U.S. Reps. Ann Wagner (R-MO), Chris Pappas (D-NH), and Tim Burchett (R-TN) are pushing for a legislative fix for Form 1099-K reporting requirements that the lawmakers say would create bureaucratic hurdles for online sellers.
Specifically, changes in the 1099-K reporting threshold could result in millions of Americans being taxed for transactions like selling a bike or used clothes online. That’s because the threshold for receiving a 1099-K was lowered from $20,000 and 200 transactions to $600.
The lawmakers said the change does not take into account the millions of individuals selling used or pre-owned items for less than the original purchase price who won’t even be receiving taxable income. Yet these transactions could trigger IRS reporting requirements, causing confusion and ultimately overreporting of income. That, in turn, could result in mistaken overpayment or ineligibility for certain tax benefits.
“While the IRS has issued a further postponement of the new $600 reporting threshold for payments made in 2023, a long-term legislative fix would provide much-needed certainty for online sellers. Unless Congress acts, once the current pause expires at the end of this year, millions of Americans will receive new and confusing tax forms for online transactions,” the lawmakers wrote in a Jan. 17 letter to the leadership of the House Ways and Means Committee.
They concluded by calling for a legislative fix in the upcoming Ways and Means Committee markup session.
“While we might have different perspectives on the ideal reporting threshold level, we agree that something needs to be done to permanently address this issue and urge you to include a provision raising the 1099-K reporting threshold in the final bill passed by Committee,” they added.