IRS rule unfair to small online sellers


Starting this year, a relatively low-key change to the reporting threshold for goods and services sold online will bring IRS scrutiny to millions of casual online sellers.

The new requirement, part of the US bailout passed last year, means ordinary people who sell items they previously owned through third-party platforms, such as eBay, will have their sales reported to the IRS. , even if they do not generate taxable income.

Previously, sellers only received an IRS 1099-K tax form if they made total payments of $20,000, with 200 total transactions. In 2022, the minimum payout drops to just $600 and there is no minimum transaction requirement.

So while billionaires pay little or no income tax, average Americans will have their sales reported to the IRS even when they don’t owe taxes, because nearly all sales of used goods or used are not taxable.

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If they sell something for less than what they paid, they won’t be liable for taxes, but they will still be reported to the IRS and may have to prove the original purchase price, which which will likely lead to confusion and overstatement. taxable income if revenue is lost.

I have seen firsthand the role of online marketplaces and the e-commerce economy in improving people’s lives. Twenty years ago, I started selling items from my father’s collection of old music records online when he ran the independent label Rosina Records in San Marcos.

While I was eventually able to turn selling online into a full-time business, I started because I was trying to make ends meet.

With the pandemic surging, the additional tax burdens imposed on middle- and low-income Americans couldn’t come at a worse time. Selling old records, used clothes or children’s toys online to pay bills and necessities like food and medicine shouldn’t trigger tax problems. Selling online is a lifeline for many people, and the government should recognize when an individual is merely an occasional seller versus someone using these platforms as a business.

Rhea Kimbell

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If Congress is looking for revenue, it won’t find it on the backs of casual salesmen. Tax avoidance by the wealthiest 1% of Americans has been estimated at $163 billion a year, nearly one-third of the total of all unpaid taxes. And millionaires and billionaires can afford a small army of lawyers and accountants to protect their tax liability, but average people will have to deal with confusing new regulations paying tax experts to help them.

Congress must address this change, which disproportionately affects those who can least afford it and took effect Jan. 1. Congress should address revenue shortfalls by cracking down on the super-rich who aren’t paying their fair share — not casual online sellers.

Rhea Kimbell is a New Braunfels resident who runs the Rhea Music and More store on eBay. She is also co-owner of the Rosina Record label in San Marcos.

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