IRS Maintains Existing 1099-K TPSO Reporting Threshold for 2023

AAFCPAs would like to make clients aware that the IRS has announced a delay in implementing its new $600 1099-K reporting threshold for third-party settlement organizations (TPSOs), which include payment apps and online marketplaces like PayPal and Venmo, for calendar year 2023. This postpones the start of a 2021 law requiring that third-party settlement organizations send Forms 1099-K to vendors receiving more than $600 through their platform during the calendar year as payment for the sale of goods and services.

The agency’s move to delay implementation aims to minimize any potential confusion that might arise from the delivery of an estimated 44 million Forms 1099-K to taxpayers, many of whom may not expect to receive one and who may not have a tax obligation. Instead, the agency will continue with its preexisting threshold for 2023, which requires third-party settlement organizations to send Forms 1099-K to those generating more than 200 transactions per year and totaling more than $20,000 in income. While the agency is treating 2023 as a transition year, it plans to reduce the reporting threshold to $5,000 in 2024 as a phased-in implementation approach before stepping down to the $600 threshold enacted under the American Rescue Plan (ARP).

Note that reporting requirements do not apply to personal gifts or transactions among friends and family members, such as birthday gifts, reimbursement for household bills, or repayment of shared meals or car rides. AAFCPAs will continue to monitor this case along with future related court rulings and legislation.

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Learn more about upcoming 1099 deadlines. >>

If you have questions, please contact Richard Weiner, CPA, MST, CM&AA, Tax Partner at 774.512.4078 or rweiner@nullaafcpa.com—or your AAFCPAs Partner.