eBay Ready to Fight Government Plan to Tax Sellers

That nice little ‘extra income’ you get from selling on eBay has been just between you and the auction giant. The Bush administration is trying to change that with a plan to tax sales of your cards, memorabilia and anything else you list. eBay, not surprisingly, has sounded the call to arms.

eBay has gathered a collection of lobbyists to fight the Bush administration’s porposal to force eBay and other major auction houses to report most sellers’ earnings to the IRS.

Watching billions of dollars in transactions flow by without the guarantee it will see any of it has attracted the interest of the US government. Only a small percentage of eBay sellers likely report their earnings to the IRS each year. If it’s plan goes through, the cash-strapped IRS could collect $2 billion in extra taxes beginning in January of 2008.

Eoin Callan, a reporter for the Financial Times, told the Marketplace Radio Show on American Public Radio, "What the tax man is asking for is eBay to step in, to share information with the IRS and also to give its customers a heads-up about their tax liabilities. But eBay is refusing to do that. eBay pointblank does not feel it’s its responsibility to act as a go-between customers and the IRS."

The plan doesn’t impact only the largest sellers. In fact, anyone who makes 100 transactions a year worth at least $5,000 would be subject to having those sales taxed. According to the Times, eBay has pledged to cooperate with the government’s request for records of individuals it suspects are making larger sums of money through the site but not reporting the income. The new plan would also force eBay to report any customers who reach a taxable milestone.

eBay doesn’t believe the proposed change is legal. The company vows not to fink on the customers who’ve built it into one of the largest companies in the world. eBay believes it’s function is more of a shopping outlet and shouldn’t be considered an auction house. They also believe the government is wrong for not including sites such as Craig’s List, which carries national classified advertising.
eBay’s stance is that sellers should be responsible for their own transactions, reporting income on their own under IRS guidelines.