04-16-2009, 04:08 PM
I am in finance and accounting, have a small business currently, and have started and sold others, here in the US, every penny needs to be reported whehter the sales are through ebay, paypal, forums, the garage, or the corner. Now, after you pass $600 in sales through your paypal account, that information is turned over to the government. If you do not claim the money, the chances of the government auditing without being alerted are slim, as under 1% of all returns are audited. But you could be, and they could request sales tax on your sales. Now, if you keep good records, you can counteract an taxes on prfits with your expenses (paint, latex, abs, hocs, masks, gas to drive to hardware store, etc) so it is very easy to avoid paying that tax, sales tax howerver if you get caught, you really have no recourse. Also, your state and local tax bureau may come looking for their end if the IRS catches on as well.