New Bipartisan Legislation Could Help Frustrated 1099 Online Sellers
Since news broke last year that certain tax reporting thresholds would change, online sellers have been frustrated.
For years, families around the United States have used websites like eBay, Mercari, Poshmark, and Etsy to sell secondhand items -- like gently used clothing and unwanted antiques -- and handmade goods. This has become a major source of income for people in certain situations. Stay-at-home parents, for example, have used reselling operations to turn themselves into dual income households.
Then, there are online shops like eBay's Linda's Stuff that have become fully fledged e-commerce retailers in their own right.
Ever since they came into play, the new tax thresholds have had many online sellers frustrated.
The American Rescue Plan of 2021 included a provision that requires sellers to report online marketplace transactions that exceed $600 in total—this is notably lower than the previous $20,000 threshold, and has made things immensely challenging for smaller sellers.
Sellers must fill out a 1099-K form reporting their transactions.The IRS says the change impacts only tax reporting rules, not overall income taxability, it has put many smaller sellers in a bind.
Marketplaces themselves have even spoken out agains the legislative change.
Now, newly introduced bipartisan legislation is giving resellers hope. According to a press release, U.S. Senators Sherrod Brown (D-OH) and Bill Cassidy, M.D. (R-LA), introduced the Red Tape Reduction Act last Thursday. The bill proposes altering the reporting threshold from $600 to $10,000, meaning fewer sellers and small businesses would receive tax forms from PayPal and other platforms.
In the release, Brown said, "Ohio small businesses are frustrated with the 1099-K reporting threshold. This red tape hits small businesses and other Ohioans selling products online, sucking time and resources from the smallest online sellers."
He continued, "By raising the threshold, we can prevent the IRS from interfering with minor transactions and cut down on excessive paperwork.”
What do you think? Should the bipartisan Red Tape Reduction Act be enacted?
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Feature Image Credit: Justin Sullivan/Getty Images
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