- The IRS is delaying new requirements that require third-party settlement organizations like PayPal and Venmo to lower the business transaction reporting threshold to $600.
- New reporting requirements go into effect on Jan. 1, 2023.
The Internal Revenue Service is delaying new requirements that require third-party settlement organizations like PayPal and Venmo to report transactions that exceed a minimum threshold of $600 in aggregate payments until next year.
“The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” acting IRS Commissioner Doug O’Donnell said in a statement that described the current year as a “transition period.”
Introduced as part of the American Rescue Plan of 2021, the regulation significantly lowered the tax reporting threshold for business transactions to $600 per year from a previous level of “more than 200 transactions per year, exceeding an aggregate amount of $20,000.”
“The law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill,” the IRS said, adding that the new reporting requirements would go into effect on Jan. 1, 2023. “The change under the law is hugely important because tax compliance is higher when amounts are subject to information reporting.”
The IRS said that care must be taken “to help ensure that 1099-Ks are only issued to taxpayers who should receive them.”
In a separate statement on transition guidance for broker reporting on digital assets, the IRS said that brokers will not be required to report additional information with respect to dispositions of digital assets until final regulations are issued.
Brokers are still required to comply with existing laws and regulations, the agency added, clarifying that taxpayers are still required to report income received from transactions involving digital assets.
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