Tax authorities want eBay to hand over your sales data

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Business sellers who are not registered to pay tax on their profits won’t rest easy tonight. The the US equivalent of HM Revenue & Customs, the IRS is pressing eBay to hand over records of sellers activity with particular focus on those performing over 100 transactions or $5000 per year. The IRS estimate they could collect some $2bn in unpaid tax if companies such as eBay complied.

Sellers should be contacting their tax office before the tax man comes knocking on their door. In the UK HMRC has started a high profile campaign to get sellers to register to pay tax and now it’s the turn of the US.

eBay maintains the position that it always has in the past, it is not their responsibility to notify tax authorities of sellers trading activities. In fact it can be argued if they should then so should many other trading venues such as classified advertisements both on and off line.

To provide the data certainly wouldn’t be too difficult, but it would certainly deter the casual seller who simply wanted to dispose of a large amount of possessions, for instance in the case of a house move, or death of a relative. Whilst it is unusual for private sellers to dispose of a large number of items it’s by no means unheard of, just browse the eBay community boards for sellers who to their surprise are suddenly elevated to the status of powerseller because they sold their car on eBay.

Tax authorities in several major eBay territories have been actively monitoring eBay with the Xenon Spider which catalogues all auctions. Although Xenon hasn’t been reported to be used in the US it is known to be live in both the UK and the US neighbour Canada. With some $52bn GMV in 2006 financial year, $25bn of which was in the US, it’s no wonder the IRS is interested in keeping tabs on which sellers are making how much profit.

It should be noted that eBay have *always* fully cooperated with tax authorities when information is requested on a specific individuals activity on the site. It is the handing over carte blanche rights to their entire customer data that they object to. Sellers should not take any sense of security in eBay resisting attempts to open their books. If you’re not paying the taxes that are due on your sales once you come to the tax authorities attention they only have to ask and data on your trading activity will be handed over.

2 Responses

  1. It is impotatnt that everyone declares their tax, but lets be honest anyone wishing to deceive the tax man will find another way and those who are selling private items, may find themselves under scrutiny, that we the tax payer had to pay for.

    I think it is easy enough to identify the major players on ebay, after all the whole system is geared up to amount of previous customers and ratings.


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