The IRS will delay implementation of sweeping rule changes that force people to report income over $600 paid through popular apps like Venmo and Paypal, the agency announced Tuesday.
The controversial tax reporting rule, which did not receive a Republican vote when it was passed by Democrats in Congress in 2021 as part of the American Rescue Plan, will result in about 44 million additional 1099-K forms being sent out in January by the IRS.
The agency, which delayed implementation of the rule last year as well, said it would treat 2023 “as an additional transition year” in an effort to “reduce potential confusion” about the new tax liability and instead phase the $600 threshold over the next two years.
“We spent several months gathering feedback from third-party groups and others, and it is becoming increasingly clear that we need additional time to effectively implement the new reporting requirements,” IRS Commissioner Danny Werfel said in a statement.
The IRS is delaying a rule change that would have forced people to report income over $600 paid through popular apps like Venmo and PaypalAP
“Taking this phased approach is the right thing to do for tax administration purposes, and it prevents unnecessary confusion as we continue to see changes to Form 1040. It is clear that the additional delay for the 2023 tax year will avoid problems for taxpayers, tax professionals and others in this field,” added Werfel.
With the delay in place, users of third-party payment apps won’t have to fill out a 1099-K in 2023 unless they receive more than $20,000 in income and engage in more than 200 transactions.
The reporting requirement does not apply to personal transactions such as birthday or holiday gifts or splitting meal costs or household bills, according to the agency. NurPhoto via Getty Images With the delay in place, users of third-party payment apps will not be required to fill out a 1099-K in 2023 unless they receive more than $20,000 in income and engage in more than 200 transactions. AP
The IRS plans for a $5,000 threshold for the 2024 tax year as part of a phase-in and will likely implement a $600 reporting threshold in the 2025 tax year.
The new rules only apply to payments received for transactions of goods and services.
The reporting requirement does not apply to personal transactions such as birthday or holiday gifts or splitting the cost of meals or household bills, according to the agency.
The agency, which delayed implementation of the rule last year as well, said it would treat 2023 “as an additional transition year” in an effort to “reduce potential confusion” about the new tax obligations.REUTERS
Critics of the rule changes, such as the Coalition for 10-99-K Fairness, argue that there are privacy concerns that come with forcing third-party payment apps to disclose details of users’ transactions with the government, as well as an unfair tax burden that falls on “casual online sellers and micro business.”
The Biden administration hopes to crack down on tax evasion by lowering the reporting threshold.
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Source: thtrangdai.edu.vn/en/
