Domainnamewire: As Tax Day hits in the U.S., many domain investors are facing unexpected complications due to how Afternic handled IRS Form 1099-K this year. What should have been a straightforward reporting process turned into a frustrating mess for sellers trying to stay compliant.
Lower 1099-K Threshold Sparks Widespread Confusion
For the 2024 tax year, the IRS dramatically lowered the threshold for issuing Form 1099-K—from 200 transactions and $20,000 in revenue down to just $5,000 in gross payments, regardless of transaction count. As a result, many taxpayers received this form for the first time, including domain sellers who use Afternic, a marketplace owned by GoDaddy.
Unfortunately, Afternic stumbled badly in its rollout.
Afternic’s Mailing Missteps and Reporting Errors
Afternic chose to mail only paper copies of the 1099-K forms instead of making them available in user accounts. Since many users hadn’t updated their mailing addresses for years—because Afternic historically never sent paper correspondence—these forms often ended up at outdated addresses. Worse, Afternic used the account address rather than the payment address, which created even more confusion.
Then came the real problem: the initial 1099-Ks reported net revenue (after Afternic’s commission), instead of the gross amount as required by the IRS. While Afternic eventually corrected the error and mailed revised forms, they didn’t notify users until March 20—after the March 15 filing deadline for S-Corps. The email announcement was sent via a third-party server and, in many cases, ended up in spam folders.
One seller shared that he had already filed his tax return based on the incorrect figures and had to file an amended return after learning of the mistake. The author of this piece only discovered his own 1099-K was mailed—incorrectly—to an outdated address after being contacted by a reader.
The PayPal Double Trouble
To make matters worse, many sellers who were paid through PayPal also received a 1099-K from PayPal, in addition to one from Afternic. This results in duplicate income reporting, showing roughly double the actual revenue and raising red flags that could trigger an IRS audit.
There is still debate over whether Afternic or PayPal should be the one issuing the form in these cases. Industry consensus suggests the payment processor (PayPal) should be responsible, but due to unclear IRS language, Afternic chose to issue its own 1099-Ks to be safe—leaving sellers to clean up the mess.
What Domain Sellers Can Do
Most domain sellers aren’t trying to cheat on their taxes—they just want to report accurately. But Afternic’s mistakes could make them appear to be underreporting or inflating their earnings.
If you haven’t filed your taxes yet and received duplicate 1099-Ks, be sure to attach an explanation to your return outlining the duplication and clarifying your actual income.
If Afternic were to retract the erroneous forms and reissue them with $0 reported, it would save many sellers from a bureaucratic headache. However, there’s no indication that such action will be taken.
A GoDaddy spokesperson told Domain Name Wire, “We’re reviewing every aspect of 1099-Ks this year and expect improvements in the next round.”
In the meantime, domain sellers will have to tread carefully and double-check every form—and every number—before hitting submit. Happy Tax Day.
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