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http://www.dailytech.com/IRS+Wants+...article7191.htm
IRS Wants to Tax Online Sales
Tuan Nguyen (Blog) - May 8, 2007 9:30 AM

Millions of users from eBay and other sale sites could soon be required to file reports with the IRS for personal sales


A quick search for the latest gadgets on eBay can quickly reveal that there are literally millions of users selling and buying stuff on a daily basis. May of eBay's users are simply people at home who sell their belongings or other things for cash. A camera, a CD, clothes -- just about anything. For the most part, many people can make a moderate and even lucrative side income from selling products on eBay.

All this is about to change for millions of eBay users according to a report on a proposal being drafted by the U.S. Treasury Department. The IRS now wants a cut out of sales that occur on eBay and other popular user-to-user sale sites such as Craigslist. A proposal is being drafted that will require all major market sites to store, track and send user information to the IRS. This information includes transaction details and other personal information.

The Center for Democracy and Technology (CDT) reports that the new IRS proposal is all part of President Bush's 2008 budget proposal. The intention is for the IRS to track down small business income that is generated from the sale of personal property. If you make more than $5000 USD per year on 100 or more sales online, you may soon be forced to file income statements with the IRS. This means that users of sites such as eBay, Craigstlist and Amazon.com will be required to fill in more personal information as well as social security numbers.

Demanding that sites such as eBay request more personal information from users is already looked upon as a bad thing according to the CDT. Many Internet users are already up in arms over privacy concerns. Identity theft and other unfortunate situations can occur from storing user information online. Since the beginning, eBay users have experienced account hijacking and other malicious attacks, so storing information such as a social security number will become a big concern for many.

According to the Treasury Department, Americans owe it billions of dollars and this would be a legitimate move into getting some of that lost revenue. But the CDT indicates that the Treasury Department has not yet convinced Congress that this proposal is necessary.

CDT deputy director Ari Schwartz indicated that collecting personal information such as social security numbers is a big no-no for end-user security. "Such data retention proposals would force the creation of massive, privately maintained databases of personally identifiable data that government investigators could tap at their leisure," said Schwartz. "Sites that currently ask consumers for their [social security numbers} are very likely to be related to illegal 'phishing scams," added Schwartz.

The IRS claims that such a move is a necessity due to the "explosive" growth of the Internet. "One of the more popular business opportunities is the selling of new and used items through online auction sites such as eBay, Ubid, etc.," noted the IRS report.