CHICOPEE, Mass. (WWLP) – It’s never too early to start planning for your tax return, and there is a change this year that filers need to be aware of.
Apps, like PayPal and Venmo, are getting very popular, especially for small business owners who sell on sites such as Etsy. If you sell goods online it’s important to note that for this upcoming filing year, mobile payment apps will be reporting any commercial transactions totaling more than $600.
The change to the tax code was signed into law as part of the COVID-19 response bill, The American Rescue Plan Act. Previously, mobile apps only had to tell tax authorities when a person had more than 200 commercial transactions per year and exceeded $20,000.
According to the IRS, the new rule is to crack down on tax evasion and improve collection. The rule is getting pushed back, and an organization has been formed called by a group of online retailers, including eBay, called The coalition for 1099-K Fairness. Its stated mission is to maintain a fair and safe online resale marketplace.
The IRS states it will be using the tax data the mobile apps submit to identify potential unreported income and develop new audit and collection approaches. The coalition for 1099-K Fairness maintains these new reporting requirements will hurt casual sellers, selling used goods at a lesser price, who may have to hire a tax professional to ensure compliance.