@eag618
Glad to see that you are on a path to getting problem resolved.
While I don't agree with all of PayPal's policies, on this issue with taxes, they are only doing what is required by lay for them to do.
Either of two ways to handle, depending on which most applies and works best for you:
1) Show, with records of past purchases and sales and intent of sale, that you are only doing as a no profit hobby or are simply reducing or replacing some of your collection of audio gear.
2) If you are consistently making a bit of profit on sales and equipment turn over, consider yourself a small business and take advantage of itemizing cost of goods and operating expenses, that will help reduce or offset apparent profits.
Best of luck either way.........Jim