Back in 2008, I reported that eBay and PayPal would have to start sending 1099s out to sellers who use those sites.
In the original bill, it was proposed that credit card processors would be required to file Form 1099 (there will be a new 1099-K just for credit card merchants) for each seller that has at least $10,000 in gross sales and 200 transactions. Since then the numbers have changed to at least $20,000 in gross sales and 200 transactions, so less people will be affected by this new rule.
This rule is not limited to just eBay and PayPal. All credit card merchants – including Amazon, eBay, PayPal, etc. – must start complying with the new rule beginning in 2011.
Given the amount of revenue and the number of transactions, this new rule won’t affect very many people. But if you do meet the income and transaction requirements, don’t panic. As long as you are reporting your income on your tax return, there’s no reason to worry about the new 1099 rules