1099-K Reporting Requirements (effective January 1, 2022)
UPDATE: On November 21, 2023, the Internal Revenue Service announced a delay for the implementation of the $600 gross sales 1099-K reporting threshold for online marketplaces, which was set to take effect for the 2023 tax year (2024 tax filing season). Therefore, for the 2023 tax year the IRS requires that we issue 1099-Ks for sellers with over $20,000 in completed gross sales AND over 200 transactions on any third-party marketplace. For the 2024 tax year (2025 tax filing season), the 1099-K reporting threshold has not been finalized but the IRS announced that it is planning for a $5,000 threshold to phase in implementation of the $600 gross sales 1099-K reporting law.Effective January 1, 2022
Please be sure to keep track of your unadjusted gross sales during the course of the calendar year. IRS regulations require all businesses that process payments to file a 1099-K form for all sellers with $600 or more in gross sales in a calendar year. This is the total amount we process on your behalf.
If you meet this threshold, we'll file a 1099-K with the IRS and applicable state taxing authorities. Mercari will provide you with a copy for your records no later than January 31 following the reportable calendar year.
1. Are payments calculated based on net or gross payments?
Payments are calculated based on unadjusted gross payments. Unadjusted gross payments means the total item price, buyer paid shipping fees, applicable sales tax, and any applicable merchant fees. These amounts are unadjusted for fees, deductions or refunds, etc.
2. Why are shipping fees included in my unadjusted gross payment amount?
Unadjusted gross payments means the total completed transaction amounts processed for the seller, including unadjusted item price and buyer paid shipping fees. For seller paid shipping fees and Mercari fees, such amounts are already included in the item price and reported as such.
3. Does the unadjusted gross payments amount change if the transaction is cancelled?
Under IRS reporting, transactions that are cancelled are not included in the seller’s unadjusted gross payment amounts. Once a transaction has completed, then the amounts become a reportable payment transaction under IRS reporting rules. However, please seek advice from a tax professional to understand the appropriate adjustments to gross payments when preparing your tax return.
4. What if I don’t submit my W-9 information?
If you don't submit your substitute W-9 form when requested, your account and selling experience may be restricted. Specifically, you will not be able to sell beyond the gross sales threshold for 1099-K reporting. If you encounter account limitations due to missing W-9 information, you can provide your information at any time to resolve related restrictions.
5. Will I receive a Form 1099-K for my account?
For each calendar year, if you have met or exceeded the gross sales threshold for 1099-K reporting, a Form 1099-K will be filed with the IRS and applicable state taxing authorities and provided to you based on your delivery election (mail or electronic form). If you do not meet both of these requirements, you will not receive a Form 1099-K. If a 1099-K is not issued, it is still your responsibility to review and potentially report your selling activities during the tax year in question. Please consult your tax advisor or accountant to ensure that your selling activities and reporting obligations are considered at tax time.
6. 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 on your W-9 form. If you consented to electronic delivery, Mercari will send you an email notification to access a PDF of your 1099-K that you can easily download and save on your computer. For more information regarding Form 1099-K filing instructions, please refer to this IRS FAQ.
7. Are there instructions on what I should do with my 1099-K for my tax return?
If you meet the gross payments reporting threshold and receive a 1099-K form, you should keep a copy of the 1099-K form with your tax records. This Form 1099-K should be considered at tax time as you may need this information for tax reporting purposes. We recommend that if you have questions about any tax reporting requirements, you should consult with your tax advisor, accountant or visit IRS.gov. Mercari is not able to provide legal or tax advice. We recommend that you provide your detailed Gross Sales Report and your Form 1099-K to your tax advisor or accountant in preparation of filing your taxes.
8. How do I find my final unadjusted gross payments for a specific year?
You can retrieve your sales history on Mercari.com from the Seller Dashboard > Sales Report and filter by the applicable calendar year. The unadjusted gross sales will be the combination of the item price, buyer paid shipping, applicable sales tax paid, and any applicable merchant fees. For more information on accessing your Gross Sales Report please visit Mercari Help Center Article here.
9. Can Mercari help me with my tax return?
While we’re committed to helping Sellers understand these associated tax regulations and requirements, we are unable to provide legal or tax guidance. Please contact a tax professional if you have any questions or concerns regarding any tax filing or regulations.
10. How do I update my tax information?
If you would like to change any information provided on the W-9 form, you can do so by going to your Mercari account and updating your info in the Tax Center. You have until January 7 annually to update your W-9 information in the Tax Center for the preceding calendar year. If you are unable to access the Tax Center, please contact us for assistance.
11. How does Mercari protect my personal information?
Pursuant to our Terms of Service, all information, including your tax identification number, will be kept secure in accordance with our privacy policy and security standards. This includes the secure storage and transmission of private information such as your social security number or other taxpayer identification number. Please see our Privacy Policy.