If ebay does'nt report its sellers sales,then how will the IRS know?

Answer 1

eBay does report sellers once they exceed a certain income bracket. These are sellers that should have business licenses and accurate business records. As far as the average Joe, it is just impractical for eBay to report them all, and IRS has minimum income standards before reporting is required.

Answer 2

I assume this question is a veiled way of asking if you can sell on Ebay and not report the income?

People selling items on Ebay are legally responsible for reporting any money they earn on their 1040 (assuming you believe that income tax is legal.) If they are legitimate businesses, then they must report it as business income. Since Ebay transactions are all electronic, they leave perfect paper trails. It's not like cutting lawns and collecting in cash. If you are earning regular, significant profits from an Ebay business, you'd be playing with fire to not report the income. Technically, the IRS may never find out, but do you really want to risk it?

Ebay is essentially a broker. They connect buyers with sellers for a fee. They certainly have records of the money sellers are earning, and may opt to give that info to the IRS, although the Ebay member would have to have signed an agreement allowing them to do this. The sheer numbers of transaction that take place each day on Ebay would make it impossible for the IRS to casually monitor all the money changing hands, even if they weren't severely understaffed (which they are.) In an audit situation, I'd assume that members transactions would be private info, protected under the constitution, but I couldn't swear to that I never bothered to read the Ebay agreement when I joined, because I only buy stuff, I dont sell.

If Ebay were to get audited, it's certainly possible the IRS could infer illegal activity of a large Ebay member. They may just roll the dice. The old adage applies... if a company you do business with gets audited, there is a chance you may get audited. Bear in mind that the IRS is extremely undermanned. They go for the cases that are going to get them the biggest slam-dunks with the least amount of work. That's not to say there might not be big tax evaders on Ebay, but it's probably not Ebay that will "tip off" the IRS. It's usually the sellers themselves who do something stupid to create a "red flag."

Also realize that every year, the IRS randomly audits many, many people making less then $25,000. So how would they know about your Ebay sales? Lets say you report a yearly income of $50,000 from a legit day job, but you make another $50,000 a year from a side business on Ebay. All that money is going through banks. There are records. What are you buying? How are you living? The IRS uses forensic accountants who can look at your lifestyle and your income, and easily see if there are any glaring disparities. Then it's you who needs to explain how you can afford the new $500,000 home, luxury car and country club membership on a $50,000 a year salary.

Answer 3

Some sellers use ebay as the source to make money for a business that employs dozens of people. I worked for one once, he re-sold tools. When you pay other people's salaries, you involve accountants, banks, etc. At that level, you can't hide anything from the IRS

Often they are power sellers that make at least a couple thousand dollars daily

Answer 4

Ebay will report over certain income levels .. and most of the time transactions are run into your bank .. which will trigger the IRS if you dump more than $3k in or out in one chunk .. and is one of the first places the IRS will look if you are audited.

Answer 5

Thats been a question thats came up a couple times concerning the law and e-bay.
As of now you are supposed to be a good citizen and report yourself.
E-bay does after a certain amount of money has been exchanged.

Answer 6

You don't think the IRS is moitoring all the e bay seller's accounts?