eBay 1099-K Goes Electronic By Default, Will Need To Opt Back In If You Want Paper Copy Mailed
eBay has announced today that 1099-K tax forms for all sellers who meet applicable thresholds will be defaulted to electronic delivery only on October 31, 2024.
Sellers who still wish to receive a paper copy of their 1099-K in the mail will need to go back into their settings after October 31st to select both electronic and paper options - and you'll need to make that change before December 31 if you want it to apply for the 2024 tax year.
We’re changing how we deliver Form 1099-K, an IRS information return that includes the gross amount of all your reportable payments within a calendar year. On October 31, 2024, your delivery preference for Form 1099-K will automatically be switched to paperless or electronic delivery. You will receive an email confirmation notifying you of the change.
As a reminder, we are required to issue Form 1099-K to sellers who meet reportable criteria for gross payouts from eBay sales during a given calendar year. The form is issued by January 31 of the following calendar year. When it becomes available, sellers are notified via email and can easily and immediately download an electronic Form 1099-K. Only sellers who meet the gross payouts from eBay sales criteria will be issued a Form 1099-K.
After October 31, 2024, you can update your delivery preference to receive a paper Form 1099-K in addition to electronic delivery. In order to receive a paper Form 1099-K for tax year 2024, you’ll need to update your delivery preference by December 31, 2024.
It's a bit odd that eBay is only sending this announcement out now, as this change was actually included in the Payment Terms of Use update back in July, with a then stated effective date of September 23, 2024.
Liz Morton
That update added a new section to the Payment Terms of Use which said:
eBay may be required to issue information return(s) to you related to payments made to you during a calendar year, such as IRS Forms 1099.
Your acceptance of these Payments Terms of Use and continued use of our Payment Services evidence your agreement to receive any information return, such as Forms 1099-K or any other Form 1099 required to be issued to you, electronically.
You may access an electronic copy of Forms 1099 by downloading the form where it is made available to you in Seller Hub. You can choose to receive paper information returns mailed to you by opting out of paperless-only delivery. The elections will be effective for current and future years unless you change your election.
You will not receive any information returns in the mail unless you’ve opted out of electronic delivery by December 31, or we are otherwise required to send a paper copy of your information return by mail.
At the time, I raised concerns this change could make it easier for fraudsters to get away with creating eBay accounts using stolen identity information - which has been an ongoing problem on the platform.
In 2022, I verified almost 80 instances of 1099-Ks being received for over $750,000 in sales made through fraudulent accounts created using stolen identities - and I fully believe that was just a very small drop in the bucket.
Liz Morton
The victims had often never used eBay as a buyer or seller and were completely unaware an account using their name, address, and (in some cases) social security number even existed until they received a 1099-K form in the mail from eBay.
Making 1099-K delivery electronic by default means identity theft victims will no longer see that notice in January, which would at least give them a few months to notify eBay, law enforcement and the IRS try to proactively handle the situation before taxes are due in April.
Instead, these innocent victims will likely file their taxes as normal, not realizing the IRS has been provided false documents by eBay showing tens or hundreds of thousands of dollars in income associated with their tax payer information until they are audited or the IRS demands they pay additional tax, interest and penalties on fraudulent income they never actually received.
While it's understandable eBay would prefer to save money on printing and postage costs, forcing electronic delivery of 1099-Ks by default is irresponsible if there are still these types of fraud and security issues on the site.
Regular sellers who have intentionally set up shop on the site will want to review their settings after October 31st to determine if electronic delivery only will work for them - personally, I'd still be requesting a paper copy for recordkeeping purposes, just in case.
