Saturday, August 02, 2008
Online Sellers Face New IRS Rules
By MARTIN VAUGHAN
July 30, 2008
If you regularly sell items on online auction sites, you may find
yourself on the Internal Revenue Service's radar. Recent legislation
aims to help the IRS collect more taxes from online enterprises, many
of which either don't know about their tax obligations or are
ignoring them, according to the agency.
The provision, part of the housing rescue package that President
George W. Bush is expected to sign within days, will require PayPal
and other processors of online payments to report annual gross
receipts to the IRS for all but the smallest online merchants.
The new reporting requirement is similar to a proposal the Bush
administration has put forward in its most recent budgets as a way to
ensure that taxes owed are being collected. It also applies to
intermediary banks that process card payments for restaurants and
brick-and-mortar retailers. Congressional tax estimators predict the
reporting change will help the IRS collect an additional $9.5 billion
in taxes owed by online and traditional businesses over the next 10
The payment processors will be required to file a 1099 form for each
merchant to the IRS and to the merchant. They won't have to file for
merchants with less than $10,000 in gross sales and less than 200
transactions in a given year.
And they won't start reporting until 2011, giving the banks and the
merchants a couple years' head start to make sure everything is in
See entire article here:
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