Autumn is liquidation season. Shelves get thinned before the holiday drops land, doubles from a summer of breaks go up for sale, and a lot of collectors quietly turn into part-time sellers between now and December 31. This year that happens under a federal reporting rule that looks exactly like it did in 2011, after four years of collectors being told a much stricter one was coming.
That reversal has produced a dangerous piece of folk wisdom: that the paperwork got easier, so the tax bill got smaller. Those are two different things, and confusing them is how a good selling year turns into an unpleasant spring.
The Threshold Moved, and Then Moved Back
The American Rescue Plan Act of 2021 dropped the Form 1099-K reporting threshold to $600 in gross payments with no minimum transaction count. Under that standard, selling one decent slabbed comic would have generated a tax form. The IRS delayed enforcement repeatedly, and collectors spent four selling seasons waiting for a rule that kept getting pushed.
It never arrived. The One Big Beautiful Bill Act, signed July 4, 2025, repealed the $600 standard outright and restored the old one: a platform issues a 1099-K only when a seller exceeds both $20,000 in gross payments and 200 transactions in a calendar year. IRS Fact Sheet 2025-08, published October 23, 2025, confirmed that the restored threshold applies retroactively to 2025 as well.
For the 2026 tax year, filed in early 2027, that is the number that governs. Most collectors clearing out a closet will not cross it. A serious breaker running weekly livestreams very well might.
What a 1099-K Actually Says, and What It Does Not
A 1099-K reports gross payments. It is the total that moved through the platform before anything came out of it.
Run the math on a real year. Suppose you sold $22,000 worth of cards across 240 transactions. The platform issues a 1099-K for $22,000. But you paid roughly $2,600 in final value fees, spent $900 on shipping labels, ate $400 in returns, and had about $16,000 into the cards in the first place. Your actual gain is a fraction of what the form reports, and the form makes no attempt to say so.
The reverse trap matters more. No form does not mean no tax. Income from selling at a profit is reportable whether or not a platform sends you anything. The threshold change altered who receives paperwork, not who owes money. A collector who nets $4,000 flipping figures this year owes tax on that gain even though $4,000 is nowhere near $20,000 and the mailbox stays empty.
Platforms that do issue forms are required to have them out by January 31.
Your State Probably Has Its Own Number
The federal change does not preempt state reporting rules, and several states never raised theirs. Sellers in those states get a 1099-K at volumes that would be invisible federally:
- Maryland, Massachusetts, Vermont, Virginia, and Washington, D.C.: $600, with no transaction minimum
- Illinois: $1,000 and four or more transactions
- New Jersey: $1,000
- Arkansas: $2,500
eBay also lists Montana, Rhode Island, and Missouri among the states with requirements below the federal standard. Two collectors with identical $3,000 selling years can end up with completely different paperwork depending on which side of a state line they live on. Check your own state's current figure rather than assuming the federal number covers you.
The 28 Percent Ceiling Nobody Mentions
Here is the part that catches people who are used to thinking about stocks. Collectibles are their own asset class in the federal tax code, and they do not get the favorable long-term capital gains rates that equities do.
Gains on collectibles held longer than one year are taxed at a maximum federal rate of 28 percent, against a 20 percent top rate for most other long-term capital assets. The word that does the work there is maximum. It is a ceiling, not a flat rate. A collector whose marginal ordinary income rate is 12 or 22 percent pays that rate, not 28. The cap only bites for higher earners.
Sell inside a year and the gain is short-term, taxed as ordinary income at rates up to 37 percent. That difference is real enough to affect timing. If you bought a case in November 2025 and it is up, the calendar between month eleven and month thirteen is worth paying attention to.
Hobby, Business, or Just Cleaning Out the Closet
Three different situations, three different outcomes, and collectors regularly assume they are in one when they are in another.
Selling personal items at a loss. You paid $180 for a figure in 2019 and sold it for $120. There is no taxable income, and there is also no deductible loss. If a 1099-K reported that sale anyway, it still has to be reconciled on the return so the reported gross does not sit there unexplained.
Hobby selling. Income is reportable. Expenses are not deductible under current law, which is the harsh part. A hobby seller reports the gain and gets no offset for fees or shipping beyond what adjusts basis and proceeds.
Business selling. Reported on Schedule C, where platform fees, shipping, supplies, storage, and mileage become deductible business expenses. The cost of admission is self-employment tax on the net profit.
The IRS decides which bucket you are in using nine factors laid out in Treasury Regulation section 1.183-2(b): profit motive, expertise, time and effort invested, history of income or losses, and several others. There is no volume number that flips the switch. Somebody who sells forty items a year with spreadsheets, a business bank account, and a pricing strategy can look more like a business than somebody who dumps 300 commons in one weekend.
The Missing Piece Is Always Cost Basis
Every platform reports what you received. None of them report what you paid. eBay is explicit that tracking cost basis is the seller's responsibility, and the same is true everywhere else.
That gap is where collectors lose money to their own recordkeeping. Without a purchase record, the conservative default treats proceeds as though basis were near zero, and you end up paying tax on money you never made.
A usable record is not complicated. For each item: what it is, when you acquired it, what you paid, what you paid in acquisition fees, what grading or authentication cost, the sale date, the sale price, platform fees, and shipping. Grading and authentication costs are generally treated as part of what you have in the item rather than as a separate deduction, which is a meaningful difference on a slab that cost more to certify than to buy.
Bulk lots need a documented allocation method. If you bought a 500-card collection for $2,000 and sold six cards out of it, decide how you are splitting that basis, write down the reasoning, and apply it consistently. Inherited and gifted items follow entirely different basis rules and are worth a conversation with a professional before you list them.
Backup Withholding: The 24 Percent Surprise
One more mechanic that surprises sellers mid-season. If a platform does not have a valid Taxpayer Identification Number on file, or the name and TIN combination does not match IRS records, the IRS requires the platform to withhold 24 percent of payments. eBay applies this and also notes additional state-level withholding in California (7 percent), Vermont (7.2 percent), and Maine (5 percent).
That money is recoverable when you file, but it comes out of your payouts now, in the middle of the busiest selling stretch of the year. The fix takes five minutes: confirm the legal name on your seller account matches the name attached to your TIN exactly.
What to Do Before December 31
- Pull the full transaction report from every platform you sold on this year, while the data is still easy to export.
- Reconcile gross proceeds against fees, shipping, and refunds now rather than in March.
- Check whether your state threshold is lower than the federal one.
- Decide deliberately whether a planned sale lands in 2026 or 2027, especially if a holding period crosses the one-year line.
- Start a basis record for anything you buy from here on, even if you have no plans to sell it.
Key Takeaways
The federal 1099-K threshold is back to $20,000 and 200 transactions, but reporting and liability are separate questions, and only one of them changed. Your state may still send you a form at $600. Collectibles gains carry a 28 percent federal ceiling rather than the 20 percent that applies to most assets, and short-term gains are worse. The single highest-value thing a collector can do is keep purchase records, because the platform will document every dollar you received and none of what you paid.
Prices, rates, and thresholds move quickly, and the figures here are estimates drawn from public reporting as of late September 2026. This is general information, not tax advice. Rules differ by state and by situation, and anyone with meaningful selling volume should talk to a qualified tax professional about their own circumstances.