ebay feedback tip off to IRS audit?
Q.Need your input for a news report on IRS audits of eBay sellers. Has anyone been tapped for an audit because of high eBay feedback showing many sales/purchases?
A.This sounds kinda alarmist to me. I don't know what active investigations are underway right now, but usually the IRS audits relate to returns that are two-three years old. Two-three years ago Ebay didn't exist. I'll bet the recovery rate is so small, because of the relatively small margin on most coin purchases, that it would not be as cost-effective to investigate as many other "flags" on returns. Of course, if they were doing a net worth audit for any other reason, it would naturally behoove them to review all of a person's income sources. Or if somebody dropped a dime. Yes, eBay did exist, but it wasn't the phenomenon it is today. I don't think too many people were making a living selling things on eBay. Today there are some who do. Those people might have something to worry about if they don't report their income to the IRS. For the average person who sells a few items a week and makes a few extra bucks as a sideline, the whole IRS audit/eBay issue isn't really a big deal. I wonder, how much power does the IRS actually have in investigating a tax audit? Can they subpoena eBay to get someone's account information? I am fairly sure they cannot compel you to reveal that information yourself. The whole internet anonymity thing really makes it hard on the IRS if they can't get this info. Feedback profiles by themselves are next to useless.
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