The IRS has set its eyes on a new source of revenue -- online business.
The agency is discussing creating new tax reporting requirements that will help crack down on under-reporting by individuals and businesses that sell goods online.
No details have been announced as of yet, but new reporting requirements could change the Web for stand-alone retailers as well as individuals who sell items through online auction sites, such as Ebay.
Sales continue to see rapid growth in e-commerce. Retailers generated $87 billion in online sales in 2005, according to the Commerce Department. The IRS has long thrown around the idea of looking towards the Web as a source of revenue to narrow the tax gap.
Currently, if you sell an item online and make more money than the purchased value, you have to report that money as income on your tax return. If the original purchase value cannot be determined, it is often valued at $0 under the current law.
Many individuals are not aware that they must report their earnings, said Tom Ochsenschlager, vice president of taxation for the American Institute of CPAs.
"They don't understand where they have crossed the line between a business and a hobby run out of their garage," explained Ochsenschlager.
The IRS is currently considering third-party reporting from the auction sites to the IRS. Representatives for Ebay say that they will turn over information if issued a subpoena, but that they maintain client privacy as a high priority.
Author: Martin Lukac
Author Bio:
Martin Lukac represents www.RateEmpire.com and www.1AmericanFinancial.com, a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!
