November 17, 2010
Big time sellers on online selling websites such as Craigslist and Ebay may be unknowingly putting themselves right in the crosshairs of the Internal Revenue Service or the IRS. One woman found out about this recently when the IRS claimed that she neglected to report a total of $41,000 earnings she received from auctioning items at online selling sites Craigslist and Ebay. The IRS now said, she owed a total of $15,000 in unpaid taxes. After a short hearing, a court backed up the findings of the IRS since the woman did really earn the money.
The IRS has implemented a procedure brought on by a new law, for those individuals earning more than $20,000 worth of items sold at Craigslist, Ebay and other online auctioning website and generate more than 200 electronic transactions should get an IRS form that they must fill up completely since this business transactions is considered taxable income.
This new law applies not only to online selling and auction websites, but garage sales and any classified ads that will produce a monetary earning to any person. The IRS has posted an article explaining all these new provisions and guidelines that will help people determine what constitutes a hobby or a business and which could be the definitive point in paying taxes or not.
Next time you auction items at Craigslist and other online auction websites, be in the know if you are covered by this new IRS provision so you could easily pay the right taxes and avoid the IRS taxmen to run after you in the future.