The IRS has announced that third-party settlement organizations, such as PayPal, Venmo, and eBay, will not be required to report tax year 2022 transactions on a Form 1099-K to the IRS or to the payee for the lower $600 threshold amount enacted as part of the American Rescue Plan of 2021.
Instead, the reporting of transactions in excess of $600 will now apply only to transactions that occur after calendar year 2022. The existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions remains in effect for payments made in 2022.
Calendar year 2022 will be regarded as a transition period for purposes of IRS enforcement and administration of the modified de minimis exception for third-party settlement organizations (TPSOs) and third-party network transactions.
TPSOs that fail to file or furnish Forms 1099-K will not be assessed penalties unless the gross amount of aggregate payments to be reported exceeds $20,000 and the number of transactions exceeds 200.
For returns for calendar years beginning after December 31, 2022, a TPSO is required to report payments in settlement of third-party network transactions with any participating payee that exceed a minimum threshold of $600 in aggregate payments, regardless of the number of such transactions.
Tammy Howell is a Senior Manager with our Client Service Team. She can be reached at firstname.lastname@example.org.