You have to love the IRS
…IRS instructions make it clear that all income — a category that includes bribes, gambling winnings, kickbacks and money made in illegal activities — can be taxed.
I just want to say that this is crap (for the most part). Yes, if you are running a business off eBay (which many do) you should pay taxes for it, thats fine. But if your just selling little junk, you shouldn’t pay taxes. Its just like having a garage sale, except online. I think the IRS is just grumpy because they are out money. What should be done (and has been sugested before) is one flat federal sales tax. You pay X% no matter where or how (internet, catalogs, stores, etc) on your purchases. The government then gives some money back to the states to make up for the loss of state level sales tax. Think of all the stuff on the net that would be taxed, and make money (plus international stuff, make em pay too, who cares if they dont live in this country).