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VIDEOOnline Sellers Unable to Keep Taxes at eBay
By
Scott Reeves Mar 19, 2009 10:40 am
Brief scrutiny of today's headlines.
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Squirreled away in the Housing Assistance Tax Act of 2008 is a mandatory requirement for processors of third-party payments, such as PayPal and credit card companies, to inform the IRS about anyone who generates at least $20,000 a year in debit- or credit-card charges on 200 or more transactions.
The law doesn’t kick in until 2011, but it’s aimed at individuals who run small online sales companies, or people who peddle small items in an effort to fill out the family budget each month.
The reason: Uncle Sam needs new sources of tax revenue.
It’s not yet clear how the Internet transactions will be reported, but something like Form 1099 looks like a good bet. The new requirement would require filers to complete Schedule C, Net Profit from Business-Sole Proprietorship. If the totals don’t match, the filer could be audited.
Many small Internet businesses won’t hit the $20,000, 200-transaction requirement for filing, and it’s a reasonable bet that some will tamp down sales at the end of the year to avoid the additional tax hassle.
Former President Bush signed the bill into law last July. The upside: The measure provided a refundable tax credit equal to 10% (up to $7,500) of the purchase price of a home for first-time buyers. The credit applies to houses purchased on or after April 9, 2008 and before July 1, 2009.
No positions in stocks mentioned.
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