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PayPal Advises Etsy Sellers on Dupe 1099K Tax Forms

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PayPal LogoPayPal provided us with some clarification on the duplicate 1099Ks some Etsy sellers received this month. PayPal and other payment providers are required to send Form 1099K to sellers and to the IRS showing the amount they processed on the sellers’ behalf each year.

As we reported yesterday, some Etsy sellers received 1099Ks from PayPal and from Etsy for the same transactions. (Etsy is required to send 1099Ks because as of May 2017, it became a payment intermediary, meaning buyers pay Etsy instead of the seller through “Etsy Payments.”)

We asked PayPal about the apparent duplicate forms sent to sellers. A PayPal spokesperson provided us with the following response:

“We did some digging and uncovered the reason for this. Recently enacted tax laws lowered the reporting threshold for 1099-K forms in certain states. PayPal sent a 1099-K form to some Etsy shop owners in Vermont and Massachusetts for payments processed through Etsy Payments. Etsy also sent 1099-K forms to those sellers.

“The form sent by PayPal was sent in error and Etsy shop owners should use the 1099-K form sent by Etsy for sales processed through Etsy Payments. PayPal has since corrected this system error.”

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He pointed to this page on the PayPal website where PayPal has placed a notice at the top of the page.

Update: An Etsy spokesperson also provided us with information which you read at the bottom of this article.

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Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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