The Internal Revenue Service is reversing course on a big tax change that was set for take effect for the upcoming filing season.
The tax agency has previously announced there was a change in reporting rules for Form 1099-K, the IRS document used to report payments and transactions from online platforms, apps or payment card processors such as Venmo, PayPal, Facebook Marketplace, Etsy or Uber. Under the plan – part of the American Rescue Act of 2021 – the reporting threshold that would trigger a 1099-K would have been lowered to $600 from any one source.
Instead, the IRS will push that requirement back a year, reverting to the existing rule – 1099-Ks will be issued when the total number of transactions exceeds 200 for the year and the aggregate amount of those transactions is more than $20,000.
The one-year delay is meant to “ensure clarity for taxpayers,” official said.
“The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” said Acting IRS Commissioner Doug O’Donnell. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes. 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.”
The reversal doesn’t mean there’s a change in the taxability of income, the IRS said. All income, including from part-time work, side jobs or sale of goods is still taxable and must be reported unless excluded by law.
An exception? Money received through payment networks from friends and relatives as personal gifts or reimbursements for person expenses – a person paying you back for a shared gift, for example – are not typically taxable expenses.