New Government Policy To Regulate the Sale of Web Properties

WebsiteIf you follow up on the news relating to government policy changes, you may have heard the rumour that Uncle Sam is planning to start regulating the sale of Web Properties. To any of us familiar with the internet and federal government intervention, you may not be surprised. Remember SOPA?

A website is like a piece of internet real estate. Some of these websites sell for millions of dollars. It’s therefore not a long shot to find out that our Government is thinking of meddling in this market. For persons that earn their livelihood “site flipping” this may be yet another way for the government to sink their greasy paws into your pockets. For websites like Flippa, a marketplace for selling websites where many site flippers earn their living, this could be detrimental.

The rumour on the street is that persons selling websites over a threshold of 10,000 dollars will have to conduct their transactions via a licensed site broker. A website broker is similar to a real estate agent, in that they facilitate the purchases of web –based businesses by bridging the gap between the buyers and the sellers. They earn based on commission, and can often negotiate better terms for buyers and sellers than generic marketplaces like Flippa.

It is understandable then, that the government will want to look out for the best interest of consumers by requiring that all persons selling websites over 10,000 be licensed to do so. This will force persons to have to use a licensed broker for those transactions. If not, then banks will be forced to check and then report to the IRS any transactions over 10,000 USD. If it is found that a website transaction was not conducted by a licensed brokerage, then both parties will be liable to fines and possible jail time (unconfirmed).

Following the FATCA policy, it is not surprising that the government further wants to meddle in the finances of US citizens conducting business.

All persons wishing to conduct business as a website broker may have to sit a state administered licensing test and then pay several fees in order to be licensed. This is quite an unnecessary hurdle for persons simply wishing to part with their online business.
Individuals who create small websites solely for the purpose of flipping them for small amounts, shouldn’t be affected by this. They will still be able to operate out of markets like Flippa. The marketplace will be reduced significantly, though, and Flippa may lose revenues due the fact that they earn based on commission. While it is possible that they may offer a gateway between newly licensed brokers and customers, they may have to adjust their marketplace quite a bit in order to facilitate this change.

I am quite sure that web brokers will be even more incentivized to start their own standalone businesses because more consumers will be forced to seek their services. 

As the world we live in becomes more reliant on technology and this vast entity we call the internet, governments are not only concerned with how to protect their citizens, but also on how they can cash in too. I certainly hope that such a policy does not come to pass.

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