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Originally Posted by perezfan
I've never paid taxes on stuff I've sold at garage sales (not that it amounted to much money). But then again, I never knew that we were required to... especially since virtually everything gets sold at a "bargain basement" style loss.
And what about the guy who sells his cards for cash, to a guy working the booth at a trade show? Or even the guy renting the booth, who sells the cards? I have a feeling these types of sales go largely unreported.
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Exactly correct, and why you shouldn't pay taxes on a garage sale. The government tax authorities realize that over time people may just sell off old things for a few bucks. They don't have the time and resources to go after such people, and realize that virtually everything being sold is old and used, and not selling for what was originally paid for it. Therefore, most garage sale/flea market sales are for a loss, so you would end up owing no income taxes on it anyway. Plus, you aren't normally running a garage sale all the time, maybe just once in a great while. So the tax authorities don't want to deal with all that info and detail, and just leave it alone.
But then we end up getting the internet, and online platforms like Ebay, Etsy, Craig's List, and so on. The initial idea behind these was really more of an online flea market or garage sale concept for people to get rid of their stuff on, by having a wider market. Heck, IIRC Ebay was started as a place for some collectors to sell their Pez dispensers among themselves. But times have changed and these former online garage sales have become big businesses, Amazon, Wayfair, etc. And then throw in an item like old sports cards, that used to be sold/traded for next to nothing for decades, and fast forward to today where they are suddenly going for hundreds and thousands of dollars. The rules and thinking are still changing and morphing. It is kind of like the situation with regard to sales taxes where the internet completely changed the idea of what really constitutes tax nexus and who should be responsible for collecting and remitting sales taxes. It wasn't until the recent 2018 SCOTUS ruling in South Dakota vs. Wayfair that we finally recognized a firm, specifically defined, measure to finally say for certain when someone should or should not be subject to having to collect sales taxes from online sales to other states they are not physically in.
People can still sell at a garage sale or flea market occasionally, and not have to worry about taxes. And they can also do the same thing using Ebay, Etsy or so on. But does doing so and using an online platform automatically change their intent and turn them into a dealer in a legitimate business? See how this can get grey and hazy real fast? There is currently no perfect, set answer that covers every possible situation. People selling for cash at shows and such will, at least for now, not have anyone chasing after them for tax reporting. Again, the tax authorities don't have the time, resources or the inclination normally to chase after them. Using an online platform though gives tax authorities the unique benefit of there now being a specific and precise record and detail of what someone is selling, and what they sold it for. It is changing the tax enforcement landscape and thinking by many state and federal (and local) tax authorities.