Many of my favorite artists and content creators cannot be found on the shelves of Barnes & Noble, or within the hydra warehouses of Big Box stores. But I try to support them as individuals through monetization platforms such as Etsy, Kickstarter, Patreon, Society6, and YouTube. These platforms are far from perfect, but that is not my main point today: I’m worried about the 2023 tax season, and how it’s going to negatively affect the US-based creators that I love.
The purpose of IRS form 1099-K is to tax individuals for the money they earn based on goods/services that are filtered through a third-party payment network. For example, if someone sells a sculpture on Etsy and the payment of that sale is processed via Paypal. Previously, mandatory reporting of such sales was only required for those earning over $20,000 through at least 200 unique transactions. This rule makes some sense to me – many people earn a hefty living through such transactions on platforms like Airbnb.
However, as of March 11, 2021, reporting such transactions for tax purposes has been lowered to a mere $600 per year, and the threshold of transactions lowered from 200 to 1. One! This legislation, passed in Section 9674 of the American Rescue Plan, confuses me beyond belief. It’s so ridiculous that it makes me question my own reading comprehension. Why, in the middle of a pandemic that has forced millions into economic insecurity, would the government punch down this way?
The creation of art already costs plenty in labor, love, and time. But it also costs in materials and fees. For example, Etsy charges sellers a flat 6.5% fee for every transaction, a 20-cent fee for listing any item that is then re-charged every time it sells, and a whopping 12-15% fee for transactions that the almighty-algorithm determines to have been made as a result of on- or off-site advertising efforts. This fee chain doesn’t even address the monetary loss associated with returns/complaints due to supply-chain issues beyond creator control, or VAT on overseas shipping, or high consumer expectations that shipping be fast/free. The struggle of the artist is real.
Another concern I have with this newly altered legislation is privacy. For instance, content creators on Onlyfans are self-employed contractors in the eyes of the IRS. But the internet can be a dangerous place, and a creator having their social security number confirmed to their account may place them in undue risk of social or financial repercussion. No commercial website is too big or small to be hacked and exploited.
I hope these tax changes become common knowledge for people who engage with and support individual content creators in the United States. There is no science to the price of art – but for many the cost of doing business has just risen. Thankfully, April 2023 is an entire year away, and opposition to the change is gaining traction.