1099-K New Reporting Threshold Delay #taxes #shorts #irs

In 2023, the IRS announced that the lowered 1099-K reporting threshold, which had already been delayed the year prior, would not be implemented yet again. Instead, 2023 was treated as a transitional year, with the threshold staying at $20,000 from over 200 transactions. Now in 2024, where the threshold has been lowered to $5,000, IRS Commissioner Danny Werfel has given his reasoning.

In a House committee hearing, Werfel was questioned on why the IRS practiced “‘illegal overreach’” in ignoring The American Rescue Plan Act of 2021’s provision of lowering the 1099-K reporting threshold to $600 from no minimum transactions. In response, Werfel attributed the IRS’s “‘authority under the Code to administer laws consistent with taxpayer rights’” as a basis for delaying and putting a new implementation schedule in place.

He also described how taxpayers would be confused and “‘bombarded with forms and paper they shouldn’t be receiving’”, which could lead to overpaying taxes. To prevent this, the IRS rolled out a phased implementation schedule, with 2023 showing no change to the original reporting threshold. In theory, this should prevent taxpayers from receiving 1099-Ks from third party transaction platforms like Venmo. For tax year 2024, the threshold has been lowered to $5,000, and in 2025, will be lowered once again to finally meet the $600.

Despite the IRS’s goal of avoiding taxpayer confusion, the multiple delays and new implementation schedule has been anything but easy to follow. To ensure you comply with current regulations, follow XQ CPA’s blog and social media for the latest tax updates. If you are in need of assistance to file your 2023 tax return, reach out to our team for the right guidance. We would love to help you.

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Sources:
https://www.journalofaccountancy.com/news/2024/feb/on-form-1099-k-delays-werfel-says-irs-must-protect-taxpayer-rights.html
https://www.taxpayeradvocate.irs.gov/news/nta-blog/form-1099-k-part-two/2024/02/#:~:text=In%202021%2C%20Congress%20passed%20the,with%20no%20minimum%20transaction%20requirement

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