Saturday, January 8, 2005
Richard Malamud (California State University -- Dominguez Hills) has published How the IRS Can Close the Online Auction Tax Gap, 106 Tax Notes 110 (2005). Here is the Conclusion:
All taxpayers should pay their fair shares of taxes. The system breaks down when a large percentage of businesses fail to report their income. Fairness dictates that the IRS crack down on those who don't report their income, especially if that can be done easily by amending outdated regulations so that gross income of many businesses would be reported to the IRS. Section 6045 appears to provide that answer for some businesses that sell over the Internet and for others that sell their products through traditional consignment sales. Unfortunately, if reporting is required, some nonbusiness sellers might get caught in the net and might have to explain to the IRS that their sales were personal and therefore not taxable. They should be able to handle that. It's a small price to pay compared to the cost of not closing the tax gap.
The article also is available on the Tax Analysts web site (Doc 2004-24049, 2005 TNT 2-38).