Starting on January 1, many U.S.-based businesses and individuals who sell products on third party Websites are going to need to file a new form with the Internal Revenue Service (IRS).
Sellers on sites like Ebay, Half.com and Etsy who earn more than $20,000 or process more than 200 transactions per year will need to file the 1099-K form with their taxes next year.
This new regulation was finalized by the IRS earlier this year in an effort to get more online retailers to report their earnings. Even though Americans are supposed to report all of their earnings to the IRS, it’s not uncommon for those selling products online to keep their earnings under the radar.
Third party merchant sites are going to be asking their users to provide their Taxpayer Identification Numbers (TIN) or Social Security numbers. Some, like Ebay and its subsidaries, will be generating 1099-K forms for their users to make filing easier.
In an email sent to customers today, Ebay’s Half.com warned:
If you don’t provide us with your TIN/SSN before you meet the thresholds, payments to your account could be frozen, we may be required to withhold taxes from your payments, your listings could be removed, and your ability to sell on Half.com could be suspended, in addition to other consequences.
Sellers who wish to avoid giving out the TIN or SSN can apply for a Employer ID Number (EIN) on IRS.gov.
