A few years ago, and still going on today, there were huge debates raging online about how to tax online retailers such as Amazon. The main legal point that was made was that since 1993 or so, a court ruling established that since these businesses have no physical location to visit (i.e. no brick & mortar store) they cannot be charged a tax since their location cannot be determined. Personally, I feel that that ruling was made very early on in the life of online retail and should most certainly be thrown out and redone with taxes applied as per the state where the item is being sent or shipped. Period.
Now, the subject of this blog will be Ebay. How do you handle the thousands upon thousands of transactions on a site like Ebay where they are just everyday people?
"Those people who sell need to be charging a tax for their state and report it on taxes! Think of the millions of dollars in taxes lost!"
"But, this is like if I had a garage sale. I don't charge tax at garage sales! Why should I here?"
These look familiar? Just some of the statements I've ever heard about this whole mess.
In my opinion, if I sell an item I own using an online site, I feel it is that sites responsibility to collect and get the taxes required (as I stated above). The reasoning is simple: many individuals who use Ebay do not understand tax laws and requirements of their respective states. This would make the process streamlined by applying taxes during payment, and would not involve the seller's input. -- it would just be taken from the buyer. Also, many people do not put vast amounts of items up for sale (an old lamp, a chess set, etc). So, asking them to go through such lengthy tax processes would be too tedious for small sellers.
Now, obviously, some sellers sell quite a bit of items, making full businesses online. At a certain point, these sellers should be put on notice of the tax requirements they must meet, and have to manage it themselves (with access to databases to find the tax amounts they need, I know also that at a certain point amounts made online do have to be reported to the IRS, but I don't know if online retailers have an obligation to report it for each seller). They should also be receiving documentation from Ebay for each year regarding the amount of money received during siad year, and such a document should be sent to the IRS (1099-Misc I believe).
(Btw, if Ebay already does this, my bad. I didn't research this).
Just my thoughts. Oh, btw. Check it my auctions:
http://www.ebay.com/usr/sprcha.rq3c7
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