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Originally Posted by Stupe the Second Sacker
Interesting...Does the Gov't define the big fish as those that make more than $600 but less than $20K? In theory anyway, wouldn't the same big fish be caught at the $20K threshold? At face value, it doesn't feel like those are the people they are going after.
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Great question, to which I have no perfect answer. In theory, you would think that even at a $20,000 threshold they would get all the "big fish" as I termed them, but then you're forgetting the other threshold factor under the old rules. You also had to have 200 or more transactions. That means someone could sell a T206 Wagner, a PSA7 '52 Topps Mantle card, and a PSA10 1986-87 Fleer Jordan rookie card on Ebay for well over $1 million total, but if those are the only three cards they sold on Ebay all that year, using Paypal, they shouldn't get a 1099-K because they didn't meet the 200 transactions threshold. Meanwhile, some guy cleaning out his garage found 200 different items he could (and did) sell for $100 each, does get his sales reported on a 1099-K for that year. So who would you say qualifies as a "big fish" in my example now? See the issue?
In my opinion, the law fixed the new 1099-K reporting threshold at simply $600 as that was already the long established reporting threshold for having to give 1099-MISC or 1099-NEC forms to certain individuals/entities (and the IRS) for work, services, or other things they provided and/or performed. Probably politically easier to defend, most everyone else has a $600 reporting threshold for getting a 1099, why shouldn't you? And because a lot of people performing work or providing services to others get paid nowadays via Paypal, Zelle, Venmo, etc., as opposed to just by cash or check, it makes sense to impose the same $600 threshold across the board. Unfortunately, these payments platforms are used for GOODS and services payments, so selling items on Ebay gets caught in the same net as say using Paypal to pay for the guy who mows your lawn and plows your driveway.
Technology like using these online payment services is great for the users. It is also great for the businesses, individuals, and governments that want to track and keep better tabs on what those users are doing, unfortunately.