Update Internet Sales Taxes Will Cost Every Shopper More

The marketplace fairness act, has passed the Senate. This act will compel any business selling items on the Internet to collect sales tax in all 50 states. The National Retail Federation is pushing this legislation, it does not like the downward pressure placed on sales prices from the Internet. They have devised a way of driving these prices up by at least the amount of sales tax that in their taxing jurisdictions. This Bills complications, and will drive prices up much more than just the cost of the sales tax. And by compelling all sellers to collect sales tax it will allow your local brick-and-mortar stores to immediately raise prices on all their goods and services.

The House of Representatives is now considering this Bill. Unlike the Senate the house intends to have a full range of hearings to try to refine this Bill , the Senate in its lack of wisdom passed the bill as written by the representatives of the National Retail Federation. That Senate bill as written will place huge burdens on all Internet businesses. What are these burdens do you ask?

First, it is a threat to privacy as  businesses will have to send their private information to all the proper taxing authorities. The same taxing authorities have shown a problem in the past with being able to keep private information contained. Secondly, this bill opens the door for many more government interventions and controls on the Internet and allows taxing authorities new gateways to collect revenues at the cost of people out of their jurisdiction. Lastly, there are 9000 ( + or minus) taxing authorities and jurisdictions across all 50 states. All businesses would be compelled to deal with those jurisdictions and settle any disputes in out-of-state courts putting those businesses at a great disadvantage.

It is obvious that the Bill as written need some serious revisions. If  passed in its present form, this Bill will affect you, not just those rascally out-of-state Internet businesses. And if you want to keep prices in check do yourself a great favor, contact your Congressman and tell them to simplify and correct this Bill.

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Internet Sales Taxes Will Cost Everyone

The United States Congress is in the process of passing a new bill, the Marketplace Fairness Act. The law requires all Internet retail businesses to collect the sales taxes on their transactions. While this looks like a means of leveling the playing field between online retailers and brick-and-mortar stores, it ultimately punishes both the online retailers and the purchasers of their items. This bill will also ultimately drive up costs of purchases both from those brick-and-mortar retailers.

In the Internet’s infancy, the United States Congress, enacted a carve out  that exempted online retailers from having to collect state and local sales taxes, in states that they are not located.  This exemption has been a sore spot for both the brick-and-mortar retailers, and state and local taxing agencies.  The short-changing of taxing agencies often occurs,because the purchaser fails to report those online purchases, and  those sales taxes go uncollected.   Also, the brick-and-mortar store owners think that they are at a disadvantage as they have the expenses of their buildings, employees, and local taxes.  With the increased prices of online goods these brick-and-mortar stores will raise their prices too. The reality, Internet retailers do have a physical locations for their goods, they do have employees to take orders and ship items,  and those employees have longer hours  because they cross many more time zones. The playing field  is a lot more level,  than the brick-and-mortar stores think it is.

The new Internet sales tax bill will turn all online sellers into unpaid tax collectors  for all the  650 odd state and local sales tax authorities.  This will radically drive up costs for those online businesses. Those online business will have to comply with collecting sales taxes, then  forwarding those collections to all proper taxing entities. Small online  business will find this a nightmare, not just because of all the different rates involved, but the different reporting periods,  securing licenses in all the districts,  the accounting nightmare for compliance, the need to open many more bank accounts (as many of these taxing districts do not allow co-mingling of funds),  etc.  Costs will rise far more than just the cost of the collected tax .

This sales tax bill poses a particular problem for online auction sites, as they are just product  aggregators.  Unlike most Internet retailers the online auction does not own, take possession of, take payment for, or ship any of the items on their site. Exceptions of note,  penny auctions – where the auction does on the items, and  eBay, where through PayPal, they actually do take payment for the items and sends the rest of the money to the seller. The normal online auction site only offers a place f item viewing and bidding.  The bill as written makes no distinction for these sites. Further, it does not truly address the online want ads like Craig’s List and Backpage.

The economy  is frail, and is approaching stagnation.  Businesses do not need more regulation and taxing, this will lead to  slowdowns .  Furthermore, it will cost consumers more for all their purchases,  and the cost will exceed just the sales tax price. If  you do not want to pay more for everything, contact your Congressman, and tell him please  vote against the Marketplace Fairness Act.



Online auctions contribute to hoarding, and they have the tools to identify and stop contributing to this. As hoarding has become a recognized disorder, and the source of a large number goods for hoarders is online auctions, do these auctions have the responsibility to identify and shut off these behaviors? There is software is available to spot this behavior and the responsible thing to do, is at least notify the hoarder, that their behavior is questionable.

I recently attended an auction held at a residence, that was full of items from mainly eBay. By full, I mean the residence had little paths, with all the space stacked to the ceilings –this included the garage and storage shed. The items were by the thousands, and a huge number of them had packing slips that they were from online auctions, and 98 percent were only opened, looked at and then stacked on the piles. There was no quality of life in this house, and most of it was totally unusable. The family who was handling the estate was so overwhelmed that they called in an auctioneer and he was so overwhelmed that he sold it off by rooms –I bought the garage.

That garage contained about 800 items, I kept about 40 and donated the rest. The cost to the original owner was thousands. From the enclosed packing slips it was obvious that the buyer had a couple of accounts and was buying multiple items weekly. This behavior is dangerous at the extreme, and this case it was. The resident had a health problem and was unable to either access the phone, or get out of the house, and it led to his death.

Online auction sites, like the one associated with this blog can easily run database queries and spot behavior that might be hoarding. Thousands of packages going to a residential address, and no sales from that buyer, should at least throw up a flag. It is an easy task to query the buyer, and ask them if they have a resale number for their purchases. If they respond that they have a permanent booth at the local flea market, or they are donating the items to operation shoe box for our soldiers, then remove the flag. If you get no response, it would be easy to suspend the account until a reasonable explanation comes from the buyer. This type of action is no different from a bartender stopping service to an inebriated bar patron.

Online auctions already attempt to control behavior  by restricting the types of listed items. They apparently have no desire to control behavior through the restrictions on obviously addictive behavior.  They should stop being automatic enablers and show that they are socially responsible, at restricting online shopping addictions.


The Fall in the Prices of Collectables, It has Returned

There has been a fall of auction prices recently especially ‘Collectables’. This collapse mirrors the one that occurred last in 1978 thru 1982,  discussed herein are the lessons learned from that collapse. The adverse conditions effect all parts of the economy, this includes the auction business. This downturn presents a  great  opportunity, if you have a plan and know how to execute it.

I attend 30-40 live auctions each year, and over the last two years have noticed a steady decrease in the auction prices. There are noticeable exceptions like, gold and silver items, one of a kind items, and mid-century modern items. Collapsing  the most in value,  restored  items, imperfect  items, and items that are commonly faked –even though they are real.  It would be wise to discard all of your collectible value books printed after 2002, base your buying decisions upon the 2001 or earlier prices. The idea is not perfect, but you will reduce the risk of grossly over paying for an item.

The idea of making a large gain, with a quick transaction in collectables, is vastly more difficult than it was,  even a couple of years ago. It will be wiser to develop a buy and hold strategy. A buy and hold strategy requires investing for the long-term and tying up capital for the long-term, if you need income stream now it will not work for you. For those of you that can afford to tie up cash for long periods of time,  huge rewards are possible.  If the price of an item keeps drifting down, it may have fallen into permanent disfavor, sell it if that happens.

Here is an example of this strategy, that worked for me . In 1979 I purchased a 1960 Mercedes-Benz 300 SL Roadster from a museum surplus auction in Texas for $7,500. I parked it in my garage. This was during the price fall of collectables that occurred during the Carter presidency. It was a rare, quality item, and based upon historical trends its price should recover. I  sold it in 1992 for $105,000. You should consider storage of items purchased for this style of investment, and if you do not own the storage space the costs of rented space may eat up all of your profits.

There has been a fall in the prices of collectables at auction, and with some astute buying combined with long-term holding, huge profits can be realized.



Are Penny Auction Sites Really Lotteries

The online community is constantly changing, and the latest appearance on the scene is the penny auction. The penny auction looks much more like a lottery, than a conventional auction.  Lotteries exist in some states, for non-profits, they are expressly forbidden for, for-profit entities. If penny auctions are lotteries, will they be shut down –like the online poker sites,  and their owners jailed as well?

The conventional online auction is a place for its members to list, bid upon, sell and deliver goods and services between themselves. The auction site does not own the goods or services, it provides a forum for the exchange of these items, and an arbiter of the inevitable disputes. It makes its money for providing a place for this exchange.

The penny auction site is different, the auction site owns the goods that are  on the site. Further more, you purchase bid packets or chances to bid on items, the auction goes up by a penny with each ‘bid’, also there is an extension of the auction closing time with each ‘bid’. If you are the high bidder when the time runs out, you are the winner and get to pay the final value too. 

I have been seeing TV ads for penny auction sites, so I decided to try one. I signed up, then found an item that I commonly purchase.  I decided to try to win it. I first tried to get it with the 10 free bids that were given to me for signing up with the site — to no avail. I then purchased a bid package, and tried again to no avail. I purchased another bid package tried again to no avail. At this point, I had spent the same amount, that I would have  if I purchased the item off another e-commerce site, but had no item.  I will not  participate in any other penny auctions.

What makes this penny system look like a lottery, I will evaluate.  First, you must purchase bid packets –you pay an amount for each bid, whether you win or not. A lottery charges you an amount for each ticket, whether you win or not. Secondly, the winner of a penny auction item must pay the final bid amount to get the item. The winner of a lottery is responsible for taxes, you generally must pay the taxes before you get your lottery proceeds. Lastly, the penny auction owns and runs the auction, and does so for a profit. The lottery –whether run by non-profit or government,  operates for a profit. For these reasons,  penny auctions and lotteries have many similarities.

The conclusion that I have is that penny auctions are operating at the edge of lottery status. lotteries are illegal, in the USA, for for-profit entities. I wonder if there is a chance that penny auctions will suffer the fate of the online poker sites.

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Alternative online auction sites may not provide the same level of buyer protection as eBay, so you may want to consider using an escrow service to protect yourself. This protection comes at a nominal cost, and any reasonable seller should be willing participate —if they are legitimate.

I use an escrow service, when the item is more than a few dollars, and I have little knowledge or experience with the site or seller. The fees can vary a lot, and as the buyer, you will be responsible for all extra costs incurred. If you are wanting next day certified check service on your monies you can expect the fees to start at $35.00, they will be less if you are being mailed a check or money order at the discretion of the escrow service.  You pretty much get what you pay for.

Using one of these services will protect you from not getting an item, or getting something other than what you have paid for. The decision is all about how much risk that you are willing to assume.

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Storage Unit Auction Reality Shows Have Altered Storage Auctions Permanently

The storage unit auction shows on television have altered the storage auction business permanently. There are shows like Storage Wars, Auction Hunters, and Storage Hunters have ignited a storage unit auction fever that borders on the ridiculous. The pricing of these units has skyrocketed. Is that price rise justified? I contend that it is not.

I owned a storage unit complex in the 1980′s, and have kept up with it since. It is in an oil town that was devastated by the oil price fall, and the resulting banking crisis. When the economy was good, the delinquency rates were 3 to 5 percent, of the number of units rented –and most people paid up when they got the legal notices, of an impending auction of their goods. When the economy fell the number of delinquencies went up to 30 to 40 percent, and most people did not pay up when they were notified of an impending unit sale, and the units went to auction.
The 1980′s auction prices were the around $25 to $200 dollars. Fast forward to 3 years ago, at the same units the auction prices were $100 to $600, this compares to the normal price rise due to inflation. When polled, most of purchasers reported that the auctioned goods were worth about what the units brought.

June 4, 2011 there was an auction of 7 units at that same storage complex. The prices of the auctioned units were $350 to $3700. The informal poll of the purchasers indicated great anticipation prior to unloading the units, and great disappointment when the units were actually cleared out. The majority of the unit purchasers were novices who had seen one of the storage unit auction shows and were deluded into thinking that big rewards were normal.

If you are going to get into the storage unit auction business, you need to remember that all items in these units are sold as-is, untested, and mostly under viewed. Large payouts are getting rarer due to the dramatic price rise resulting from the viewers of these shows being given a distorted view of the normal outcome of these auction transactions. For that reason I contend that these shows have altered the storage auction business in a permanent way.

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Report Your Online Auction Income, If You Do Not You Will Be Caught

The US Congress has passed laws regarding auction sites, and their reporting the income of  site users, these laws go into effect this year. If you sell on eBay, or any eBay alternative, you should know what has changed. This knowledge will allow you to make the decisions necessary to minimize your tax impact, and exposure to the IRS.
The first change that occured was passed as a part of the stimulus bill –one of those tax loop holes they closed in that bill. This change requires that online auctions report to the IRS, with a 1099, all sellers who sell more than $20,000 of items, or those who sell more than 200 items –even if the amount is less than $20,000. If you do not want to get one of those 1099′s, you can spread out your sales over several sites. While this will not reduce your tax liability, it will give you the advantage of voluntairly reporting your income and you can take charge of your reporting rather being in the defensive mode that occures when you recieve a 1099.
This $20,000 limit was reduced to $600 by the Healthcare bill, is might be raised back up to the $20,000 –by a bi-partisan effort that is underway in Congress. There is a very good chance of of this change being passed. If it does not get passed, after you sell $600 you will be subject to the 1099 reporting requirements. Let your congress persons, and senators know that you want this change passed, as the paperwork reporting requirements drive up all business costs, and these costs get passed on to you.
Lastly, just remember to report all that online auction income, the IRS has an army of new enforcement agents, and they are looking for everything.

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EBay Wants to be Another Amazon

All online auction sites are effected by the February release by eBay CEO Donahoe, as seen in FBN, where he states he has a little success in converting eBay into a “secondary market” rather than having the online auction be the center of its site. This shift was aided in March 2011 by eBay buying GSI, an online commerce company similar to Amazon. The strategy has been several years in the works, and has made many eBay sellers uncomfortable. This discomfort is going to persist, and as eBay nears its goal, will drive more sellers away from the site. In simple terms, if you are an eBay seller, it is time to diversify, sell your items on other sites as well as eBay, learn which fits your needs the most closely.

The eBay policies toward its sellers, seem similar to the policies of a bleeder landlord, in the real estate rental business. They have raised the site fees to 9% of the final value of the item –including shipping. They are demanding payment (in most categories) to be by approved electronic means; eg, PayPal, credit cards, approved minor other services. These payment means cost the seller additional expenses when selling an item. There was a large exodus when eBay first raised its rates, this is still occurring today. These costs are akin to the exorbitant rates charged by the bleeder landlord.

Those same bleeder landlords also cut back on services and support, just as eBay is doing toward its sellers. EBay has eliminated the ability to give negative feedback to any buyer for any reason. All sellers know there are problem buyers, and this feedback system is denying the ability to tell the truth about those problem buyers. Secondly eBay’s PayPal always sides with the buyer, in the instance of a dispute  Some buyers have picked up on this, and are using this system as an approval process for their purchases –boy it would be nice to leave truthful feedback for these problem buyers.

EBay ‘Top-rated seller”, are you one? If so just skip this paragraph. If you are NOT, it is time to consider leaving eBay all together. Your listings are not seen by as many as eBay denies their exposure in both the mobile updates sent out and in the “best match” in its site search, and if some one is using the filter “Top-rated sellers only” your item will never be seen by that person. This reduces the number of times your item is viewed, and you get less for it. Find another auction site is the only real remedy.

All in all eBay is the reluctant leader in the online auction business, it is a very good time to establish seller accounts with eBay alternatives, who want to be the future leaders in internet auctions.



There are all sorts of issues that effect all online auction sites. Some common issues that will be discussed here include; sellers, fees, buyers, categories, and payment gates.  There are additional issues that effect alternative auctions, such as; tax policies, internet equality, security, privacy,  product sourcing, general interests, and politics –yes,  politics effect online auctions too.  For these reasons, all  topics that effect us, will be included in our blog posts.

Ealtbay is an auction site that is intended for people who have reached the age of majority, this blog too –is intended for those same people. We will discuss our topics in a mature fashion, with no nefarious elements being allowed. The blog posts and comments, are required to be both polite and mature. Comments are allowed, but need to be on topic,  they must add to the discussion, and must not be profane. You can link to other sites and articles, but pure site promotions will be moderated out of existence.

 While we think our opinions are important , we value your opinions too. You are encouraged to comment, and if so inclined you can create your own articles too.