Congress has 43 days to act to protect casual online sellers and microbusinesses from “unfair tax and privacy burdens,” according to a coalition of online marketplaces.
The countdown clock appears on 1099kfairness.org, the website of lobbying group Coalition for 1099-K Fairness founded by eBay, Etsy, Mercari, OfferUp, Poshmark, Reverb, and Tradesy in response to changes in online tax reporting thresholds included in the American Rescue Plan Act of 2021.
The sense of urgency was conveyed in an email invitation from the coalition to reporters to a Zoom call explaining the issue: “If Congress does not act before the end of the year, casual online sellers and small entrepreneurs will face increased IRS scrutiny for low-dollar online sales.”
As the IRS explains, payment processors had been required to report gross payments that exceeded $20,000 and over 200 transactions, but beginning with tax year 2022, they are required to report gross payments that exceed $600 – and no matter the number of transactions. The IRS itself has been issuing bulletins to advise tax professionals and taxpayers about the new rules.
Note that the law does not change taxpayers’ obligations, but rather, it is designed to bring them into compliance. Some sellers are sympathetic to the confusion the new reporting will likely cause casual sellers, others say they hope it will make it fairer to those who do report their ecommerce earnings.
Etsy reminded sellers this week of the new reporting rules (“Now’s the perfect time to double check that your tax details are up to date because you may receive a 1099-K form in the new year”).
But eBay has been working aggressively to galvanize its sellers to act. It emailed sellers and published an announcement asking them to reach out to their senators and representatives to request them to raise the reporting threshold above $600.
Roll Call reported on additional details of the legislative push to change the reporting threshold. It interviewed Rep. Chris Pappas who is among lawmakers who believe the threshold dropped too far. “He points to people selling used goods from around their homes who might surpass the $600 limit but would likely be auctioning off items for less than they bought them for and don’t owe any tax,” according to the publication.
Online sellers report having received emails from eBay asking them to take action. One reader forwarded the email from eBay and said, “and yes I did “send a letter” as requested.”
Hi (name redacted),
Earlier this week you may have received an email or a Message Center notification from eBay about a tax law that will soon impose completely unnecessary tax reporting requirements on millions of online sellers.
Starting January 1, 2023, eBay and other online marketplaces will be required to issue reports for sellers who have more than $600 in annual sales to the IRS. That means millions of eBay sellers, including those who may only sell a few items a year, will have their sales reported and will need to keep careful records of their transactions – even if no taxes are owed. We need your help in asking Congress to amend this law before it goes into effect.
Please join us in urging Congress to raise the tax reporting threshold before the new law goes into effect. Click here, and in a few easy steps you can ask Congress to raise the tax reporting threshold before the coming deadline of January 1, 2023. Your voice matters – together, we can make a difference for all online sellers.
The eBay Government Relations Team
Click Here to Contact Your Legislators