Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.

IRS delays reporting rule for $600 payments for PayPal, Venmo and more – again

The IRS said Tuesday it is again delaying the implementation of a 2021 law that requires payment platforms such as Venmo, Paypal or Cash App to send tax forms called 1099-Ks to anyone who received more than $600 during the current tax year.

This is the second year in a row that the IRS has delayed enacting the new regulations, following the tax agency last year. rejected the new law through 2023. On Tuesday, the IRS announced it would push back the regulations for another year “to reduce taxpayer confusion” after hearing from taxpayers, tax professionals and payment processors.

Without this delay, an estimated 44 million 1099-K forms would have been sent to millions of taxpayers for the current tax year, even though they may not have owed tax on the payments and would not expect such a form, the IRS said. said.

Instead, the IRS will rely on a pre-existing threshold – more than 200 transactions exceeding $20,000 in income – to send 1099-Ks in early 2024 to complete tax year returns in course.

Reporting threshold raised to $5,000

In a key revision to the law, the IRS said that starting in tax year 2024, it would transition to the new rule by increasing the reporting threshold from $600 to $5,000. This means that people who receive more than $5,000 in payments through PayPal and other applications in 2024 will receive the 1099-K tax form in early 2025 to complete their 2024 tax return.

For tax year 2025, the threshold would be reduced to $600, unless the IRS makes additional changes.

“The IRS’s decision to delay implementation of the new Form 1099-K reporting requirements is good news for taxpayers, tax professionals and payment processors,” said Erin Collins, National Taxpayer Advocate , a branch of the IRS focused on the interests of taxpayers.

She added: “Equally important is today’s announcement by the IRS that it will take a phased approach and only require reporting of transactions totaling more than $5,000 next year. Taxpayers and tax professionals need certainty and clarity about what is expected of them.

Some Republican lawmakers said the second consecutive IRS delay was a sign that the $600 rule had generated confusion and was “unworkable.”

“Given that even Democrats now admit that this law is unworkable and are attempting to rewrite a key provision, it is time to scrap it and start again,” said Rep. Jason Smith of Missouri, chairman of the Committee on Ways and means of the House.

A provision of the 2021 American Rescue Plan requires users to report transactions through payment apps, including Venmo, Cash App and others, for goods and services reaching or exceeding $600 in a calendar year. Prior to the ARP provision — and now for this year — the reporting requirement only applied to the sale of goods and services to taxpayers who receive more than $20,000 and make more than 200 transactions.

Refusal of online sellers

The rule has sparked significant backlash from online sales platforms such as eBay and Etsy, with some businesses arguing that the reporting requirement would create confusion and hardship for sellers who rely on these platforms to earn their revenue. life.

At the same time, Republican lawmakers denounced the plan as an overreach of government power and argued it could harm people who rely on payment apps to reimburse friends and family members .

IRS announces new tax brackets for 2024

IRS officials said one reason for the delay was taxpayers’ confusion about what types of transactions should be reported under the new law. For example, transactions between friends and family, such as selling a sofa or a car or reimbursing a friend for pizza, would not be reportable. Likewise, selling used items such as clothing or furniture at a loss through a service like eBay could also generate a 1099-K, even though those sales would not create any tax liability.

Still, other sales might be taxable, such as those of a small business that sells goods or services for profit.

“This phased approach is the right thing to do for tax administration purposes, and it avoids unnecessary confusion,” IRS Commissioner Danny Werfel said in a statement. “It is clear that an additional deferral for the 2023 tax year will avoid problems for taxpayers, tax professionals and others in this area.”

—With reporting from the Associated Press.

Gn En bus

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button