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US 1099-K Federal Tax Reporting Burdens on Casual Sellers - Details

A new law passed earlier this year will require millions of Americans to receive confusing and burdensome tax forms for the sale of used or pre-owned goods, even when the sale of those goods are non-taxable events. Congress should change the law immediately and protect Americans just trying to get by. 

Even casual sellers will now receive a 1099-K tax form

Millions of Americans use marketplace platforms to supplement income, make ends meet, and support their families. Section 9674 of the American Rescue Plan (H.R. 1319), which was inserted without any hearing or debate, reduced the de minimis reporting threshold for Third-Party Settlement Organizations (TPSOs) from $20,000 in annual payments and 200 transactions, to $600 (with no transaction count). The impact of this change will be that millions of Americans cleaning out their garage or selling a few used items to make extra money will now receive a 1099-K tax form. 

This would hurt me. Receiving extra tax documentation is just another unnecessary burden adding complications to the process I go through to sell products I have used.

– William “Brad” N., Idaho

New provision lacks understanding, unnecessarily targets non-taxable events

Selling a used or pre-owned good has vastly different tax treatment than providing payment for a service or renting out a second home. When you sell a good below the cost you originally paid, there is no profit and therefore no income tax owed. Yet, Section 9674 makes no distinction between selling a good and receiving payment for a service. Receiving a 1099-K for non-taxable events will be confusing for individuals not running a business, but casually selling items on marketplaces such as eBay, Poshmark, or Mercari. And it will add millions more unnecessary forms for an already overburdened IRS to process.  

Platforms required to collect full Social Security numbers of millions

Section 9674’s change will also require platforms of all different shapes and sizes to collect full Social Security numbers for millions of individuals casually selling. Consumers want more privacy online, not less.

eBay’s policy recommendations

eBay believes we need a threshold for consumer sales of goods that makes sense and protects millions of American consumers from overtaxation and unnecessary disclosure of private information. We believe Congress can act to protect consumers and increase the reporting threshold for platforms enabling consumer sales of goods in the budget reconciliation package.