We’re asking Congress to fix the W-9 issue by significantly raising the sales threshold, making the Mercari marketplace more accessible to all. Here’s how you can get your voice heard.
UPDATE November 2023: IRS announces 2023 Form 1099-K reporting threshold delay for third party platform payments
At the start of this year, we updated you about a change to W-9 requirements now requiring all marketplaces, including Mercari, to obtain a W-9 from anyone prior to making $600 or more in gross sales within one year. We know this adds complexity for you as Mercari sellers, and we’re working to enact change. Here, we’ll inform you about new proposals we’re supporting that, if enacted, would significantly increase the $600 threshold. That would mean less disruption in the buying and selling process, less paperwork for you, and ultimately a more accessible marketplace for everyone.
Here’s what we’re doing to improve things and how you can weigh in to make a difference.
What exactly is the current policy and how did we get here?
In March 2021, the American Rescue Plan of 2021 was signed into law. This is a federal law that applies to all U.S. businesses and, among other things, requires online marketplaces like Mercari to obtain W-9 forms from customers at significantly lower thresholds, and then submit IRS 1099-K reports. This changed our tax reporting obligations on customers’ sales from $20,000 and 200 transactions per year to only $600 per year.
Importantly, the law did not raise or change the amount of taxes that anyone might actually owe on their online sales, it just dramatically increased the amount of information we have to collect and then report back to our users and the government. That means a lot more complexity for you.
It also raises everyone’s risk of overreported income, which makes for an unfair tax burden.
Everyone should pay what they owe in taxes; this policy by itself doesn’t change anyone’s tax obligation. For example: if you bought a $1,000 laptop last year and sold it this year for $700, you obviously didn’t make a profit that would be considered taxable income, but because your sale was more than $600, this new law requires us to send you a 1099-K form, which means you need to explain it to the IRS. A threshold as low as $600 will cause millions of people to complete W-9 forms and receive 1099-K tax forms for the first time next year, and without expensive tax advice or clear understanding of the process, many could end up paying more than they owe.
We have a simple message for Congress: Raise the online sales reporting threshold.
As we’ve been rolling out these changes, we’ve also been communicating back to elected officials and other lawmakers along with The Coalition for 1099-K Fairness about how this new policy is impacting our sellers. Thanks to these productive conversations, there are now multiple proposals in Congress to either reverse the policy entirely and revert to the $20,000/200 transaction level, or at a minimum, raise the threshold to a more reasonable $5,000 in gross sales per year. Either would go a long way to reducing the significant burden on most of you as sellers, and we’re working every day to encourage Congress to make a change this year.
Your voice can have an important direct impact, too. Here’s how.
Call your member of Congress at (202) 224-3121 and tell them to fix Section 9674 of the American Rescue Plan Act of 2021 to raise the 1099-K online sales reporting threshold. You can also use your zip code to find email addresses for your local Congressperson here or Senator here.
Team Mercari
