on the highway, they were abandoned and destroyed rather than repaired.
Responding to complaints, Halliburton refused to permit independent auditing and inspected itself using so-called ???Tiger Teams.??? One such team stayed at the five-star Kuwait Kempinski Hotel while it was doing its audit, running up a bill of more than $1 million that was passed on to U.S. taxpayers.
Another U.S. firm well connected to the Bush White House, Custer Battles, has provided security services to the coalition, receiving $11 million in Iraqi funds including $4 million in cash in a sole-source contract to supply security at Baghdad International Airport. The company had never provided airport security before receiving the contract. It also received a $21 million no-bid contract to provide security for the exchange of Iraqi currency. It has been alleged that much of the currency ???replaced??? by Custer Battles has never been accounted for. The company also allegedly took over abandoned Iraqi-owned forklifts at the airport, repainted them, and then leased them back to the airport authority through a company set up in the Cayman Islands. Custer Battles reportedly set up a number of shell companies in offshore tax havens in Lebanon, Cyprus, and the Cayman Islands to handle the cash flow.
Two former company managers turned whistleblowers have charged that the company defrauded the U.S. government of at least $50 million. The Bush administration???s Justice Department has only reluctantly, and under pressure from a Newsweek expos??, supported the rights of the plaintiffs in the case. The White House has indicated that it is not interested in assisting other investigations of fraud in Iraqi contracting, preferring to regard the CPA as a ???multinational entity??? and thereby limiting its vulnerability in American courts.
Another American contractor, CACI International, which was involved in the Abu Ghraib interrogations, was accused by the GAO in April 2004 of having failed to keep records on hours of work that it was billing for and of routinely upgrading employee job descriptions so that more could be charged per employee per hour. Both are apparently common practices among contractors in Iraq, and audits routinely determine that there is little in the way of paperwork to support billings. The GAO report also confirms that many private security contractors in Iraq have been charging the U.S. government exorbitant fees for their services, frequently because the contracts allow security costs to be rolled into the overall cost of the contract without being itemized. In one case, contract security guards were effectively being billed at $33,000 per guard per month while the average rate for a security specialist worked out to between $13,000 and $20,000 per month.
The CPA also spread its largesse around the U.S. armed forces, distributing over $600 million in cash to four regional commanders to fund reconstruction projects as part of the Commanders??? Emergency Response Program. An audit of one region disclosed that 80 percent of the funds could not be accounted for, and more that $7 million in cash was missing. It is widely believed that many of the contracting agents working under the regional commands literally stole the money. In one reported instance, an American contracting officer doubled the price of a multimillion-dollar contract and brazenly explained that the extra money would be for his retirement fund.
Unfortunately, the corruption of the occupation outlived the departure of Paul Bremer and the demise of the CPA. A recent high-level investigation of the Iraqi interim government concluded that the corruption is now so pervasive as to be irreversible. One prominent businessman estimates that 95 percent of all business activity involves some form of bribery or kickback. The bureaucrats and fixers who live off of bribery are referred to by ordinary Iraqis as ???Ali Babas,??? named after the character in The Thousand and One Nights who was able to access riches from a treasure cave by saying ???open sesame.??? For the average Iraqi businessman, there was formerly only one hand out, that of Saddam???s designated minion. Now every hand is out. The educated and entrepreneurial are leaving the country in droves, as is most of the beleaguered Christian minority. Huge government appropriations are approved by Iraqi lawmakers and then simply disappear. Meanwhile, life for the average Iraqi does not improve, and oil production, water supplies, and electricity generation are all at lower levels than they were when the U.S. took control in 2003. The only thing that everyone knows is that all the money is gone and daily life in Iraq is worse than it was under Saddam Hussein.
The undocumented cash flow continued long after the CPA folded. Over $1.5 billion was disbursed to interim Iraqi ministries without any accounting, and more than $1 billion designated for provincial treasuries never made it out of Baghdad. More than $430 million in contracts issued by the Petroleum Ministry were unsupported by any documentation, and $8 billion were given to government ministries that had no financial controls in place. Nearly all of it disappeared, spent on ???payroll,??? wages for ???ghost employees??? in the Ministries of the Interior and Defense. In one case, an Army brigade receiving money to support 2,200 men was found to have fewer than 300 effectives. 602 actual guards at the Ministry of the Interior were billed as more than 8,200 for payroll purposes.
Iraqi Airways carried 2,400 employees even though it had not operated for over a year and had no planes. The airline itself was sold to an unidentified buyer without any paperwork to show for how much it was sold and what assets were included. It has been alleged that the buyer might well have been Pentagon favorite Ahmad Chalabi.
Nearly all payrolls in the national guard and national police were also inflated, leading to uncertainty over how large the security forces actually were???still an open question. Absentees from the nominal rolls of police and soldiers provided by government ministries are believed to number in the tens of thousands, and as the United States Congress has figured out, frequently cited figures on available trained manpower are largely imaginary.
Even the ???coalition of the willing??? partners have been quick to cash in. Polish helicopters purchased as part of a $300 million deal with arms maker Bumar Ltd. were found to be obsolete, largely unflyable, and were actually rejected by the Iraqis. Bullets purchased from Poland by the Defense Ministry cost three times the normal international price. Five Polish peacekeepers have been arrested for demanding $90,000 in bribes. Both British and American soldiers have also demanded bribes from shopkeepers and travelers.
In yet another instance of take-it-while-you-can, a senior Interior Ministry official flew to Beirut in a helicopter accompanied by $10 million in newly printed Iraqi dinars. He has yet to return. Interim Iraqi President Iyad Allawi???s Defense Minister Hazem Shaalan transferred $500 million to a bank account in Lebanon, allegedly to buy weapons, in a case that continues to be murky. Shaalan is reportedly vacationing abroad and has not returned to Iraq. A Bremer favorite at the Defense Ministry, Ziad Tareq Cattan, was responsible for a number of shady arms-procurement deals. A warrant has been issued for his arrest, an unusual occurrence, and he is avoiding detention by staying with family in Erbil in Kurdistan.
Countless billions will never be accounted for, and the full cost of corruption has yet to be tallied. Sources report that much of the money that was designated for the development of a national army and police force is actually going to units that are exclusively Kurd or Shi???ite in expectation of a day of reckoning over the country???s oil supplies. The Kurds have made no secret of their desire to continue their autonomy-bordering-on-independence and have stated that they regard Kirkuk as their own. The Shi???ites have possession of the oil-producing region to the south and are using their control of the Interior Ministry to fill police ranks with their own pro-Iranian Badr Brigade members as well as militiamen drawn from radical cleric Moqtada al-Sadr???s Mehdi Army. The Sunnis are the odd men out, virtually guaranteeing that, far from becoming the model democracy the U.S. set out to build, Iraq will descend deeper into chaos???aided in no small part by the culture of corruption we helped to fortify.