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IRS postpones enforcement of new 1099-K rule for business payments made through Venmo, PayPal


Nov 21, 2023

On February 15, 2023, IRS Commissioner Daniel Werfel testified before a Senate Finance Committee hearing. He discussed new tax reporting requirements for business payments received through apps like PayPal or Venmo, as well as e-commerce companies such as eBay, Etsy, and Poshmark.

For the tax year 2023, a transition year was announced for a new tax reporting requirement affecting payments received. This will trigger Form 1099-K for payments as low as $600, even if the income stemmed from a single business transaction. Previously, the limit was over 200 transactions worth an aggregate above $20,000, and for 2023, this old limit will remain in place.

The IRS plans to phase in the lower threshold by adding a $5,000 limit for 2024 tax returns and expressed intention to make updates to Form 1040 and related schedules to make the reporting process easier. The $600 threshold will go into full effect for tax year 2025.

IRS Commissioner Daniel Werfel stated that the decision to delay and phase in the new reporting requirements was influenced by feedback from third-party groups and designed to prevent unnecessary confusion for taxpayers and tax professionals.

The announcement of the transition year comes amid bipartisan scrutiny and concerns about taxpayer confusion related to the new reporting requirements. Prior to the delay, the IRS was expecting an estimated 44 million 1099-Ks for 2023.

By Editor

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