The so-called taxpayer advocate of the Internal Revenue Service, who is supposed to tell the government what concerns taxpayers, has called instead for the IRS to require online auction sites such as eBay to report sellers’ activities.

Sellers who use eBay and other sites are supposed to report their sales as income, according to the IRS, but few actually do so.

But in a proposal given to Congress last week by “taxpayer advocate” Nina Olson, eBay and other auction sites would be required to report to the IRS any seller who has more than 100 transactions or sells more than $5,000 in a year. She’s advocating, of course, against the taxpayers, who frankly would rather pay as little as they can manage.

Congress held hearings to address the ongoing “tax gap” problem, or how much taxes people actually pay versus how much the IRS collects. In 2001, the last year for which the IRS had information, the tax gap was estimated at $345 billion, of which the IRS expects to collect only $55 billion through enforcement efforts.

“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. . . .

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. — San Francisco Chronicle

Sure. That will force eBay to raise seller fees and cut into its already thin profits. Not to mention all the sellers who will simply get out of the business entirely, further damaging the market.

The company says it will cooperate with the IRS in investigating named individuals and entities, but does not want to act as a “go between” for customers “en masse.”

It wants tax collectors to rely on their own wiles and defends the hands off approach to tax that is apparent from interviews with eBay users. . . .

The eBay spokesperson says: “We believe that it is the seller’s responsibility.” — Financial Times

This dramatic enforcement effort would cripple eBay and other online businesses, decimating a large segment of the economy, and the government says it would only collect $2 billion a year anyway — out of a nearly $300 billion “tax gap.”

The primary reason there’s a tax gap in the first place, according to the IRS, is that many people simply underreport their income, and pay less than the IRS thinks they owe. Some people — as many as a million by some estimates — report nothing and pay nothing, objecting to the whole process of enslavement to the bureaucracy.

But, remember, the taxpayer advocate who called for this is voicing your concerns. Apparently you want your little side business selling handmade quilts on eBay killed. You want to be taxed even more than you already are, because apparently if you aren’t constantly screaming in pain from having the fruits of your labor stolen from you, they aren’t oppressing you enough.

In the end, remember that the income tax is morally reprehensible. It amounts to slavery, not to any particular owner, but to the bureaucracy, which tells us what to do, how to do it, takes from us what they want, and if we’ve been good, quiet little slaves, might give us the occasional reward, or let us eat after we turn 67.

Again, this is nothing like freedom, it’s the new peculiar institution which replaced the old peculiar institution. Only this time, we are all slaves.