Articles & Alerts
Welcome News for Businesses as IRS Delays $600 Payment Reporting
Businesses received a holiday gift from the Internal Revenue Service as the IRS announced a delay in the implementation of the $600 aggregate reporting threshold for payment platforms, such as Venmo and PayPal, which was scheduled to take effect for the 2022 tax year.
Pursuant to the American Rescue Plan Act of 2021, the reporting threshold required to issue a Form 1099-K was reduced from $20,000 in payments through more than 200 transactions to a significantly lower bar of $600 regardless of the number of transactions. This change generated a lot of attention as taxpayers and the IRS were expected to be inundated with forms leading to the potential for confusion as which transactions were personal in nature and not subject to reporting, and which were business-related and therefore necessary for tax reporting.
Instead, the IRS clarified in its notice that it will treat 2022 as a transition year to implement the lowered $600 reporting threshold and will now apply the 1099-K requirement starting in 2023 to help ensure that 1099-Ks are only issued to those taxpayers who should receive them. For more information, please contact your Anchin Relationship Partner.