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IRS Delays Tax Rule for Third-Party Payment Platforms

By:
S.J. Steinhardt
Published Date:
Dec 27, 2022

The IRS is delaying, for one year, a change in reporting thresholds for third-party settlement organizations.

The change to the reporting requirement for businesses using payment cards and third-party payment service apps such as Venmo, CashApp, Etsy, StubHub and Airbnb to report all of their income in excess of $600 on a Form 1099-K was scheduled to take effect for the 2022 tax year. Previously, reporting was only required for businesses that received more than $20,000 in payments from more than 200 transactions.

The change in the reporting threshold, a provision of the 2021 stimulus package known as the American Rescue Plan, is aimed at closing the tax gap, the difference between taxes owed and taxes paid on time. The rule prompted objections from business groups, lawmakers and others who fear the prospect of surprise tax bills or audits.

Among those groups are the American Institute of CPAs (AICPA), the National Association of Tax Professionals (NATP), and the National Taxpayers Union (NTU), Accounting Today reported.

“The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” said Acting IRS Commissioner Doug O'Donnell. “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.”

The IRS said that the existing 1099-K reporting threshold of $20,000 in payments from more than 200 transactions will remain in effect.

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