A provision that was slipped into the US bailout requires individuals to receive tax forms from the IRS for the sale of used goods, even when sales of those goods are not taxable. With inflation rising and millions of us struggling to get by, Congress needs to address this issue.
Section 9674 of the US bailout — added without a hearing or debate — reduced the reporting threshold for online marketplaces such as eBay, Etsy and Facebook Marketplace from $20,000 in annual payments and 200 transactions, to $600 and no number of transactions.
This means that individuals and families who clean out their attics or sell oversized baby clothes will now receive a 1099-K tax form. This will lead to confusion and over-reporting of non-taxable income for millions of Americans already struggling due to the pandemic. This change also threatens to limit the availability of lower-cost second-hand goods for essential items that American families need.
Let’s say you bought a computer several years ago for $1,800. You want to sell it for $600 because you need the money to fix your car. You’ve looked everywhere, but can’t find the original purchase receipt. Under the new law, you will receive a 1099-K and you will have to prove to the IRS that you did not make a profit. Without the receipt, you can’t prove anything.
Legislation has been introduced by Democrats and Republicans to raise the reporting threshold (HR 7079 in the House; S.3840 in the Senate). I urge the senses. Angus King and Susan Collins and Representatives Chellie Pingree and Jared Golden to co-sponsor this legislation and support bipartisan efforts to raise the threshold.