eBay is rallying the troops to try and change 1099-K tax reporting rules, issuing a message to its community of sellers this week. eBay used an example of someone selling a personal item on its marketplace to bolster its argument:
“Imagine selling an old bike for $800 that cost you $1,500 a few years ago. Since you didn’t make a profit, the IRS doesn’t consider that taxable income. But under this new law, you’re still going to get a 1099-K. And now you’ll have to prove to the IRS that you don’t actually owe any taxes on that sale, which makes for complicated accounting work.”
People frequently raise the issue on eBay’s seller discussion board, with some stating they believe the threshold is too low, and others saying even with a higher threshold, sellers are required to – and should – report their income.
In Monday’s post, eBay pointed to FAQs section on its website and urged sellers to contact their elected representatives and ask them to pass a new bill recently introduced in Congress that would “raise the threshold and limit the number of sellers getting these unnecessary forms.”
“But,” eBay continued, “we need your support to make sure it will pass! Go to our eBay Main Street website and tell Congress to act now to support Americans selling online. It will only take a few minutes, and if we succeed, it can save you, and millions of other sellers the hassle of needless tax forms for years to come.”
eBay linked to a March 15th press release on Representative Chris Pappas’s website about his proposed legislation dubbed the “Protecting Americans from Tax Overpayment Act.” The press release quoted four online sellers from New Hampshire.
According to the Pappas press release, the legislation would do the following:
- Raise the reporting threshold from $600 to $5,000.
- Require entities to issue a plain-language description of the taxability of income reported on Form 1099-K to reduce confusion among online sellers.