Hillsborough Sun

On May 18, 2023, Congressman Chris Pappas (NH-01), alongside Congressman Dan Kildee (MI-08), a member of the House Ways and Means Committee, introduced legislation to raise the threshold for 1099-K reporting for goods sold on online marketplaces to ensure sellers do not pay more taxes than they owe and limit the amount of personal information they’re required to provide online.

“People across New Hampshire use online platforms to supplement their income and find a second life for used goods they no longer need,” said Congressman Pappas. “But while selling used goods for less than the original purchase price does not create any taxable income, these transactions will now trigger IRS reporting requirements that may yield confusion and accidental overreporting of income. Congress must fix this now. We should raise the reporting threshold to ensure small sellers are not subject to burdensome or confusing reporting requirements which could result in overpayment of taxes and ineligibility for certain benefits.”

“The new IRS reporting requirements are confusing and burdensome for many small businesses and an increasing number of Michiganders using online platforms to sell or exchange goods,” said Congressman Kildee. “I’m pleased to introduce this legislation to remove bureaucratic red tape and raise the reporting threshold to provide greater clarity and certainty for Michiganders and small businesses.”

Millions of Americans sell goods online to supplement their income, clean out their closets and give their goods a second life, and for many, selling used personal goods online has been a much-needed economic lifeline. The Internal Revenue Service (IRS) distributes Form 1099-Ks each year to Americans who sell their goods online. Because the reporting threshold has been lowered from $20,000 and 200 transactions to $600, many people will now receive tax forms they’ve never seen before for transactions like selling a bike or used clothes.

Pappas and Kildee’s Cut Red Tape for Online Sales Act would raise the reporting threshold for 1099-K reporting from $600 to $5,000 and require entities to issue a plain-language description of the taxability of income reported on Form 1099-K to reduce confusion among online sellers. In December 2022, IRS delayed the implementation of the new $600 reporting threshold following Pappas and Kildee’s repeated calls to raise the threshold.

Pappas first introduced this legislation in the 117th Congress, and it was listed on the National Taxpayers Union’s 2022 “No-Brainer” list of bills Congress should pass.

Original source can be found here.