IRS delays controversial new tax reporting rule for apps like Venmo

The IRS said Tuesday that the old threshold will remain in place – next January. businesses will need to send the tax form, known as a 1099-K, only to people who have made more than $20,000 and 200 transactions on the platforms.

The change makes no difference to the amount of tax anyone must pay. People who earn their income on apps still owe income tax, regardless of whether the app reports their income to them on a 1099-K.

Democrats who called for a lower threshold, saying transparency would benefit both taxpayers and the government. Gig workers would have a tax form to make it easier to pay their taxes, instead of having to laboriously tally their own income over the course of the year, for example. And because businesses would have to send 1099-K forms to taxpayers and the IRS, the agency would be able to catch people who aren’t reporting their income.

Some Republicans opposed the 1099-K change, warning of the dangers of the IRS intrusion into people’s personal dealings. And some Democrats expressed regret over the complexity of the new requirement after passing it, fearing that the $600 threshold would be too low and therefore too burdensome for businesses that would potentially have to send millions of 1099-Ks and for taxpayers who may be required to do so. disconcerted to receive them.

Many companies have lobbied against the new rule, including platforms selling event tickets, used clothing and art, and payment apps.

The IRS said Tuesday it would require businesses to send 1099-K forms to anyone who made more than $5,000 in transactions on their platforms starting in 2025. The agency said it would enforce the rule of $600 the following year, giving Congress more time to change the law first.