The IRS will crack down on revenue generated by third-party sellers on eBay, Amazon and other sites

NOVATO, California (KGO) — If you’re one of the nearly 4 million people who sell on eBay, Amazon, or Etsy, the IRS is watching you. The “honor system” will soon become a dinosaur in the IRS. Starting this year, the IRS will no longer allow third-party sellers to self-report their earnings.

For years, sellers have been able to sell their products on third-party sites and remain largely out of the IRS’s radar.

As long as you were earning less than $20,000, you were allowed to self-report your earnings.

Enough, says Jennifer Chiow, special agent of the IRS Criminal Investigation Unit.

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“So in the future, more and more taxpayers will receive Form 1099s by mail, which these companies must submit by January 31st,” Chiou said.

This means that the IRS will most likely collect taxes on the income received.

“These companies must file Form 1099 for these individuals if their transactions are over $600,” she said.

Failure to report can be costly.

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The IRS blamed Novato’s Terry Fisher for not disclosing nearly $40,000 of Amazon sales in 2020.

The agency sent him a notice demanding $14,000 in taxes and fines.

“I was smitten. Absolutely smitten,” he said.

Terry says he has never sold anything on Amazon.

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“I didn’t do it. They say what I did. And I was stuck in the process of proving to the IRS that I never received that income,” Fisher said.

Fisher contacted Amazon and the IRS.

Amazon sent him back to the feds.

The IRS responded with another letter.

“It basically said the same thing that you still owe, and here are some pay stubs attached,” he said.

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Frustrated, he contacted 7 On Your Side. We contacted Amazon and the IRS.

Amazon denied all requests back to the IRS, which advised him to file an identity theft report.

“We will be sure to work with the civilian side to make sure there are no other potential scams or data breaches,” Chiu said.

Fisher says he was told the investigation could take a year and that he didn’t need to do anything further.

Take a look at other stories and videos by Michael Finney and 7 On Your Side.

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