Internet Sales Tax: Are eBay Sellers Required to Pay Income Tax on Sales
Published 3/27/08 (Modified 6/17/11)By MoneyBlueBook
I used to sell products on eBay as a money making hobby and even once attempted to make a side business out of it. It wasn't easy trying to make profit while at the same time avoiding all the internet fraud and scams out there. While I eventually decided to pursue other ventures, I had a friend who continued to dabble in eBay auctions. Soon enough, he had successfully turned what started out as a one room operation to an impressive one man eBay business machine that engulfed his entire basement. Everytime I stopped by his house I was always startled at the sheer number of brand new Dell laptop and ThinkPad boxes stacked in piles throughout his basement that overflowed into his unoccupied garage.
Through his closely guarded network of online connections (he never disclosed them to me), he was able to secure excellent wholesale deals on hot electronics like laptops, desktop computers, and handheld PDA's for sale on eBay. His racket continued for several years to my continued amazement as I wondered how he managed to stay so consistently profitable despite rising eBay fees and heavy online competition. One day I finally turned to him and asked him if he was reporting his eBay earnings as taxable income on his federal income tax. He simply smiled and changed the subject. Obviously, the answer was no, thus exposing the secret to his profitable eBay success - tax evasion!
Frankly I don't really blame him for withholding his eBay profits from the
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