Next year’s tax season may be more complicated for the smallest businesses that use apps like PayPal and Venmo or online marketplaces like eBay and Etsy
If your business uses a Third-Party Settlement Organization (TPSO), such as PayPal, Venmo, Cash App, or online marketplaces like Etsy and eBay, tax compliance may become more difficult next year. Last year’s American Rescue Plan Act (ARPA) law now requires TPSOs to issue a 1099-K form for goods and service transactions totaling $600 or more in annual gross sales, reporting millions of very minor transactions to the IRS. Prior to ARPA becoming law, this threshold was much higher – $20,000 in goods and service transactions and more than 200 transactions in a calendar year.
In early March, NFIB sent letters of support to the U.S. Senate and House of Representatives supporting S. 3546/H.R. 6913, the Stop the Nosy Obsession with Online Payments Act (SNOOP Act) and H.R. 3425, the Saving Gig Economy Taxpayers Act.
“Small businesses have long reported tax-related issues as some of their top business problems,” NFIB Vice President of Federal Government Relations Kevin Kuhlman said. “This provision could subject small business owners to receive a 1099-K for transactions where they have no tax liability and will only further complicate their tax administrative burden.”
Small business owners reported in the latest NFIB Problems and Priorities survey that tax-related issues continue to be a significant problem with four out of the top 10 business concerns being tax-related. Many transactions conducted on TPSOs are non-taxable. Reconciling taxable and non-taxable transactions will likely be nearly impossible for small business owners and the IRS, further complicating the small business tax burden.
Please urge your Senators and Representative to support the Stop the Nosy Obsession with Online Payments Act (SNOOP Act) and the Saving the Gig Economy Taxpayers Act. These bills would repeal the provision in the ARPA requiring TPSOs to issue a 1099-K form for transactions totaling $600 or more in annual gross sales.
