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Note: This letter refers back to last issue's article, "Beware the Ides of April: Getting Down to Brass Tax," AuctionBytes-Update #10, March 26, 2000. (The article is available at http://www.auctionbytes.com/Email_Newsletter/10/10.html.)
Dear Editor:
Having just read this article on your site, I was wondering where you came up with all the FALSE information on paying taxes on e-commerce, Since there are no laws on the books with statutes to back them up stating that e-commerce is taxable I feel that you as well as many others are telling poor unsuspecting dummies that will believe anything in print or on their monitor to shell out more money to the IRS than they already do. Back up your statement with facts!!!!!!!!!!!!!!! Or shut up!!!!!!!!!!!!!!!!
Rick
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Editor's note: After writing to Rick asking for more information, he wrote the following explanation:
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When our illustrious law makers make laws there has to be a statute to back it or for lack of a better word (Make it a true law) and unless a bill or a law does not have a statute to back it up, it's not a true enforceable law. It's just like a rule or regulation rather than a law,...
Kind of like the IRS code, it has never been inactide into law in all 50 states. If you would like to see the IRS code you can buy a set at any book store for $35.00. Did you ever wonder why your state government doesn't persue tax collection like the IRS does? That's because they know that it's not a true law, grin.
Now, on the other hand, if you sign a signature card at the bank and it's not blank, you enter into a contract with the IRS, (check yours)!!!!! Also, did you know that the IRS IS NOT part of the US Govt.!!!! It's an independent Corporation that was formed and incorporated in the state of Maryland in 1933, check it out, it's public record.
One more tidbit, for ya. Taxes stopped being mandatory after WWII after the Victory tax was abolished in 1945.
Don't get me wrong, I believe that we all have to pay taxes, I pay mine too, just not what the IRS tells me to pay, I served my country, I lived, I died, I bled and I have paid my fair share, I'm just not going to have
the IRS tell me to pay more!!!!!!! I sued them twice, I beat them twice and now they know who I am and not to mess with me, there's to many out there that don't know what the real deal is. Remember, (statutes) is the key word. I'll get off my soapbox now and thanks for the response.
Rick
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I was curious to know what Mr. Batsimm, a tax practitioner whom David quoted in last issue's article on taxes, would say about the statute point that Rick brought up, so I sent him Rick's first email message. Mr. Batsimm cited an applicable statute and IRS clarification, and he then went on to explain in his own words what it might mean to online auction sellers.
Internal Revenue Code
(IRC) Section 61 - "For federal income tax purposes, gross income means all income from whatever source, except for those items specifically excluded by the Code."
"Fifteen of the more common types of gross income are enumerated by Code Sec. 61. They are: 1) compensation for services, including fees, commissions, fringe benefits, and similar items; 2) gross income from business; 3) gains from dealings in property; 4) interest; 5) rents; 6) royalties; 7) dividends; 8) alimony and separate maintenance payments; 9) annuities; 10) income from life insurance and endowment contracts; 11) pensions; 12) income from discharge of debt; 13) partner's share of partnership income; 14) income in respect of a decedent; and 15) income from an interest in an estate or trust."
I would guess that most of all e-commerce falls into category 2, and some in 3 and 6, and maybe some in 1.
No, there's no specific statute saying that e-commerce is taxable. And no, there's no specific statute saying that Amway money is taxable, or any other source! But the income section of the Code was written to include all unless specifically exempted. Congress was smart enough to draft this particular section in such a way that people would not try to come up with endless exceptions ("Well, it doesn't SAY it's taxable!"), instead they said, unless we tell you it's NOT taxable, it IS.
The message is that Congress is interested in the TYPE of transaction, and not in the manner in which it is conducted. E-commerce is merely a new means of conducting a business; instead of going to a store, or calling up an 800 number, you can go on-line. But it doesn't change the core business - just the promotion and distribution sides of it.
Mike Batsimm
>From the editor: Remember, AuctionBytes-Update is not claiming to be a tax expert. You should consult your own tax advisor. Have an opinion? That's what the message board is for!
Thanks very much to Rick and Mr. Batsimm for weighing in on this issue.
And now, for the LIGHTER side of taxes:
Just in time for last-minute tax preparers, the Queen of Crabbiness, Maxine, from Hallmark.com offers the following surefire techniques for getting the dreaded audit envelope from the IRS:
- Pay your taxes with pennies (deliver them by sling shot).
2. Deduct calls made to the Psychic Network in an attempt to get winning PowerBall numbers.
3. Claim your cat as a dependent.
4. Claim charitable deductions that equal more than your income.
5. On the line that asks what you made this year, answer "Trouble."
6. Deduct adoption costs associated with adopting a new personality.
7. Claim a home office deduction based on all the in-home counseling you give to friends and family.
8. Wait till the last minute and copy the numbers from the guy standing next to you in line at the post office.
9. Fill out your forms in yellow crayon.
10. Detail 11,215 Internet stock trades -- and claim you came out exactly even.
- Hallmark.com has four "tax day" cards you can send to friends
- or to your favorite tax preparer -- to let them know that you "feel their pain"! (Did I mention April 15th is less than one week away?)
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