IRS Again Delays New Reporting Rule
The Internal Revenue Service (IRS) on Tuesday said it is once again delaying the implementation of a 2021 law that requires third party payment processors such as Venmo, Paypal or Cash App to issue tax forms called 1099-Ks to customers who received more than $600 in the current tax year.
“Following feedback from taxpayers, tax professionals, and payment processors and to reduce taxpayer confusion, the Internal Revenue Service delayed the new $600 Form 1099-K reporting threshold requirement for third party payment organizations for tax year 2023 and is planning a threshold of $5,000 for 2024 to phase in the new law,” the agency said in a statement.
This is the second consecutive year the IRS has delayed enacting the new rule. Without that delay, it is estimated that 44 million 1099-K forms would have been sent to taxpayers for the 2023 tax year, even though they may not have owed taxes on the payments and wouldn’t have been expecting such a form, the IRS said.
The agency is making 2023 another transition year to implement the new requirements under the American Rescue Plan. The previous reporting thresholds will remain in place for 2023.
This means that for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.
The IRS notes that taxpayers should be aware that while the reporting threshold remains over $20,000 and 200 transactions for 2023, companies could still issue the form for any amount.
The IRS Understanding your Form 1099-K webpage provides resources for taxpayers who receive a 1099-K, including what to do with a Form 1099-K and what to do if you get a Form 1099-K in error.
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