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What do I need to know about taxes as a Pango user?
What do I need to know about taxes as a Pango user?

Will I be charged sales tax on purchases? As a seller, how do I report my sales on my taxes?

Vanessa avatar
Written by Vanessa
Updated over a week ago

UPDATE 11/21/2023: The IRS has announced a new change and will be delaying the $600 reporting threshold for Form 1099-K until 2024. We no longer need to collect W-9 forms from sellers who earned over $600 in 2023. For more information, please see this article from irs.gov.

Based on the most recent regulatory updates from the IRS, marketplaces like Pango are now required to submit 1099-K forms for sellers who earn $600 or more on our platform in 2023. To comply with these laws, we require qualifying sellers to submit a W-9 form with their tax information so that we can create and process all necessary documentation at the beginning of the tax season.

To submit your W-9 form, please log into your account on our website and select the Tax Center tab. If your selling account requires this information, there will be a button to complete and submit the necessary information. At this time, the Tax Center tab will only be accessible via our website, not the PangoBooks app.

For more information, please read the below FAQ and feel free to contact our team with any additional questions. You can also read this document from the IRS for more information on form 1099-K.

What is a 1099-K form and what does it report?

  • A 1099-K form simply reports the total amount you have earned on Pango from January 1, 2023 through December 31, 2023. It is similar to the W-2 form you might receive from an employer but reflects your income from merchandise (i.e., book) sales. The amount reported on your Pango 1099-K will include all earnings from sales regardless of if you transferred the earnings to your bank or PayPal account.

How do I know if I’ll owe any taxes on my sales?

  • Receiving a 1099-K does not necessarily mean you will need to pay taxes on your Pango earnings. The 1099-K form we issue doesn’t calculate your profit or indicate any tax liabilities you may have—it simply gives the total gross sales processed by Pango.

    For example, say a Pango seller sells a book for $10 but they bought it for $22. While Pango would still have to report the full sale amount as earnings on the 1099-K form, the seller would have no taxable income to report since the resale amount was less than the original purchase price. If all the books you sold were at prices below your original purchase price, you may not owe any taxes on your sales at all.

    Unfortunately, the Pango team cannot legally provide any specific tax advice and everyone’s individual tax situation is different. We recommend speaking to a tax professional to find out more about your specific tax liability and situation.

Why do I need to provide my full SSN or ITIN?

  • In order to submit 1099-K forms to the IRS per legal requirements, we must collect SSNs or ITINs from sellers. To do so, we are asking sellers to complete the W-9 form, Request for Taxpayer Identification Number and Certification. Please note that this form is just a way for us to collect this information from you and is not a request to the IRS for a new SSN or ITIN. Maintaining accurate information from our sellers ensures that all accounts are in legal compliance.

How will my information be kept secure?

  • The system we use to store and process all tax information is entirely encrypted and secured to the highest standards of the payment and information security industry. At no point will anyone have direct access to any tax information you submit through our site and the entire process has been thoroughly tested and certified.

Where will I be able to access my 1099-K form?

  • Your 1099-K form will be posted on the Tax Center section of your account on the Pango website. If you need assistance logging into your account, please contact our team at support@pangobooks.com.

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

  • If you hit the threshold and don’t provide this information, your payouts and account status may be temporarily put on hold. Sellers will have through December 2023 to submit their tax information.

When are the deadlines for submitting my information?

  • We ask that all required sellers submit their tax information by the end of the year. We will submit and provide the 1099-K forms by the end of January 2024.

Why didn’t I have to do this in 2022?

  • For tax year 2022, the filing requirement for marketplace sellers was $20,000; no single Pango seller earned more than this amount. The current $600 threshold for reporting was introduced for tax year 2023, so this process is new for sellers on our platform.

Do I need to worry about sales tax as a Pango seller?

  • You may notice that on some orders, we have added a sales tax charge that buyers pay when checking out. This tax charge is added with orders shipping to states where we are required to file sales tax and is done automatically. If you are a Pango seller, there is nothing you need to do as it relates to the collection of sales tax on orders. We handle this entire process.

Does it matter if my Pango shop is my full-time job vs a hobby?

  • If your Pango shop is your full-time job, it may be considered self-employment by the IRS. If this is the case, you may owe additional taxes on your earnings. If your Pango selling is a hobby or side project, it most likely does not qualify as self-employment. If you are unsure about the above, we highly recommend seeking the advice of a tax professional. You can find more information on this topic from the IRS here.

Is the $600 threshold calculated using the full sale cost of the book, or just the 80% earnings?

  • The $600 threshold is calculated for sellers through their 80% earnings across their sales in tax year 2023.

Please note that nothing on this page should be read as specific tax advice and if you have any questions about your personal tax situation or anything else, we recommend consulting with a tax professional.

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