E-Commerce Platforms Impacted by Recent IRS Announcement
PUBLISHER’S NOTE: After publishing an article on this blog on December 17, 2022, the I.R.S. made a change as to the effective date for the “gig-tax” rule discussed. Please read the update below.
UPDATE: I.R.S. Makes Tax Changes for E-commerce Platforms, Pauses Requirement for 1099s
On December 23, 2022 the I.R.S. paused the requirement that e-commerce platforms such as PayPal, Venmo, Etsy and Airbnb send 1099s to any users who had gross income through the app of at least $600 in 2022.
Previously, e-commerce users received 1099s if they had gross income for the year of at least $20,000 or at least 200 transactions. As part of the American Rescue Act, in March of 2021 Congress changed the threshold to $600, to take effect in 2022. Now the I.R.S. had instituted a one year delay for the law to go into effect. According to the I.R.S., this delay is to help reduce confusion during the 2023 tax-filing season and provide more time for taxpayers to prepare and understand the new reporting requirements.
Keep in mind that this delay does not affect what income is taxable, only how much information is reported by the e-commerce apps to the I.R.S. Sellers must still track and report their own business income and pay the appropriate tax on it.
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Joseph Balmer manages the Probate, Trust and Estate Administration department at Dayton, Ohio, law firm, Holzfaster, Cecil, McKnight & Mues, and has been certified by the Ohio State Bar Association as a specialist in Estate Planning, Trust and Probate Law since 2006.
