The IRS will treat 2023 as an additional transition year for implementation of the American Rescue Plan Act’s lower 1099-K reporting threshold, but only for third-party network transactions, such as those through Venmo, PayPal, Apple Pay, online marketplaces, etc. (IRS Notice 2023-74)
The IRS will not regard 2023 as a transition year with respect to payment card transactions, which are transactions where a customer pays with a credit card, such as Visa, Mastercard, or American Express.
This means that taxpayers who receive payments through third-party network transactions should not receive Form 1099-K for the 2023 taxable year, unless the aggregate payments received through a single third-party network exceeded $20,000 and the total number of transactions exceeded 200 for the year.
However, taxpayers should expect to receive Form 1099-K for the 2023 taxable year for credit card transactions if the aggregate payments received through a single credit card company exceeded $600, regardless of the number of transactions.
In the IRS’s press release announcing the 1099-K reporting delay, it stated that at a later date it intends to announce a filing threshold for third-party network transactions for 2024 of $5,000. (IR-2023-221) The $5,000 filing threshold for 2024 was only part of the press release and was not made part of Notice 2023-74.
The IRS Notice 2023-74 is available at: www.irs.gov/pub/irs-drop/n-23-74.pdf
The IRS press release is available at: www.irs.gov/newsroom/irs-announces-delay-in-form-1099-k-reporting-threshold-for-third-party-platform-payments-in-2023-plans-for-a-threshold-of-5000-for-2024-to-phase-in-implementation
We’ll cover this topic and all of the tax law changes that happened in 2023 at Spidell’s 2023/24 Federal and California Tax Update. Click here for details.