In more than 20 years running my business on eBay, I’ve witnessed firsthand how Americans across the country have benefitted from reselling new and used goods online.
Platforms like eBay have enabled sellers and buyers to seamlessly interact, facilitating transactions and providing a way for people to find what they need at an affordable price. It is a system that has proven to be mutually beneficial for everyone who participates. But, in predictable big-government fashion, Washington has decided to take aim at the recommerce market by enacting a major change to the tax reporting threshold for sales through online platforms.
Prior to this year, the IRS only required online sellers to report sales more than $20,000 or 200 transactions. Above that level, it’s clear the seller is not just occasionally using an online marketplace to give their used goods a new home and pocket some extra cash but is more likely to be running a business. But starting next year, that sales requirement drops to only $600 with no transaction limit.
This change casts a wide net that ensnares even the occasional online seller who will now have their sales reported to the IRS, even if they are not generating taxable income. For example, if an individual sells a pair of skis originally bought for $1,000 for $700 online, they are now going to have to figure out another confusing tax form. As there is no taxable income when a good is sold for less than it was originally purchased for, why would the IRS need this information?
As a longtime member of the eBay community, I know the number of casual sellers this requirement will hurt. With only a few hundred dollars in sales, there is now added government scrutiny on well-meaning folks who are re-selling old toys, books or other items they no longer need.
This also means that once you hit $600 in sales, the IRS will require platforms to collect full Social Security numbers to process those tax forms. Given the amount of personal information the government is already collecting, this new requirement should ring alarm bells for the millions of casual online sellers who care about their privacy.
I am a business owner who pays my fair share in taxes. I also know the online reseller community is paying their fair share of taxes, regardless of where they reside. The last thing they need is another confusing tax form.
Lawmakers in Washington are often seen as out of touch with the average American and this tax change cements that point of view. It is troublesome that people clearing out their garage to make some extra money are a target of the IRS while the top one-percent is evading $163 billion worth of taxes. This new law will cause undue confusion and added expense as many small sellers will have to hire a tax consultant to ensure that they are complying with the new regulations.
I know many small sellers who are frustrated by the changes that will go into effect in 2022, and I feel a responsibility to speak up. These are hard-working Americans who are simply selling previously owned clothes, shoes and other everyday goods to pocket a little extra cash for bills, medicine and holiday gifts for their loved ones. Online selling is a lifeline for millions of people in this country who are struggling through difficult times.
In this case, the federal government has extended its reach far beyond what is appropriate and prudent. I am deeply disturbed by the idea that Washington will spend taxpayer dollars coming after individuals who may not even be aware of the new law, and probably don’t even owe any new taxes. There are far more pressing issues that the government should be directing its resources towards these days.
With the pandemic resurging and millions of Americans dealing with economic insecurity in their own way, Washington should rethink this blatant overreach and increase the tax reporting threshold for online sales.
Mac Griffiths is an online seller based in South Jordan with more than 20 years of experience in the recommerce industry.