Just when we thought that the “1099 nightmare” was going to be it for 2010, we learn of the new IRS impositions on internet commerce. These rules target folks selling stuff online. People selling 200 items or making $20k on eBay, for example, shall be subject to reporting rules. People who make a living (or complement their income) by selling trinkets online will be particularly hurt by this. I foresee a reduction in business on Etsy and similar cottage industry sites. Personal sales in the open market might take a hit, at least for marginal sellers. Some might just sell less while others will have to distribute their online activity so that they are not as easy to target. To make things worse, Paypal will be required to report online activity, meaning that they will send the IRS 1099 forms that will have to match each individual seller’s information.
The 1099 nightmare extends from small businesses to tiny one-person operations. Of course, I bet that large companies can only cheer. After all, they already have systems and personnel to deal with the flood of paperwork that the money-thirsty IRS has required from society. A great win for corporatism.