By law, you are paying tax on your profits. I saw the news that, if you are making a profit over a couple hundred dollars that year, you need to report. Also, the news said IRS is auditing the power sellers now.
Also,if you are doing a business(instead of cleaning your closet),you need to have a license. Then you have to pay tax.
Of course, many ppl get around with it now, but there is a risk you cannot afford.