You do not need to pay additional tax on it, the MA law is just a reporting notification. See bullet point #2 below
mass.gov FAQ:
I received a 1099-K notice. Do I need to report that amount as taxable income?
Answer: It depends on each taxpayer’s specific situation. Form 1099-K is an informational document. You should use the information reported in conjunction with your other records to determine whether it’s taxable income and to determine your correct tax. Here are four examples:
1. Mike works part-time as an independent driver for hire, and, over the course of a year, he receives income of $9,789 via a Third Party Settlement Organization (TPSO). The $9,789 should be included when calculating gross receipts for his income tax return. He may be able to deduct certain business expenses.
2. Meghan is downsizing her home and sells furniture on an auction site for $5,000. The original purchase price of the furniture was $9,000. The $5,000 IS NOT subject to tax as it is a function of selling personal items at a loss.
3. Mario, a full-time accountant, also has a hobby selling hand-painted holiday decorations on an auction site. He sells $3,268 worth of decorations over the course of the year. That $3,268 amount should be included when calculating gross receipts for his income tax return. He may be able to deduct certain business expenses.
4. Molly goes to dinner with her 14 graduate school classmates to celebrate the end of the term. She pays for a $1,500 meal on her credit card and her classmates reimburse her for the expense via a peer-to-peer payment system, totaling $1,400. That $1,400 IS NOT subject to tax or any reporting as it is was not payment for goods or services, but simply reimbursement.
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