The IRS is delaying a rule this upcoming tax season that would require individuals to report payments over $600 on e-commerce sites and payment platforms like PayPal, Venmo, eBay, and Etsy.
The delay prevents the third-party sites from sending tax paperwork to a much wider swath of people in 2023.
“Beginning next year, payment platforms were supposed to send tax forms, known as a Form 1099-K, to people who received at least $600 via these types of sites and payment platforms,” MarketWatch reports.
“The forms are typically triggered when a recipient receives at least $20,000 and has had at least 200 transactions.”
BREAKING NEWS: The IRS just announced that they are delaying the $600 1099-K reporting requirement
CashApp, Venmo, and Paypal are no longer required to send you a 1099-K for $600 transactions
Instead, it will be $20,000
— Duke Alexander Moore, CTC, EA (@dukelovestaxes) December 23, 2022
The IRS is delaying a requirement for e-commerce platforms, including Venmo, PayPal, Cash App and Etsy, to send tax forms to customers who have transactions of more than $600 https://t.co/iERMH976KG
— Bloomberg (@business) December 24, 2022
Via MarketWatch:
E-Commerce businesses, accountants and others pushed for a higher threshold, saying the batch of paperwork would be an administrative headache for companies and the backlogged IRS, and also stir up confusion among taxpayers. These groups applauded the pause announced Friday.
The threshold was lowered in the American Rescue Plan of March 2021. Recent lobbying efforts to raise the threshold as one part of the year-end spending deal proved unsuccessful. On Friday, the House passed the $1.7 trillion spending bill, which now awaits President Joe Biden’s signature.
The IRS said the upcoming tax year will be a “transition period” for the platforms that were due to adopt the now-suspended reporting requirements, including Venmo, PayPal and CashApp.
Acting IRS Commissioner Doug O’Donnell said IRS and Treasury officials heard the concerns about putting the new, lower reporting requirements into practice.
“To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes. The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” O’Donnell said.
One organization pushing for higher reporting thresholds, which included companies like Airbnb ABNB , eBay, Etsy and PayPal, called the delay “great news for millions of Americans.”
“We appreciate the IRS providing this critical relief so that millions of people aren’t unnecessarily burdened with tax forms in 2023 for splitting meals, selling used goods, paying back a friend, or other instances where no taxable income was generated,” said a spokesperson for the Coalition for 1099-K Fairness. The delay creates a chance for lawmakers “to find a common-sense and permanent solution.”
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