People are being told they need to provide their Social Security numbers to online platforms and cash transfer app companies for the sales of things like clothes and concert tickets over $600, even though the IRS says they don’t need to.
The prompts from companies like eBay and Ticketmaster are the result of a change in the tax law that was reneged last-minute by the IRS ahead of the 2023 tax filing season.
The switch is causing a lot of confusion among taxpayers and tax professionals — and even within the IRS itself.
The threshold for reporting business income or personal income from using these apps was supposed to change this year. It was downgraded from sales above $20,000 to sales of above just $600 and was part of a provision passed in the 2021 American Rescue Plan.
That means you’d need to pay a capital gains tax on sales worth more than $600 if you used these apps to receive a payment.
But the IRS decided to delay this rule change from tax season 2023 to tax season 2024, citing “confusion during the … 2023 tax filing season” and the need to “provide more time for taxpayers to prepare and understand the new reporting requirements.”
The IRS said some taxpayers may be receiving 1099-K forms “in error.”
“Some individuals may receive a Form 1099-K for the sale of personal items or in situations where they received a Form 1099-K in error (i.e. for transactions between friends and family, or expense sharing),” the agency said in a statement.
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