Fight over IRS Form 1099K Threshold to Resume

Online sellers received an eleventh hour reprieve in January when the IRS delayed implementing a new $600 threshold for Form 1099-Ks for tax year 2022 - but the unpopular requirement remains in place for tax year 2023 and going forward.

That means that in just a few short months, ecommerce platforms and payment processors will have to report to the IRS the total amount they processed in 2023 on behalf of sellers who go over a new $600 threshold - no matter the number of transactions.

Previously, the companies were required to report payments when they exceeded $20,000 - and 200 transactions - on Form 1099-K.

Last fall, mainstream media reported on how regular people who sold a few household items would face unexpected tax consequences as a result of the lower threshold, but the issue hasn't gained the same amount of attention this year, as of yet.

However, eBay has found a renewed sense of urgency as the issue rears its ugly head for tax year 2023 and it must issue the Form 1099-Ks to sellers in the early months of 2024. eBay CEO Jamie Iannone discussed the issue during his keynote address at last month's eBay Open seller conference. 

The CEO told attendees he regularly meets with lawmakers in DC and said eBay continues to advocate for a permanent solution on the Form 1099-K issue "to make sure you aren't burdened with more tax forms to fill out." (To be clear, companies like eBay must fill out and submit Form 1099-Ks; the burden on sellers varies.)

eBay Government Relations' Main Street program tweeted about recent visits by Iannone and eBay Chief Financial Officer Steve Priest to DC, with sellers in tow, to meet with Senators Bill Cassidy and Sherrod Brown and Representative Chris Pappas, and thanking the lawmakers for introducing the Red Tape Reduction Act.

In May, Pappas and his colleague Representative Dan Kildee issued a press release about the Red Tape bill that would raise the reporting threshold for 1099-K reporting from $600 to $5,000 and would "require entities to issue a plain-language description of the taxability of income reported on Form 1099-K to reduce confusion among online sellers."

There have been a few recent articles about a surprising type of "seller" that could be impacted by the low threshold: fans of Taylor Swift and other performers.

CNBC noted that tickets for Taylor Swift's "The Eras Tour" resold for an average price of $2,183 in the secondary market. Anyone who used Ticketmaster, eBay or payment services like Venmo and PayPal to resell tickets might be shocked next year to learn the sales were reportable to the IRS.

In the meantime, the IRS page explains Form 1099-K on the IRS.gov website.