– The IRS has announced a delay in the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023.
– Taxpayers will not be required to report unless they receive over $20,000 and have more than 200 transactions in 2023.
– 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.
– Updates to the Form 1040 and related schedules for 2024 are being considered to make the reporting process easier for taxpayers. 1. The IRS Commissioner, Danny Werfel, announced that the new reporting requirements for third party settlement organizations (TPSOs) will be delayed for tax year 2023 to allow for effective implementation.
2. The reporting requirement, which was set to start in 2022 under the American Rescue Plan (ARP), would have required TPSOs to report payments of more than $600 for the sale of goods and services on a Form 1099-K.
3. The reporting requirements do not apply to personal transactions such as gifts, sharing expenses, or paying household bills, but could apply to the casual sale of goods and services, even if the seller has no tax liability from those sales.
4. The IRS plans to phase in the reporting requirements by setting a threshold of $5,000 for 2024 and is seeking feedback on this threshold and other elements of the reporting requirement. 1. The IRS is working on minimizing burden and making it easier for taxpayers to comply with new reporting requirements.
2. Expanded information reporting, as a result of changes in Form 1099-K thresholds, is aimed at increasing tax compliance and reducing burden on taxpayers.
3. The IRS is focused on ensuring that Forms 1099-K are issued only to taxpayers who should receive them and on providing taxpayers, tax professionals, and software providers with necessary information for compliance.
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