We often hear the phrase "Amazonization of eBay" these days, which is in my opinion a legally actionable insult to Amazon; but maybe it is time to coin a new phrase to refer to the FUBAR effect on the eBay.com site, used as a verb, to "eBay IT up.""
An astounding statement after the eBay announcement regarding the PayPal transaction reporting requirements which will become law in 2011 as part of the American Housing Rescue and Foreclosure Prevention Act of 2008. Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:
1. receive more than $20,000 in payment volume in a single year; and
2. receive more than 200 payments in a single year.
This is in no way shape or form eBay's fault. It is just another step in the transformation of America into George Orwell's 1984 by our elected officials. Big Brother is watching you and wants to watch more. I don't actually have a problem with it, I pay my taxes.
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One good thing that may come out of it is that eBay and PayPal will be forced to upgrade the ancient version of Quickbooks they bought off Noah's online garage sale. The one that is not compatible with anything newer than an Apple IIe. We can always hope.
Ken Swab who is the senior Federal Government Relations officer at PayPal blogged on this on Tuesday morning. He said:
I want to emphasize that this new law affects a small percentage of PayPal customers.
Say what?
Either this guy doesn't know what he is talking about, always a possibility, or eBay as we knew it has disappeared a lot faster than we ever thought it could.
$20,000 a year averages out to $1666.66 a month, making you a 'gasp' PowerSeller! It would not be unreasonable to peg overhead at 30% of that if you include all eBay and PayPal fees, item cost, repeat listings, internet access, hardware, software and postage and packing expenses. Pre-tax, federal and state, net would be $1165 a month (rounded).
On a 60 Minutes program aired March 11th this year just before she retired, Meg Whitman said
"We have about – around the world, about 1.3 million people make most, if not all, of their living selling on eBay."This was echoed by presidential contender John McCain in Martin County Kentucky who can be heard on NPR's Morning Edition, 25th March 2008 (1:28 into the tape) adding the information
"... most of whom are in the United States."
Yet Ken Swab "says this new law affects a small percentage of PayPal customers" The question is who is eBaying it up? The ex-CEO of eBay, Presidential hopeful John McCain or Ken Swab?
Ms Whitman, $1166 a month pre-tax is not making a living. Advice to you folks out there hopeful of "making a living on eBay" . . .Don't quit your day job!"
Y'all come back!
UPDATE:
Scott Pooler on Trading Assistant Journal has a different angle on the same subject.
3 comments:
I have two questions:
1) What is FUBAR
2) What if you did quit your day job?
I was not aware of this new law but it certainly does affect me. No worries, though, since my accountant is a real stickler and like you, I pay my taxes. Thanks for bringing it up.
Anony Mouse
""We have about – around the world, about 1.3 million people make most, if not all, of their living selling on eBay."
Last year, to my surprise, Ebay celebrated it's 5 millionth PayPal account. Australia only has a population of 21 million, and as far as Ebay goes, Australia did not embrace PayPal in the same that North America and England appear to have. I can only assume that many of those Australian accounts are duplicated owners, as I can not see that a quarter of our population had a PayPal account last year.
If Australia is a PayPal backwater and has over 5 million accounts (and the take up on Ebay alone has had to have increased this year), then this begs the obvious question - how many PayPal accounts are there worldwide? Googling "number of paypal accounts worldwide" without parenthesis, shows that the UK PayPal front page claims that PayPal has "Now over 150 million accounts worldwide". It would be fair to assume that many, probably even the majority of those accounts are used either occassionally, rarely, or since discovering the true nature / problems / risks of PayPal - never.
HYPOTHETICALLY
Even if 1.3 million people worldwide make their living on Ebay, and another 1.3 million turn over more than $20,000 a year (but it is not their principle income), and yet another 1.3 million put more than 200 transactions a year through their PayPal account - that would still only represent a figure of about 4 million out of 150 million accounts worldwide that would fall into the scope of this law. Now while America uses PayPal more than some of the other countries (eg: Australia and Europe) if the percentage of useage is similar, this would mean that only mean that 4 in 150 paypal accounts would fall into the scope of this law - if America uses their PayPal accounts actively double the rest of the world it would be 8 in 150 accounts that would be affected. With either hypothetical figure, only 2.5% to 5.3% of accounts in America would be affected. This is not scientific, and the figures will be far from accurate, but on this occassion the spin that "this new law affects a small percentage of PayPal customers" is probably quite accurate, as most PayPal customers are likely only casual users or virtually don't even use the account they opened.
The majority of American PayPal account holders who earn their principle income through Ebay, on the other hand, WILL be affected by this law, but they are almost certainly in the minority of the total number of PayPal account holders.
Kind Regards, Kevin
If you are running a legitimate business and claiming your income and paying your taxes, this bill doesn't really matter. Anyone making $20,000 a year should be doing this anyway. The problem is that the IRS will have data that won't naturally match your claimed income. So PayPal will send one number to the IRS and when you do your taxes, you claim a different number. That will trigger a request from the IRS to explain the difference.
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