In a recent development, the IRS has decided to delay the enforcement of the new $600 reporting threshold for Form 1099-K applicable to third-party organizations in the year 2023. This delay has been instituted to mitigate confusion among taxpayers, tax professionals, and payment processors.
For the tax year 2023, the IRS is designating it as a transitional period, during which reporting will only be mandatory if the taxpayer receives earnings exceeding $20,000 and engages in more than 200 transactions. Looking ahead, the IRS has outlined plans to introduce a $5,000 threshold for the tax year 2024, aligning with the $600 reporting threshold mandated by the American Rescue Plan Act. The objective is to alleviate the burden on taxpayers and streamline reporting requirements. The IRS is actively engaged in collaborative efforts with third-party groups, tax professionals, and other stakeholders to ensure widespread compliance with the law.
