If you sell a few thousand dollars in sports cards or other items on eBay or another online outlet in 2023, there’s still a chance you won’t be getting a 1099 early next year.
The plan to force online sellers to report amounts as little as $600 to the IRS that’s scheduled to go into effect this tax year is getting a challenge from two senators—one on each side of the political aisle.
Senators Sherrod Brown (D-OH) and Bill Cassidy, M.D. (R-LA), introduced the Red Tape Reduction Act on Thursday. The bill would take the reporting threshold from $600 to $10,000, meaning fewer casual sellers and small businesses would receive tax forms from third party payment platforms like Paypal.
A provision to the tax code in the American Rescue Plan Act adopted two years ago requires those platforms to report businesses’ gross transaction volumes totaling more than $600 to the IRS. However, the idea met with stiff opposition from some lawmakers as well as eBay, Etsy and other online hubs who lobbied against it. In late December, the IRS announced it was delaying implementation of the new threshold until this year “to help smooth the transition and ensure clarity for taxpayers, tax professionals and industry.”
Brown called the $600 threshold “red tape” that is “sucking time and resources from the smallest online sellers. By raising the threshold, we can prevent the IRS from interfering with minor transactions and cut down on excessive paperwork.”
Through 2022, sellers were only required to report information when a payee had over 200 commercial transactions per year that exceeded $20,000.
The bill would have to be passed before the threshold change is implemented but it will almost certainly be given priority, given the interest and time constraints before those forms would have to be generated by the IRS.
“We’ll see where this lands if and when there is a tax bill,” tweeted Richard Rubin, who covers U.S. tax policy for the Wall Street Journal. “But clearly this has momentum.”
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