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eBay Announces Mandatory Collection of Social Security Numbers for These Sellers

·2 min read

eBay announced on Dec. 20 that the online marketplace will be required to collect Social Security numbers — or Individual Tax Identification numbers — from all sellers who sell product (over the course of the year) worth more than $600.

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Effective Jan. 1, 2022, eBay sellers will receive a 1099-K if they sell at least $600 of goods through the e-commerce platform in 2022, with no minimum transaction level. This is down from the current income threshold to be issued a 1099-K by eBay, which stood at $20,000 in annual sales with a minimum of 200 transactions. This may impact the 2022 tax return filed in 2023.

Once the $600 threshold in annual sales is reached, eBay will require sellers to provide their full 9-digit Social Security number or Individual Tax Identification Number before they can continue to sell on the platform. Failure to provide this information will result in payouts being put on hold and the ability to list on the platform may be restricted. eBay may also deduct backup withholding from future payouts.

This change comes after President Biden signed the American Rescue Plan Act of 2021 back in March. This new tax reporting law is part of IRS efforts to streamline 1099 reporting and tax compliance.

However, not every transaction will be taxable. In most cases, a taxable event will not occur if an item is sold for less than what the seller originally paid. For example, if you bought an item for $500 the previous year and then sold it online for $250, it’s unlikely that you will be subject to income tax. Nonetheless, it is wise to keep receipts for anything purchased which you may later consider selling on eBay.

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eBay encourages sellers to talk to a tax professional to determine whether they have taxable income, and to determine how to report amounts listed on their 1099-K. Not properly reporting earned income could cause your return to understate your tax liability. In this case, the IRS may impose a penalty equal to 20% of your underpayment, according to TurboTax.

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This article originally appeared on GOBankingRates.com: eBay Announces Mandatory Collection of Social Security Numbers for These Sellers