Overview of 1099-K Regulation
IRS regulations require all businesses that process payments to file a 1099-K form for all sellers with more than 200 paid transactions and $20,000 in gross sales in a calendar year. This is the amount we processed on your behalf.
If you meet these criteria, we'll create a Form 1099-K for you.
1. Is the $20,000 calculated based on net or gross payments?
The $20,000 is calculated based on unadjusted gross payments. Unadjusted gross payments means the total item price and the total buyer shipping fees, unadjusted for fees or refunds.
2. Why are shipping fees included in my unadjusted gross payment amount?
All businesses that process payments are required to file a Form 1099-K for all sellers with more than 200 transactions and where gross payments to them exceed $20,000 USD in a calendar year. Unadjusted gross payments means the total payments processed, unadjusted item price and the buyer shipping fees. This includes cancelled orders and in-progress orders, even if the orders are later cancelled.
3. Does the unadjusted gross payments amount change if the transaction is cancelled?
Unfortunately, no. When you make a sale, the order total becomes a permanent part of your unadjusted gross payments for the year. Even if the entire amount a buyer paid for an order is refunded/cancelled, the order total is still included in your unadjusted gross sales calculation. The IRS regulations require that no adjustments to gross transaction amounts be made. The 1099-K is an informative report to the IRS, please seek advice from a tax professional to understand the appropriate adjustments when preparing your tax return.
4. I’m not going to come close to the threshold required for tax reporting, why does Mercari require my taxpayer identification information?
Per our Terms of Service, when we are required by law to do so, we may request personal information such as a tax identification number from you. This is to ensure that if you do go over the threshold, we’ll be properly prepared. Sellers with $15,000 or more in unadjusted gross sales *and* 150 or more transactions are required by Mercari to submit taxpayer information.
Please note that if you don’t reach the IRS thresholds of $20,000 or more in unadjusted gross payments and 200 or more completed transactions, Mercari will not file Form 1099-K for you. You can retrieve your sales history in the Seller Dashboard > Sales Report.
5. What happens if I don’t provide the required information?
Valid taxpayer identification information is required by US law and Mercari’s Terms of Service. We may need to limit or close your account if you don’t provide the requested information.
6. Will I receive a Form 1099-K for my account?
For each calendar year, if you have at least $20,000 in unadjusted gross payments and 200 completed transactions or more, a Form 1099-K will be provided to you.
If you do not meet both of these requirements, you will not receive a Form 1099-K.
7. When can I expect my Form 1099-K?
Mercari will make a copy of your form available on or before January 31 of the following year.
If you did not consent to electronic delivery, the form will be postmarked on or before January 31 and mailed to the address provided in your W9 form.
If you consented to electronic delivery, Mercari will send you an email with a PDF of your 1099-K that you can easily save on your computer.
For more information regarding Form 1099-K filing instructions, please visit the IRS website.
8. Are there instructions on how to use the 1099-K for my tax return?
To find out how to file Form 1099-K, how this affects your business, or if you have any other questions regarding these tax regulations, please contact your professional tax advisor.
9. Can Mercari help me with my tax return?
While we’re committed to helping Sellers understand these new tax regulation requirements, we are unable to provide tax guidance. Please contact a tax professional if you have any questions or concerns regarding tax filing or regulation.
10. I made a mistake in my W-9 form. How do I update it?
Please submit your information again by accessing the URL provided to you.
11. How does Mercari protect my personal information?
Your tax identification number will be kept secure in accordance with privacy laws and security standards. This includes the secure storage and transmission of private information such as your social security number.
12. How do I find my final unadjusted gross sales for a specific year?
You can retrieve your sales history from the Seller Dashboard > Sales Report and filter by the applicable calendar year.
Please be sure to keep track of your unadjusted gross sales during the course of the calendar year.