Casual eBayers are rarely responsible for income tax.
A huge percent of people who ask me this question are not a business, nor are they a "hobbyist". They're just folks who sell their used personal items, unwanted gifts, etc, for extra cash. Like their old DVDs, that unwanted Christmas sweater, a pair of heels you only wore once, etc.
In these instances, proceeds from eBay are almost NEVER taxable income. It doesn't matter if you sell 1 item or 100 items. What matters is your cost basis - are you selling it for less than you paid? If so, it's none of the IRS's concern. Not reportable, not taxable.
Similarly, those unwanted Christmas gifts are not taxable. (Assuming you're selling it for the same or less than the giver paid for them). Document what you can, but no auditor is going to push you for documentation on selling used personal items for under MSRP (and 99% of items that sell on eBay sell for less than MSRP).
The thing to keep in mind, if you use PayPal (and most eBay transactions happen through PayPal), they will send you a 1099 if you reach a certain level (current threshold is over 200 transactions, or over $20,000 collected). This does NOT mean you necessarily owe taxes on this. You only owe taxes on the things you sold for profit. For the rest of the items, you will have to explain yourself to the IRS. Respond with the appropriate form (I believe you can do this on a 982 ...some tax professional might have a better idea), and just say the items were a capital loss, there was no income.
Now, if somebody is abusing this, it would be fairly apparent to an auditor. For example, if you're selling hundreds of new items, or multiples of the same thing, then you will look like a business.
Remember, only income is taxable. Don't let your accountant tell you otherwise. Selling something to break even, or at a loss, is not income, and not taxable.
