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News Link • TAXES: Federal

IRS Incompetence

• Daily
 I am an Ebay dealer of rare DVD's & video games. Don't get too envious just yet. I earned a whopping $17743 in 2011. That was my profit after expenses, mileage & capital expenditures (buying stuff to resale) etc. The IRS doesn't seem to understand the difference between profit & total gross sales, but that isn't the half of it. They seem to be considering the figure of $37,876 on my 1099-K form from Paypal as my income! This is the total amount of money I took in for 2011. Of course, a substantial amount of this figure is shipping charges paid by buyers & then spent by me to ship the items. I am astounded that the IRS could be this incredibly stupid, but they are saying I owe taxes on this $37876.

1 Comments in Response to

Comment by Howard Pearlman
Entered on:

I receive stuff like this from the IRS about twice a year.  It takes me about 2 days to get the records I need to state my case and then I send it in.  While it is unfair of them to consume my time like this, every single time I've had this type of problem and come back to them with a explanation they have agreed with me and dismissed the claim for additional money.  If you keep good records and organize it in a logical and methodical manner you should be OK.  If you come at them like an obnoxious asshole, they can make life very difficult for you and you'll be spending a lot of time sending correspondence back and forth.  The "mistake" was probably made by a computer on  a fishing expedition.  These notices are sent out automatically and no human will probably see your case until your polite response is considered and received.  I would explain your case to them in a polite but firm manner and you will most likely see the matter resolved in your favor, at least that's been my experience every single time.

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