The IRS announced on December 23rd, 2022 a delayed implementation of the 1099-k third party payments.
This reporting requirement has been extremely controversial due to the low threshold to report, considering that many taxpayers use applications like Venmo, Zelle and others to transfer funds for personal activities. These transfers in aggregate over the year would exceed the reporting threshold of $600 and the taxpayer would receive a form and would have to report it in the personal tax return (1040).
We expect that the legislators will increase the reporting threshold significantly to $10,000 or more to avoid overwhelm taxpayers with forms that should not be considered revenue/income related. Note that previously, the threshold was $20,000.
“… the IRS released guidance today outlining that calendar year 2022 will be a transition period for implementation of the lowered threshold reporting for third-party settlement organizations (TPSOs) that would have generated Form 1099-Ks for taxpayers.
…Under the law, beginning January 1, 2023, a TPSO is required to report third-party network transactions paid in 2022 with any participating payee that exceed a minimum threshold of $600 in aggregate payments, regardless of the number of transactions. TPSOs report these transactions by providing individual payee’s an IRS Form 1099-K, Payment Card and Third-Party Network Transactions.”