If the IRS wants the returns to match the 1099 then they'll need to rewrite the return forms because right now there isn't a box for ebay or paypal income. So nothing is going to match unless they rewrite the forms.
Unfortunately, tax law isn't as simple as filling in numbers in a specific box for a specific document that you receive.
Tax law and IRS publications say that you should report the sale of collectibles on Form 8949 and Schedule D as long or short term capital gains.
If what you're selling isn't considered a collectible, then it's considered a business which involves filling out Schedule C for the income tax, and schedule SE for the self employment tax that will be due in addition to the regular income tax.
The additional forms filed increase the chance for an audit. And without proper receipts necessary to substantiate the correct cost basis for each item, it's just not worth the hassle. Maybe we need to stick to Craigslist or revive the local newspaper classifieds again to keep third parties out of small transactions when you're just trying to clean out the basement or garage .
