4 ms·

I happen to know that Etsy is being used as a tax haven for selling “products” from an online “store”. Basically, you buy stuff, offer it for sale of Etsy, and

I happen to know that Etsy is being used as a tax haven for selling “products” from an online “store”. Basically, you buy stuff, offer it for sale of Etsy, and claim all of the goods you purchased as businesses expenses for tax writeoff purposes. This of course is not limited to Etsy, but it’s an easy platform to use for this purpose. It’s similar to how movie studios will purposefully produce horrible movies in order to create a loss. Or any other tax loophole, really.

baby-yoda 4y ago
It sounds like you're describing a classic COGS scenario. Not sure I see the loophole, can you expand?
- japanman425 4y ago
  [flagged]
- voxic11 4y ago
  The loophole is that they don't actually expect anything to sell. So they are claim a tax write off when the goods depreciate, all the while actually enjoying them for personal use.
  - baby-yoda 4y ago
    I doubt many Etsy sellers are running their business on an accrual basis to be eligible for depreciation expense. Beyond that Inventory is a non-depreciable asset. If they're not generating any revenue they can't claim COGS. Any of these scenarios are obvious red flags and would be audit candidates. Now if you're suggesting people are submitting fraudulent returns thats another thing but there's no "loophole" here. EDIT - just to add, I'm sure there is a ton of attempted illicit activity on Etsy, just like any other marketplace. See this [0] for example. I don't think there is any tax "loophole" here, however. [0] https://www.etsy.com/listing/1200405951/t-shirt https://www.etsy.com/listing/1200405951/t-shirt
toyg 4y ago
> you buy stuff, offer it for sale of Etsy, and claim all of the goods you purchased as businesses expenses for tax writeoff purposes. That's not a loophole, that's just fraud that goes undetected because the taxman doesn't know or monitor Etsy. Amazon used to be the same, before someone knocked on their door. Businesses doing that are still guilty of tax fraud and will be convicted if/once authorities come around (since Etsy will be compelled to collaborate).

baby-yoda 4y ago

It sounds like you're describing a classic COGS scenario. Not sure I see the loophole, can you expand?

japanman425 4y ago
[flagged]
voxic11 4y ago
The loophole is that they don't actually expect anything to sell. So they are claim a tax write off when the goods depreciate, all the while actually enjoying them for personal use.
- baby-yoda 4y ago
  I doubt many Etsy sellers are running their business on an accrual basis to be eligible for depreciation expense. Beyond that Inventory is a non-depreciable asset. If they're not generating any revenue they can't claim COGS. Any of these scenarios are obvious red flags and would be audit candidates. Now if you're suggesting people are submitting fraudulent returns thats another thing but there's no "loophole" here. EDIT - just to add, I'm sure there is a ton of attempted illicit activity on Etsy, just like any other marketplace. See this [0] for example. I don't think there is any tax "loophole" here, however. [0] https://www.etsy.com/listing/1200405951/t-shirt https://www.etsy.com/listing/1200405951/t-shirt

toyg 4y ago

> you buy stuff, offer it for sale of Etsy, and claim all of the goods you purchased as businesses expenses for tax writeoff purposes. That's not a loophole, that's just fraud that goes undetected because the taxman doesn't know or monitor Etsy. Amazon used to be the same, before someone knocked on their door. Businesses doing that are still guilty of tax fraud and will be convicted if/once authorities come around (since Etsy will be compelled to collaborate).