Etsy reminded sellers last week that they may receive a 1099-K form in the New Year for 2023 since it’s required by law to report sales amounts to the IRS for any seller who made more than $600 in gross sales, which is down from the previous threshold of more than 200 transactions per year and exceeding an aggregate amount of $20,000.
It’s deja vu all over again – this time last year, companies were trying to get Congress to abolish the stricter reporting requirements for Form 1099K that were set to take effect for tax year 2022. While Congress didn’t act, the IRS issued a last-minute reprieve on December 23, that delayed implementation of the new lower threshold until tax year 2023. The day of reckoning looms, with only 41 days until the end of the year.
If unchanged, the law could result in an extra 30 million forms being issued, as Bloomberg Tax reported today: the IRS expects to receive about 44 million Form 1099-Ks in 2024 (for tax year 2023), an increase of about 30 million.
The 1099-K Coalition – which lobbies on behalf of a group of companies – told Bloomberg the new reporting requirement would cause confusion and compliance challenges.
Bloomberg summarized legislative attempts to change the law: “Lawmakers from both sides of the aisle are hoping to prevent potential taxpayer panic. Rep. Carol Miller (R-W.Va.) has a bill that would revert the threshold back to its original $20,000, Rep. Chris Pappas (D-N.H.) wants to raise the requirement to $5,000, and Sens. Sherrod Brown (D-Ohio) and Bill Cassidy (R-La.) proposed legislation to create a $10,000 threshold—the only bipartisan solution on the table.”
In its message to sellers last week, Etsy encouraged them to advocate for “clearer tax laws that make sense for small business owners like you” by sending a letter to Congress.
eBay has also tried to engage with lawmakers and sellers through its Government Relations’ Main Street program. In September, eBay…
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