The IRS announced today another reprieve for taxpayers, delaying implementation of a new reporting threshold for third-party platform payments in 2023. The IRS also said it would phase in the new 1099-K threshold amount for tax year 2024.
That means companies such as eBay, Etsy, and PayPal – as well as payment apps – will not have to issue Form 1099-K to customers unless those firms processed the current threshold amount of $20,000 in more than 200 transactions in 2023.
A 2021 law had changed the reporting threshold to $600 (no matter how many transactions) effective for 2022; today’s announcement makes it the second year the tax agency issued a reprieve.
The IRS said it had received feedback from taxpayers, tax professionals, and payment processors and wished to reduce taxpayer confusion. It said the form would have been sent to many taxpayers who wouldn’t have been expecting one and might not have had a tax obligation.
The IRS will phase in the new threshold by lowering it to $5,000 for 2024. “Given the complexity of the new provision, the large number of individual taxpayers affected and the need for stakeholders to have certainty with enough lead time, the IRS is planning for a threshold of $5,000 for tax year 2024 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan (ARP),” it stated in an announcement on Tuesday.
The delay does not mean sellers who process under $20,000 a year in fewer than 200 transactions don’t have to report their income – the form is meant to assist the IRS in verifying the accuracy of taxpayer reporting.
In Tuesday’s IRS announcement, it stated:
“Reporting requirements do not apply to personal transactions such as birthday or holiday gifts, sharing the cost of a car ride or meal, or paying a family member or another for a household bill. These payments are not taxable and should not be reported on Form 1099-K.
“However, the casual sale…
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