Expanded 1099-K Reporting Delayed
Urgent Tax Update: Expanded 1099-K Reporting Delayed
IRS delays reporting of transactions aggregating more than $600 on Form 1099-K
In a welcome, holiday-timed announcement, the IRS issued Notice 2023-10 on December 23, announcing a delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.
The lower reporting thresholds, discussed in an earlier blog (Reminder: 1099-K requirements and income tax reporting), decreased the total amount of aggregate payments needed for third-party networks to report and send out Form 1099-Ks from $20,000 to $600, effective after December 31, 2021. The new rules would have required 1099-K reporting of payments aggregating more than $600 received from Third Party Settlement Organizations (TPSOs) payment sources such as Venmo, Cash App, Zelle, StubHub, Etsy, and PayPal.
Effect of Notice 2023-10
Per Notice 2023-10, effective for returns for calendar years beginning before January 1, 2023, the reporting requirements for a TPSO revert to the pre-2022 rule, and no reporting is required, unless the gross amount of aggregate payments to be reported exceeds $20,000 and the number of such transactions with that participating payee exceeds 200.
A one year only delay for now - but legislation may be pending
The IRS notice only delays the expanded reporting for one year - 2022. However, there is some support for permanently changing the rule with future tax legislation, and while such a change was not included in the recent Omnibus Spending Bill, perhaps it will be included in tax legislation in 2023.
Herbein will continue to monitor any potential tax law change to permanently repeal the expanded reporting requirement. However, for now, we are happy to report this very welcome reprieve for 2022 reporting.
Article prepared by Barry Groebel
