IRS to eBayers: the party's over

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Tucked into the housing rescue package is a provision that would require PayPal to report financial information to the Internal Revenue Service for some online merchants. Read about it in the Wall St. Journal.

The rules change could hit millions of people who buy and sell on eBay, who, for the most part, have treated the auction site as an online garage sale. These entrepreneurs have blissfully shoved gross proceeds into their pockets and not paid income tax on them.

Why does this matter? After all, for some sellers, eBay sales are legitimate income. For others, it's just a way to get liquid, offing guitars, CDs and stereo equipment for walking around money. The IRS' operational definition under the proposed change seems fair: you would receive a Form 1099 if you have gross sales of more than $10,000 and more than 200 transactions in a year.

It's not the creeping Big Brother-ism that bothers me. Rather, it's creeping universal identifier. It used to be that people worried about your Social Security number being the universal identifier. That's still part of the equation. But the real identifier is your online identity. There's only one Internet. There's only one you. Your behavior will follow you. And remember, Google never forgets.

Social media analysts spend a great deal of time talking about your online reputation. Here's a data point that targets your financial reputation. What's next? 

Steve Jobs talks about "the cloud," that online place where all your data reside. Of course Jobs frames it as all good, all progress. Good time to pause and think about the dark side: the unintended consequences.

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This page contains a single entry by David Kamerer published on July 30, 2008 9:09 PM.

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