The IRS recently announced a delay in implementing the new reporting requirements for third-party settlement organizations (TPSOs). Examples of TPSOs include Venmo, PayPal and CashApp. These new reporting requirements were enacted as part of the American Rescue Plan of 2021 and were set to take effect for this upcoming tax season.
Form 1099-K, Payment Card and Third-Party Network Transactions, is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. On December 23, 2022, the IRS announced that calendar year 2022 will be treated as a transition year for the reduced reporting threshold of more than $600. For calendar year 2022, third party settlement organizations who issue Forms 1099-K are only required to report transactions where gross payments exceed $20,000 and there are more than 200 transactions.
Subsequent to this December 23 announcement, the IRS followed up on December 28, 2022 with News Release IR-2022-230 – IRS Updates Frequently Asked Questions about Form 1099-K. This new Fact Sheet contains frequently asked questions about Form 1099-K and is being issued to provide general information to taxpayers and tax professionals.
For complete details, please read the full IRS Announcement and access the Fact Sheet here:
IRS News Release – December 23, 2022 – IRS Announces Delay for Implementation of $600 Reporting Threshold for 3rd Party Payment Platforms (1099-K) IR-2022-226 | Español
IRS Fact Sheet PDF – December 28, 2022 – IRS Updates Frequently Asked Questions About Form 1099-K – FS-2022-41