Readers of Andrew Vachss' novels often get news before newspaper readers—or even newspaper reporters. Below is an exchange from 2000's Dead and Gone, immediately followed by a news article from The Associated Press, published March 23, 2005.
Lune tapped a few keys, pointed an immaculate fingernail at his computer screen. "You know what that is?" he asked me, as what looked like a string of auction bids popped into focus. "A bunch of dope dealers talking in code?" "No. It's the IRS." "Huh? I don't get it." "It's a pattern," he said, spinning on his chair to face me. "You know all this talk about America's 'underground cash economy'?" "It's not just talk." "Exactly! It's authenticated fact. And that's where the real money is. Not in cocaine cartels or topless clubs; it's in flea markets, garage sales, all the 'hobbyist' stuff that's being trafficked back and forth every second." "Flea markets? How much could—?" "You have to watch the patterns," he said, reciting his mantra. He turned back to the screen, beckoning me to look over his shoulder. "Look! Here's one, right there on the screen. He's selling a signed copy of a first-edition book by—Martha Grimes. See it?" "Sure. The highest bidder is—forty-five bucks so far, right?" "Right. And what this guy—I mean the seller, okay?—what he did was, he bought maybe twenty copies of that book when it was remaindered. You know, you've seen the tables where they sell them in bookstores, haven't you?" "Yeah," I said, knowing that everybody pays, and that the currency I needed to pay Lune's tolls was patience. "First, you have to understand that all books get remaindered. It doesn't matter if they sell a million copies, there's always some left over. Well, the publisher isn't going to throw them away, so they sell them, in bulk, very cheaply. A book you spent twenty-five dollars on when it was new, a couple of years later, you'll see it for a dollar ninety-eight." "Yeah—?" "Now the guy has all these books, so he waits until this Martha Grimes is doing a book-signing someplace. Then he ambushes her, gets her to sign as many copies as he can get away with. Some writers will just do it, some will limit the number of copies. But this—merchant, his story is always what a huge fan he is and how he's going to give the books away to all his friends as Christmas gifts or for their birthdays or something. See?" "I—guess so. But —""Look at the pattern, Burke. Come on. This guy buys a book for, say, less than two dollars. He gets it signed. Then he sells it for forty-five dollars on this Internet auction site. Do you think, for one single solitary second, that he declares that profit as income?" "Of course not." "Good. Now multiply by—oh, ten million transactions per year." "Are you serious?" Not a brilliant question to ask Lune. "Come closer," he said, pulling back from the screen so I could do it. "Take a look as I scroll through for you. See how every single seller and every single buyer has to provide information just to participate? Their e-mail, a credit card, a street address—a ton of authentic data. What you see here is the clearest, cleanest audit trail that any IRS agent could ever dream of." "Damn!" —Dead and Gone, pp. 254-255 (2000) |
IRS May Want Share of eBay Sales
Originally published by The Associated Press, March 28, 2005
WASHINGTON (AP) — Hawking baby and children's clothes, along with some garage sale and thrift store bargains, on eBay helps Sunni Wojnarowsky bring in some extra money so she can afford to stay home with her two young boys.
The additional dollars are great, but does she really need to hassle with the paperwork and report her small profit to the Internal Revenue Service? Her question, posed to the online auction site's discussion board for sellers, generated much advice—and more confusion.
"You can't get an answer from anybody," Wojnarowsky said in an interview from her home in Brunswick, Ohio. "It would be nice to have a straightforward answer of yes, you file taxes, or no, you don't."
More than 135 million people have registered to use the auction site that calls itself "the world's online marketplace." Buyers bought more than $34 billion worth of merchandise there last year.
Some people make money by cleaning out items from their closets; others use the site to run small businesses.
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."
The IRS can apply a list of nine indicators that might prove whether someone's online auctions amount to a business. These indicators include evidence that the taxpayer depends on the income, acts in a businesslike manner, or puts enough time and effort into the activity to suggest a profit motive.
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.
Some categories are not so clear.
If a great-aunt's collection of antique china fetched top dollar from collectors, that might mean capital gains taxes are owed.
If someone scours neighborhood garage sales for great deals on comic books to resell on eBay, that might amount to running a business.
It often is best to ask a tax professional, said Bob Miller, who says he spends about 18 hours a day on eBay, selling collectable postage stamps and advising other buyers and sellers from his home in northern Utah.
"When the person that you owe the money to can throw you in jail, it's always a good idea to get professional advice," he said.
eBay spokesman Chris Donlay said the company does not report individual sales to the tax authorities. eBay urges users, in the site's educational materials and seminars, to learn about tax issues.
"It's really up to the seller, just like offline," he said. "We are just a venue, really. We're sort of like the mall landlord or the owner of the parking lot where the flea market happens."
It takes so little effort to set up shop on eBay that some might overlook the tax issues, Miller said.
"If you have an e-mail address, you can start selling. If you're a U.S.-based seller, you need to have a credit card and a bank account," Miller said.
"People have a feeling that they're selling on eBay, they're not a business. It's not true. If you are selling and making a profit, you have to declare it."
An eBay survey last year found that 430,000 of its U.S. sellers make a significant portion or all of their revenue from selling on eBay.
While it might sound like nothing good can come of the headache involved in claiming a small profit from online auctions, consider the perks. Business expenses can be deducted from profits. That includes the cost of the goods sold, fees, supplies and maybe a home office—if the qualifications are met.
Wojnarowsky said she plans to report her eBay profits, which she estimates at roughly $2,000, but she is not looking forward to it.
Last year, the Wojnarowsky paid a $400 tax preparation fee, which included a business schedule to report online auction earnings. This year, they will crunch the numbers themselves using tax preparation software.
"I talked to a friend of mine who does eBay, and she's not filing because she said it's not regulated," Wojnarowsky said. "But my fear is, yeah, but what if you're wrong? I don't want to pay the fine."
© 2005 The Associated Press. All rights reserved.
