Ebay sales to become more taxing on us ?

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Tax man eyes the eBay crowd
IRS considers changes that could mean new rules for those that sell goods online.
By David Ellis, CNNMoney.com staff writer
August 23 2006: 4:25 PM EDT

NEW YORK (CNNMoney.com) -- Facing a $345 billion tax gap, the Internal Revenue Service has set its sights on a new target - the rapidly expanding world of online business.

In an effort to crack down on under-reporting by individuals and businesses that sell goods online, an IRS official said the tax agency is discussing creating new tax reporting requirements. The review of tax policy was first reported on Tuesday by the tax-law trade publication Tax Notes.

While no details were given, the new reporting requirements could mean big changes for stand-alone Web retailers as well as individuals selling family heirlooms through popular online auction sites such as eBay Inc.

E-commerce continues to grow rapidly. Retailers generated $87 billion dollars in online sales in 2005, according to the Commerce Department's Census Bureau, up 22 percent from 2004.

The changes, which have been bandied about by the IRS for some time, are part of a larger IRS initiative to narrow the tax gap, or the difference between what taxpayers should have paid and what they actually pay.

Under current tax law, an individual who sells an item online and collects more money than its purchased value is expected to report that money as income on their tax return. If an item's original purchase value cannot be determined it is typically valued at $0 under current tax law.
 
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