IRS Delays Third Party 1099-K Reporting Requirements
The Internal Revenue Service is delaying the new $600 Form 1099-K reporting threshold for third party settlement organizations for 2023.
Instead, the agency said it will treat 2023 as an additional transition year as it works to implement the new law, which was enacted under the American Rescue Plan.
The IRS was set to send an estimated 44 million forms in January 2024.
Many would have been sent to taxpayers who wouldn’t expect one and may not have a tax obligation.
With the delay, reporting won’t be required unless a taxpayer receives over $20,000 and has over 200 transactions in 2023.
The IRS is planning to set a $5,000 threshold for 2024 to phase-in the implementation of the $600 reporting threshold.
IRS commissioner Danny Werfel said the decision will help reduce confusion for taxpayers.
“We spent many months gathering feedback from third party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements,” said Werfel.
“It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area.”
The IRS also delayed the requirement last year.
The reporting requirements include the sale of goods and services, including selling used personal items like clothing and furniture.
They do not apply to personal transactions like gifts, sharing ride or meal costs, or paying family for household bills.
The IRS said the complexity of distinguishing between different types of transactions factored into its decision.
“We want to make this as easy as possible for taxpayers,” Werfel said.
“We will work to make the new reporting requirements easier for them, and we’ll work closely with third party groups, tax professionals and others to find the smoothest path to ensure compliance with the law.”
The IRS is asking for feedback on the $5,000 threshold for 2024 and other elements of the reporting requirement.
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.