eBay is urging sellers in what seems like a last-ditch effort to have Congress raise the new IRS tax reporting threshold.
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As part of the American Rescue Plan Act of 2021, eBay, many other marketplaces, and payment apps like PayPal and Venmo will have to issue a Form 1099-K when a seller transacted more than $600 in sales on the platform.
Before this change, the IRS required marketplaces and payment processors to issue a Form 1099-K only if transactions exceeded $20,000 and 200 transactions during a calendar year.
While a few states had lowered the threshold for state tax reporting purposes already, the majority of sellers only received the tax form when the IRS federal threshold was met.
Unless there is a last-minute legislative change, in January, all sellers that sold more than $600 on eBay during 2021 will receive a Form 1099-K.
Again, this is not just an eBay issue, but one that impacts sales on other marketplaces and transactions processed through payment apps like PayPal and Venmo.
Also, the requirement is a transactional threshold and may include shipping charges, taxes, and any other applicable fees that buyers may have been charged at the time of sale.
We have a guide on this new regulation and an explainer about Form 1099-K here.
If this is the first you heard of it, we strongly suggest you read our article on this topic as all sellers that meet the new threshold will receive a Form 1099-K, even if the item(s) sold below the original purchase price.
In other words, if you sold some items out of your closet that you bought a few years ago, you will get a 1099-K as long as you meet the threshold.
This may require private sellers to seek tax advice from a tax professional on how to deal with this tax form on their income tax return, even if they are not running a business.
While eBay has been leading the fight to fix this burdensome issue for nearly 18 months through its lobbying efforts and even spearheading a coalition of marketplaces that include Etsy, Poshmark, Mercari, OfferUp, Reverb, and Tradesy — there has been little progress towards a reasonable solution.
eBay: Tell Congress To Fix Burdensome Tax Reporting Requirements Before January 1st!
“You’re invited to make your voice heard in Congress before the new law takes effect. We’re hosting a grassroots campaign on eBay Main Street, our global action network, where you can ask your senators and representatives to raise the reporting threshold above $600,” eBay said in its statement.
To get your voice heard now, eBay set up a landing page to generate and deliver a letter in your name to your Members of Congress. It’s an easy and quick way to hopefully influence Congress to adjust the new Form 1099-K reporting requirement before it goes into effect.
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