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The Liberty Lamp: Libertarian News & Editorials

A blog dedicated to the advancement of libertarian principles, and to the protection of activist groups' privacy and Constitutional rights. Topics include discussions on privacy tips, current events, political topics, and bulletins on how to get involved in various pro-liberty activities.

Sunday, February 25, 2007

IRS urged to go after eBay sellers

The San Francisco Chronicle reports:

When it comes to paying income taxes, eBay's legions of small-time entrepreneurs are on an honor system in which they are supposed to declare their profits to the Internal Revenue Service. Many users, however, ignore the law or are unaware of their obligation.

Now a growing chorus of tax experts is hoping to crack down on the cheating by requiring eBay -- and other online auctions, such as those on Yahoo, Ubid.com and Amazon -- to track users and report their gross sales to the federal government. Armed with such information, the IRS could better seek any taxes owed, potentially reaping millions of dollars in extra revenue for the U.S. Treasury.

But requiring eBay to out its sellers to tax collectors could send a shockwave across its vast online bazaar, where users trade everything from Ferraris to Ugg boots to pepper spray. Paying Uncle Sam could significantly reduce their profits or even make their businesses money-losers.

The latest call for more aggressive tax collection was heard last week at a congressional committee hearing focused on closing the tax gap, the hundreds of billions of dollars in taxes that go unpaid each year. Nina Olson, the national taxpayer advocate for the IRS, spoke of the heavy burden put on the nation by the shortfall and then cited undeclared online sales -- particularly on eBay, given its size -- as part of the problem.

"The IRS must have the tools needed to address under-reporting of this income," said Olson, whose job is to voice taxpayer concerns to the federal government.

EBay, based in San Jose, has 97 million U.S. users, who, in 2006 sold $25.2 billion in merchandise, exceeding the gross national product of many countries. More than 720,000 Americans make their primary or secondary income from the Web site, according to a 2005 study.

How many eBay users pay the taxes they owe on their online earnings is unknown. But experts suspect the percentage is low.

Virtually all tax filers -- 96 percent -- pay what's owed on income that is reported to the IRS by a third party, such as when a bank reports interest earned on a savings account, according to the IRS. However, when a third party doesn't tip off the government, compliance drops dramatically, to below 50 percent.

The remedy, according to many federal officials, is to expand reporting requirements. The question is, which businesses and what kind of income should fall under the rules?

As part of his proposed federal budget for 2008, President Bush made what many believe is the first step to more vigorously collect taxes on online sales. Although vaguely worded, the proposal would require "brokers," or middlemen, to collect taxpayer identification numbers from clients and report their sales of personal property to the IRS on a 1099 form if sales surpass 100 transactions or more than $5,000 annually.

Under current law, eBay and other auction sites aren't considered brokers. But definitions can be changed.

In November, a citizen advisory group for the IRS recommended as much. Expanding the definition to include online auctions, the group said, would open the door to reporting and increased tax compliance.

Paul Heller, chairman of the citizen advisory group, made up of accountants and tax preparers, applauded the president's proposal, but called it so nebulous that it's unclear what kind of businesses he's targeting. Heller, a vice president for JPMorgan Chase, suspects that the provisions are at least partly aimed at Internet sales.

"I have no idea who it would be referring to," Heller said of the proposal, "if not online auctions."

Jennifer Zuccarelli, a spokeswoman for the Treasury Department, declined to name any companies the Bush proposal applies to. All she would say is that the provisions would affect both online and offline commerce, without discrimination as to the medium.

Other than Internet sales, tax experts said that art galleries and consignment stores could be potential targets of the Bush proposal.

Hani Durzy, a spokesman for eBay, insisted that his company would be unaffected if Bush's ideas are enacted as written. EBay doesn't meet the definition of a broker, he said, because it never takes possession of the merchandise its users sell.

In any case, Durzy said eBay doesn't even know whether any given transaction is completed and therefore can't report authoritatively about a user's sales to the IRS.

Simply reporting to the government, he added, would be a financial burden for his company.

David Yaskulka, marketing chairman for the Professional eBay Sellers Alliance, an industry group of more than 500 big eBay sellers, said it wouldn't bother him if eBay reported sales information about its users to the IRS. In his experience, big sellers already pay their fair share.

"Every professional seller I've ever talked to pays their taxes and has no problem with anyone finding out about the level of business they're doing," Yaskulka said.

His concern is that legislation will unfairly target eBay. All sales venues, online or off, should be treated the same, he said.

The next step for the proposed legislation, along with a number of other of Bush budget ideas, is to go through Congress, starting with the House Ways and Means Committee. Members are likely to address the issue during an upcoming hearing on closing the tax gap, tentatively scheduled for mid-March.

Matthew Beck, a spokesman for the committee's Democratic majority, declined comment, other than to say of the Bush proposal, "We certainly take that as a starting point, and we certainly look forward to addressing the tax gap."

Taxpayer advocate my ass. Ebay may not be able to help you, but check out Liberty Auctions. You can buy and sell anything you want with value backed currencies like the Liberty Dollar. No spying or reporting, and there are absolutely no site fees!

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Friday, February 16, 2007

Private Threats From Public Records

Privacy is important. Everyone wants it, and we can find strong evidence in the Bill of Rights supporting its legally protected status. For many generations (at least in theory), one's own personal papers and effects were considered to be something quasi-sacred; something not to be violated except in extreme cases, such as investigating a real crime, where an actual victim exists. Over the course of time, however, the situation has deteriorated somewhat. Government statute and public attitudes have led us to a social milieu in which privacy is no longer considered a right, but merely a "privilege".

Informed and thoughtful readers such as yourselves will doubtlessly understand that we need to get back the privacy. You want to better comprehend what the real threats to your personal information are. You want to find the best solutions for protecting that information and for maintaining personal control over it.
We will discuss all of this very soon. First, we must understand what, exactly, the difference is between a "right" and a "privilege". Some may find this to be a useless academic splitting of hairs. I intend to demonstrate that it, is, in fact, critical to the discussion that follows.

What is a right? Put simply, a right is an inherent power you, the individual, have to do something without having to ask for permission. On the other hand, a privilege is something that you do have to ask someone for permission to do. If you don't, negative consequences may befall you.

For clarity, let me give an example. I will refrain from the tired and worn politically popular First Amendment clauses, and will go for something more shocking (but hopefully equally demonstrative) – Gun rights and the Second Amendment.

You have an inherent right to self-defense, whether you believe it comes from God, Natural Law, the best structure for society, etc. Gun permits, on the other hand, make firearm ownership a privilege and not a right because you then have to ask mommy government if it is OK to “play with guns”, ie, keep and bear arms for the purpose of self defense, sport, or any other reason that does not initiate force on someone else. The same conceptual framework also applies to your privacy. You have an inherent right to maintain control of your personal information- your property, as long as you act in a peaceful, honest manner that doesn't threaten or damage the goods or person of someone else.

Excuses from men (or women) with guns claiming to be "government" are irrelevant if you know yourself to be innocent. This should not be taken to mean that nothing will happen to you. It might. But there are ways to minimize this chance, as we will see. The important thing to realize is that privacy is not "just for criminals with something to hide" but for the innocent as well. Why would you want your ID stolen? Would you want to safeguard yourself against a false or inaccurate accusation? Of course you would!

What are the stakes? The short answer is that it depends on who you are and what you do. The longer answer is that business owners, professionals like doctors and contractors, and political activists are at the highest risk. In fact, if you're a career professional such as a physician, you have a one in three (33%) chance of being named in a lawsuit in any given year (data from KeepYourAssets.net)! With statistics like these, no wonder malpractice insurance is so high these days. A more graphic and extreme example of professional danger comes to us from a recent report by Strategic Forecasting, Inc. (www.stratfor.com), a leading risk analysis company.

It seems that a certain mentally unstable individual in the Midwestern US, calling himself "The Bishop", has been sending threatening letters, and, most recently, nearly complete mail-bombs to executives at several mid-sized financial firms. What is his goal? Apparently to threaten these firms into changing the prices of certain stocks, often to $6.66. The threat letters also included vows to kidnap and hold hostage the managers' spouses and children. As of yet, no one is known to have been harmed. This is very fortunate, but the sad part of this tale is that the entire thing could have been avoided by the victims. How? By keeping out of the public record by "controlling" rather than "owning" their property.

We will not know for certain how The Bishop got his information until he is apprehended and tried, but the most likely way he finds the addresses of his victims is through public records, including those of the state DMV and county assessor's office. Vehicle registration and property tax records are the most reliable and easily obtained pieces of personal information useful to a potential assailant. One can easily visit a county administrative building for home ownership and property tax records. The DMV keeps very little control over its own records, and in many states, your personal information may be sold to third parties for marketing reasons! If you are a high profile businessperson (or even if you aren't), there is a low, but very real chance that a criminal or greedy lawyer may try to find out where you live in order to take your money or harass you.

Fortunately, there is something you can do to ward off such life altering attacks. The secret is the concept and practice of "controlling", rather than "owning" your high value, publicly recorded assets. To achieve safe, reliable anonymous ownership, one can utilize the power of a trust or an "Invisible" New Mexico Limited Liabilities Company (NM LLC).

Trusts and LLCs are legal entities that legally separate you from your property- but control over the use of the property is still all yours. For example, you could form an LLC for your home, then transfer ownership from your name to the name of the company. From then on, public record would show only the name of your company. Thus, someone looking through the records would not be able to easily find out where you live. Similarly, motor vehicles can be made more private by transferring ownership to a LLC or trust. Note, however, that your auto insurance rates may go up slightly, as "business" policies are typically more expensive (though usually more comprehensive) than coverage for individuals. On the other hand, if you're looking for more insurance already, this may not be a problem. If you want to transfer ownership of multiple assets, I recommend using a single LLC for each one. This insulates risk, and ensures that if one item is somehow found, the others will not be. Separation is most important for minimizing damages from lawsuits. After all, if a lawyer can't discover that you own anything, he will not try to bother suing you for it.

We now conclude this brief introduction to asset protection and the importance of privacy.
What have we learned? First, that privacy is an unalienable right that cannot be legitimately revoked or qualified on a whim by government. Next, I showed you a vivid example of what has happened on occasion to some people who did not take advantage of privacy protecting asset protection opportunities when they had the chance. Finally, you've learned a bit about how to actually use a legal entity like a LLC or trust to separate yourself from your assets so that the two will not be easily associated with each other.

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Thursday, February 08, 2007

Congress Wants You... In Jail!

The 111th Congress has been up to it's usual tricks again. First, it was a Democratic log-roll of the typical pro socialism, anti political competition nature. Now, it's apparently the Republicans' term. It has been made known that the Republicans in Congress wish to pass a series of anti freedom bills under the guise of fighting criminals. Not much new here. Dubbed the "Law and Order Agenda (of doom)", they wish to do such things as eliminate child pornography, end drug trafficking, and killing all terrorists- just by passing a law about it! That's right, kids! Just like magic! There will never be any negative, unintended consequences of that... I don't know what to believe. Are Congresspeople really THAT stupid, or do they just think all of us are? Either way, it is a complete insult to YOUR integrity and intelligence as a so-called "citizen"!

For a complete outline of what's going on, click the title link of this post or click here. Oh by the way... They want to eliminate your on-line privacy by forcing ISPs and potentially web sites such as this to retain sensitive, personal information for a long period of time! We will not comply, of course, but God knows many others will if this bill passes.

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