Let’s face it, times are tough for many Nevadans — unemployment is still high, gas isapproaching $5 a gallon, and inflation is driving up prices. So, it’s not surprising that people are clearing out their garages and closets, hoping to sell an old bike or handbag on one of the many online marketplaces. They might be a student who needs to pay for books or someone unemployed who is behind on rent. Or they might be a single mom like I was when I started selling online. Selling preowned items online is an easy and convenient way for millions of Americans to earn extra cash. At least it was easy until Congress reduced the tax reporting threshold of goods sold online. That might not sound like a big deal, but for the casual online seller, things are about to get more complicated. The reporting threshold for the sale of goods or services used to be $20,000 and 200 transactions per year. If a seller reached that threshold, then the IRS must be notified, and a 1099-K form filed. Last year, Congress passed the American Rescue Plan Act which had a provision lowering the reporting threshold to just $600 annually. This means that the casual seller who sells online every few months will now have their sales reported to the IRS. However, if the items were sold for less than what the seller originally paid for them, then that’s considered non-taxable income. So why report sales to the IRS that the seller isn’t even liable for in the first place? And unfortunately, the IRS doesn’t just take the seller’s word on what they originally paid for the item sold; the seller must provide proof of purchase. As most people don’t hang on to receipts for something they bought years ago, there is bound to be confusion plus overreporting of income that may not even be taxable. Just the thought of having to deal with the IRS — and turn in sensitive personal information —over selling a couple of hundred dollars’ worth of stuff will certainly deter potential sellers who must then find some other way to earn the money they need. I know how it feels to be in that situation. In 2004, I was a single mom working towards my college degree and I needed some extra spending money. I’ve always been a motorcycle enthusiast, so I started selling motorcycle parts online to help pay the bills. For me, selling motorcycle parts grew over time into a successful small automotive parts business. As a business owner, I keep diligent records and know how difficult filing taxes can be. Life would have turned out far different for me had this low reporting threshold been in place years ago. Dealing with the IRS and trying to find old receipts would have made me think twice about selling online in the first place. I know what it’s like to have to try to make ends meet, and everyone should be able to turn to selling online when they need to without worrying about the IRS coming after them. The $600 reporting threshold — if kept in place — takes that opportunity away from people who need it most. Congress should raise the reporting threshold to a more reasonable amount, giving Nevadans back the opportunity to earn much-needed extra cash — minus the confusion. Tanya Jun, from Carson City, is an active member of the reseller community.
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