Wonders of Wonders The New Economy VS Brick & Mortar
Wonder of wonders ! Welcome to life.
A year of so ago a prominent – forward thinking and innovative ( at least in his mind) businessman was complaining bitterly – “And another thing these people running businesses out of their houses and homes are not paying business taxes”
Well it may be true that city , provincial state and federal governments are not far behind in figuring out how to work the taxes , this will take some time due to the bureaucratic structure and system. We may well living in a “golden age” or perhaps not. Add to this the benefit in terms of costs of being able to use residential as opposed to business phone and internet rates.
Here is a most amazing discovery by the financial magazine Forbes. If Forbes is only just realizing how the landscape has changed – then government and government agencies must be somewhat further back.
Sales tax collection compliance among eBay sellers is “alarmingly low,” says a new academic study published as states look for ammunition to bolster tax-collection laws.
When Georgia State University Economics Professor James Alm and Mikhail I. Melnik, an assistant professor of economics at Niagara University, downloaded and analyzed data on all consumer electronics sold on eBay during a 24-hour-period in July 2007, they found that only 18% of sellers bothered to collect sales tax even on sales to buyers within their own states. Under current federal law, an online seller has to collect sales taxes on purchases by buyers in his home state, but not on those by buyers from other states in which he has no physical presence, or “nexus.” States generally exempt residents who aren’t in business and make only “occasional” sales–say at a garage sale–from this requirement.
Not surprisingly, the new study, which appears in the National Tax Journal, found compliance rises dramatically with the size of the merchant. But Melnik said in an interview that he was surprised to find that even among eBay sellers with 10,000 to 15,000 ratings–meaning they have had that many unique customers and hardly qualify as “occasional” sellers–only half bothered to collect sales taxes on in-state sales. “They appear to be real businesses who have decided deliberately not to comply with state sales tax,” Melnik said. “That’s a violation of law.” (EBay gives all sellers the option of having sales taxes included when the final purchase price is calculated, allowing the researchers to determine whether the taxes were being charged although not whether the taxes collected were actually remitted to the states.)
Melnik said it seems likely some merchants who aren’t collecting in-state sales taxes aren’t complying with income tax laws either. Someone who is buying and selling items as a business (even a side business) on eBay would normally report it on a Schedule C attached to his 1040. This provides better tax treatment than is afforded hobbyists selling on eBay, who legally must report their sales, but can only deduct their expenses as miscellaneous itemized deductions. (For more on tax reporting of side businesses and hobbies, click here.)
But nonreporting of eBay sales is apparently widespread. For example, in April, a U.S. Tax Court judge ruled an Internal Revenue Service revenue officer was liable for back taxes from thousands of eBay clothing sales that she hadn’t reported on her tax forms.
Beginning in 2012 (for transactions taking place in 2011 and later) credit card companies and third-party transaction handlers such as eBay and Amazon.com must report to the IRS annually the gross sales of any U.S. seller doing more than 200 transactions and $20,000 in sales per year. Congress passed this requirement in 2008 to help pay for the first-time-home-buyer tax credit.
Meanwhile, the states have been using new laws, enforcement tactics and pressure on Congress to attempt to capture more sales taxes from online sales. New York, North Carolina and Rhode Island have passed novel laws that attempt to force big online out-of-state retailers such as Amazon and Overstock.com to collect their sales taxes based on the location of the companies’ affiliate sellers. Those laws are being challenged in court, as is a new Colorado “big brother” law that requires certain out-of-state merchants to either collect the tax or advise customers of their (widely ignored) obligation to pay it over to their state if the merchant doesn’t collect it. With state and local sales taxes nationwide now averaging a record 8.6%, billions of dollars in revenue a year are at stake nationwide.
http://forbes.com
Edmonton Fort McMurray Chrysler Town Country vans
http://seocompany-services.com
Related Websites - Should Online Merchants Have to Pay Sales Taxes? It's pretty apparently that both our federal and state governments need more money, and one hot issue that I've been hearing a lot about lately is the discussion on whether...
- Standard Deduction or Itemize? That was the question on my latest TurboTax guest post, Should You Take the Standard or Itemized Deduction? There's quite a list of things can can be accumulated for itemizing,...
- Remedy An IRS Delinquency With A Tax Settlement If you owe back taxes, the IRS can seize your bank account, garnish wages, or put a lien on your assets. You can remedy IRS delinquency with tax settlement and...
- Things to Have Removed from your Credit Report pt 2 Continued from part 1. 3 - Charge Offs. When you do not pay off a credit card account or a loan account for a period of three to six months,...
- How to Appeal Your Property Taxes Property taxes are one of the principal means that cities and municipalities use to raise revenue. Property taxes are generally based on two things: the value of the property itself,...