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

  1. Interesting, still I\’ve came accross one completely opposite blog post the other day

  2. admin

    FYI the form is a 1099-K, the IRS views sites like eBay and Ealtbay as auction sites, therefore the law applies –eBay has taken the position that they are a venue not an auction site, and are not subject to the requirements. The spirit of the law was to collect revenue from the members of sites like those mentioned. Ignore it at your own peril.

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