1099-K Threshold: USD 20,000 and 200 Transactions Again: Is Your Marketplace Ready?

Amazon issues 1099-Ks directly to third-party sellers. As a marketplace facilitator, Amazon also collects and remits sales tax on behalf of sellers in 45 states + DC, so individual sellers are relieved of sales tax collection obligations in those states. Sellers should still track their own physical nexus.

Etsy issues 1099-Ks at the USD 20,000 / 200-transaction threshold restored by OBBBA. Also issues state-specific forms (including Massachusetts, Vermont, and Virginia) where additional state reporting is required. Etsy collects and remits sales tax as a marketplace facilitator in states with MFL laws.

eBay issues 1099-Ks at the USD 20,000 / 200-transaction threshold. However, eBay does NOT collect and remit sales tax in every state; sellers must verify their obligations state by state. In states where eBay does act as a marketplace facilitator, sellers are relieved; in others, the seller retains the collection obligation.

Business and goods-and-services payments only. Personal transfers (friends and family) are excluded from 1099-K reporting. PayPal issues a single 1099-K covering all eligible Venmo and PayPal commercial transactions. This was the center of the 2022 public controversy when a USD 600 rule was first announced and many sellers feared personal transfers would be reported. That rule never took full effect, and OBBBA restored the USD 20,000/200-transaction threshold in 2025.

Who issues the 1099-K depends on your Stripe Connect account type. Standard or Express accounts: Stripe is the merchant of record and issues the 1099-K directly to connected accounts. Custom accounts: your platform is the payment settlement entity (PSE) and must issue the 1099-K yourself. Verify your configuration in Stripe Dashboard → Tax forms → Account setup before year-end.

Shopify Payments issues 1099-Ks only for merchants who use Shopify Payments as their payment processor. If a merchant uses a third-party processor (Stripe, PayPal, etc.), that processor issues the 1099-K, not Shopify. Shopify does not issue 1099-Ks for merchants using external payment gateways.

Always triggered regardless of sales volume or transaction count. Even a single remote employee working from a state can create nexus for that state. Storing inventory in a fulfillment center (e.g., Amazon FBA) in a state also creates physical nexus. This rule never went away after Wayfair.

45 states + DC have enacted economic nexus laws following Wayfair. Triggered by sales volume alone, with no physical presence required. Most states use USD 100,000 in annual sales or 200 transactions as the threshold, but some states differ (e.g., California uses USD 500,000). Sellers must track this across all states where they make sales.

In states with marketplace facilitator laws, the platform (not the individual seller) must collect and remit sales tax on all facilitated sales. Third-party sellers are relieved of the collection obligation in those states. The 5 states without MFL laws also have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

Largely superseded by economic nexus laws following Wayfair, but still independently triggers nexus in some states for referral programs and affiliate marketing arrangements. If your marketplace operates an affiliate or referral program, review whether any participating affiliates are located in click-through nexus states.

Do I need to issue 1099-Ks to all my sellers in 2025?

Only if you are a payment settlement entity (PSE) or third-party settlement organization (TPSO) and a seller receives USD 20,000 or more in gross payments AND has more than 200 transactions through your platform during the 2025 tax year. That is the threshold Congress restored via the One Big Beautiful Bill Act, retroactive to 2022 per the IRS. Note that this is based on gross payments, not net, which means platform fees paid to you do not reduce the amount reported on the seller's 1099-K.

My marketplace uses Stripe Connect. Who sends the 1099-K: me or Stripe?

It depends on your Connect account configuration. If you use Standard or Express accounts where Stripe is the merchant of record, Stripe issues the 1099-K directly to your connected accounts, and you do not issue it. If you use Custom accounts where your platform is the PSE, you are responsible for issuing the 1099-K to each seller. Verify your configuration in Stripe Dashboard under Tax forms → Account setup. Getting this wrong can result in duplicate filings (if both Stripe and you file) or missed filings (if each party assumes the other is filing). Both create IRS correspondence.

What is the difference between a marketplace facilitator and a marketplace seller for sales tax?

A marketplace facilitator is the platform itself: the entity (Amazon, Etsy, your SaaS app) that facilitates the transaction between buyers and third-party sellers. In 45 states + DC, the marketplace facilitator must collect and remit sales tax on all facilitated sales, including those made by third-party sellers. The individual seller is then relieved of the sales tax collection obligation in those states, meaning they generally do not need to register for sales tax in MFL states where the platform already collects. However, sellers must still track their own economic nexus thresholds in the 5 non-MFL states and for any direct (non-marketplace) sales.

We operate a B2B marketplace. Do marketplace facilitator laws apply to us?

Most state MFL statutes apply to all marketplace sales (B2B and B2C) without distinguishing the buyer type. However, many states provide exemptions for sales to registered businesses that furnish valid exemption documentation (e.g., a state resale exemption form or direct-pay permit). You are still required to collect exemption documents from each B2B buyer, validate them, and document the exemption. Failure to maintain valid exemption documents leaves your platform liable for the uncollected tax. Marketplace Shield automates exemption document collection and tracks when those documents are about to expire.

How would Marketplace Shield track the 1099-K threshold in real time?

Marketplace Shield is designed to connect to your Stripe, Shopify, or PayPal data and monitor cumulative gross payment volume and transaction count per seller throughout the calendar year. When a seller approaches the USD 20,000 / 200-transaction threshold, it would flag the account and initiate an automated W-9 collection flow before year-end. It is not on sale yet.