IRS announces delay in Form 1099-K reporting
threshold for third-party platform payments in 2023; plans for a threshold of
$5,000 for 2024 to phase in implementation
IR-2023-221, Nov. 21, 2023
WASHINGTON — Following feedback from taxpayers, tax professionals
and payment processors and to reduce taxpayer confusion, the Internal Revenue
Service today released Notice2023-74 announcing a delay of the new $600 Form 1099-K reporting threshold
for third-party settlement organizations for calendar year 2023.
As the IRS continues to work to implement the new law, the agency
will treat 2023 as an additional transition year. This will reduce the
potential confusion caused by the distribution of an estimated 44 million Forms
1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax
obligation. As a result, reporting
will not be required unless the taxpayer receives over $20,000 and has more
than 200 transactions in 2023.
Given the complexity of the new provision, the large number of
individual taxpayers affected and the need for stakeholders to have certainty
with enough lead time, 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 (ARP).
Following feedback from the tax community, the IRS is also
looking to make updates to the Form 1040 and related schedules for 2024 that
would make the reporting process easier for taxpayers. Changes to the Form 1040
series – the core tax form for more than 150 million taxpayers – are complex
and take time; delaying changes to tax year 2024 allows for additional
feedback.
Read the full announcement here: IR-2023-221.
