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What are the US tax reporting requirements for 2023?

This article contains information about tax reporting for sales made in 2023. Please see this article for 2022 tax reporting requirements.

Quick answer

As of January 1, 2023, marketplaces like Reverb are required by law to report a seller’s sales if they sell $600 or more on the platform in a calendar year. This means that if you hit the $600 sales threshold in 2023, you’ll need to provide tax identification information so that we can issue you a Form 1099-K.

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Here’s what you need to know

  • If you hit $600 in sales on Reverb in 2023, we’ll reach out to collect your tax identification information. You have the option to add this information to your account here at any point prior to hitting the threshold, but you will be required to provide it once you reach $600 or more in sales.
  • This information is needed to issue you a Form 1099-K and will help you file your taxes for sales made in 2023. If you hit the threshold and don’t provide this information, your payouts may be temporarily put on hold until you enter your tax information.
  • After you’ve provided your tax information, we’ll reach out with any next steps.

Reporting your sales doesn’t necessarily mean you’ll pay income tax

Receiving a 1099-K doesn’t necessarily mean you’ll pay income tax on your Reverb sales. For example, say a Reverber bought a guitar for $1,600 in 2019 and sold it for $1,000 in 2023. Reverb would still have to report the $1,000 payment on a 1099-K, but the seller would have no taxable income to report since the resale amount was less than the original purchase price. However, everyone’s situation is different. If you have questions about your taxable income, it’s best to work with a tax professional.

How we’re advocating for change in this law

This $600 tax reporting threshold was originally meant to go into effect on January 1, 2022, but in December 2022, the IRS announced a one-year delay of the new threshold. This means that for the 2022 tax year, you’ll only receive a Form 1099-K if you (1) exceeded the previous threshold of $20,000 in sales and 200 transactions or (2) live in a state with a lower reporting threshold.

This delay was the result of advocacy by Reverb and other leading online marketplaces, who launched  The Coalition for 1099-K Fairness to encourage Congress to raise the $600 reporting threshold. More than a thousand Reverb sellers shared their stories about the benefits of reselling used gear on Reverb—and those stories helped policymakers see how this reporting threshold disproportionately burdens casual sellers.

While the $600 reporting threshold is currently in effect for 2023 sales, we’re hopeful that this delay is the first step toward a permanent solution. We’ll continue to advocate on behalf of the Reverb community and keep you updated along the way.

FAQs and additional resources

While we can’t give you specific advice, we have compiled FAQs and additional info below to help you make sense of these reporting requirements. You can also reference the IRS website for the most up-to-date information.

When does the $600 reporting threshold go into effect?

This $600 reporting threshold applies to sales made on or after January 1, 2023. If you sell $600 or more on the platform in 2023, we’ll request your tax info so that we can issue you a Form 1099-K in 2024.

Visit this Help Center article for info about tax reporting for 2022 sales.

What do I do if I hit the $600 sales threshold?

If you hit $600 in sales on Reverb in 2023, we’ll reach out to collect your tax identification information. You have the option to add this information to your account here at any point prior to hitting the threshold, but you will be required to provide it once you reach $600 or more in sales. If you hit the threshold and don’t provide this information, your payouts may be temporarily put on hold until you enter your tax information.

What happens if I don’t provide my tax information to Reverb?

If you hit the threshold in 2023 and don’t provide this information, your payouts may be temporarily put on hold until you enter your tax information.

What is a Form 1099-K?

A Form 1099-K reports payments you’ve received through a third party to the IRS. Since Reverb processes payments for US sellers through Reverb Payments, we’re required by law to send out a 1099-K tax form to sellers who meet federal or state thresholds.

The Form 1099-K from Reverb reports the unadjusted gross sales you received through Reverb Payments during the last calendar year. Unadjusted gross sales includes:

  • Sales
  • Shipping
  • Refunds
  • Selling fees
  • Bump fees
  • Credit card fees

Note that there may be other fees in addition to those listed above in Reverb’s 1099-K calculations. Reverb’s 1099-K amount excludes Marketplace Facilitator Taxes remitted by Reverb on behalf of sellers. Reverb fees and any refunded orders do not reduce your total sales for the year.

Note that you only pay taxes on your taxable income. Each Reverber will have to look at all their transactions both on and off platform in a given year to determine their taxable income, and should consult a tax advisor with any questions. Visit the IRS website for more info on understanding your form 1099-K and instructions for Form 1099-K.

Why do I need to provide tax information to Reverb if I hit the $600 threshold?

This is a requirement by US law, introduced in the American Rescue Plan Act of 2021.

Will I have to pay taxes on my Reverb sales?

Receiving a 1099-K doesn’t necessarily mean you’ll pay income tax on your Reverb sales. For example, say a Reverber bought a guitar for $1,600 in 2019 and sold it for $1,000 in 2023. Reverb would still have to report the $1,000 payment on a 1099-K, but the seller would have no taxable income to report since the resale amount was less than the original purchase price.

However, everyone’s situation is different. If you have questions about your taxable income, it’s best to work with a tax professional.

If I’m not a US-based seller, does this apply to me?

If you’re not a US seller, you won’t receive a 1099-K from Reverb. If you aren’t located in the US but you are paid in USD, we will need a Form W-8 BEN on file to remove you from the 1099-K obligation. Reach out to 1099taxreporting@reverb.com for more information.

Is this $600 sales threshold specific to Reverb?

No, this is the sales reporting threshold for all third-party marketplaces.

Does this $600 threshold apply to both new and used gear sold on Reverb?

Yes, a seller has hit the $600 threshold when they have sold $600 or more on Reverb, including both new and used gear.

What if I sell something and then issue a refund?

Refunded orders do not reduce your total sales for the year.

How can I keep track of what I’ve paid for gear on Reverb?

You can view your past Reverb purchases in your buyer dashboard. Adding gear you’ve purchased to your Collection is another great way to keep track of what you own—including how much you originally paid—even when your gear was not purchased on Reverb.

What type of information will I need to provide to Reverb?

If you reach $600 in sales on Reverb in 2023, you’ll need to provide tax information—like your Employer Identification Number (EIN), Individual Tax ID Number (ITIN), or Social Security Number (SSN)—if you haven’t provided it to us already.

What’s the difference between providing a Social Security number or an employer identification number?

If you’re a sole proprietor—meaning you did not make a sale through a business entity that is a corporation, partnership, or limited liability company—you will use your Social Security number for tax filing and reporting. Otherwise, you need a federal employer identification number (EIN) to pay taxes as a business. You can apply for an EIN from the IRS.

What happens after I provide my tax information on Reverb.

If you’re eligible to receive a Form 1099-K for the 2023 tax year, you’ll be able to download it from the Tax ID page of your Reverb account by the end of January 2024.

We’ll email you once your form is ready.

To download your Form 1099-K:
  1. Sign in on Reverb.com and go to Shop Settings.
  2. Go to the Tax ID tab.
  3. Scroll to Step 2, Request Form 1099-K.
  4. Select Download 1099-K. Your e-form will download as a PDF file. Don’t leave the page until the download is complete.

Is my information secure?

Reverb uses industry standard security and encryption technologies to ensure your personal information stays secure and private. Specifically, Reverb uses a widely adopted security protocol called Transport Layer Security (TLS) and encrypts sensitive info using Advanced Encryption Standard (AES)-256.

Will I need to update my tax information each year?

No, once you submit your information and it’s verified by the IRS, you will not need to submit your information again. The only time you’ll need to update it is if your personal information, such as your address, changes. To change your information, head to the Tax ID page in your Reverb account.

What if I have more than one Reverb shop?

Each shop, even if it is under the same Taxpayer Identification Number (TIN) —be it social security number or Employer Identification Number (EIN)— is issued an individual 1099-K for their shop’s activity. We’re unable to combine shop activity at this time.

What if I have additional questions?

If you have questions about Reverb’s policies, you can view our updated Terms of Use and Payment Terms. If you have additional questions, we recommend consulting a tax professional.

We’ve also compiled a few additional resources you might find useful:

Tax laws change frequently, and the information above is not tax or legal advice. You're responsible for any use of this information. Please consult a tax professional if you have any questions.
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