The IRS Stalks eBay Sales

If you are an avid eBay seller, you may want to beware. The IRS does want to tax the income from your sales. But they won't really say if you have to. Maybe you do, or maybe you don't. They'll let you know after charging you for tax evasion.

In tax law, there is no clear, bright line that separates fun from profit, or a hobby from a business. But IRS instructions make it clear that all income -- a category that includes bribes, gambling winnings, kickbacks and money made in illegal activities can be taxed.
"When you're working on the Internet, it's kind of a gray issue," said Bart Fooden, a certified public accountant in Woodbury, New York, who advises small businesses and individuals. "The big issue is whether you're doing it as a business or not."
Fooden said the difference between a hobby and a business can often be the seller's intent. If someone is selling the junk that is collecting dust in a garage or basement, then that person probably is getting less than he paid for it. No profit here. If someone is buying goods in bulk from a wholesaler and hoping to make a couple extra bucks reselling each one, then that person could have just started a profitable business, Fooden said.

Confused yet? This is certainly more proof that our tax system needs a rehauling. Flat tax, anyone?