Burdensome IRS $600 Threshold Reporting Requirement Delayed By One Year

Date: January 03, 2023

IRS requirement would make tax compliance more difficult for small businesses who use payment apps or online marketplaces

The IRS will delay the expanded Form 1099-K reporting requirement for annual transactions over $600 from Third-Party Settlement Organizations (TPSOs) like eBay, Etsy, Venmo, and PayPal. This requirement will make tax compliance more difficult for businesses using TPSO online platforms.

“The one-year Administrative delay by the IRS allows small businesses to breathe a sigh of relief from being inundated with new Form 1099-K reporting early next year,” said Kevin Kuhlman, Vice President of Federal Government Relations. “The delay provides more time to increase the thresholds and reduce the paperwork burden on small businesses. NFIB urges Congress to continue working to provide relief from this burdensome reporting requirement.”

The 2021 American Rescue Plan Act (ARPA) law now requires TPSOs to issue a Form 1099-K for each user whose goods and service transactions total more than $600 in annual gross sales, creating millions of reports for very minor transactions to the IRS. Prior to ARPA becoming law, this threshold was much higher – $20,000 in goods and service transactions and more than 200 transactions in a calendar year. 

In early March 2022, NFIB sent letters of support to the U.S. Senate and House of Representatives supporting S. 3546/H.R. 6913, the Stop the Nosy Obsession with Online Payments Act (SNOOP Act) and H.R. 3425, the Saving Gig Economy Taxpayers Act. These bills would repeal the provision in the ARPA requiring TPSOs to issue a Form 1099-K for transactions totaling more than $600 in annual gross sales. This was one of the issues NFIB members discussed with members of Congress during the annual NFIB Fly-In event.

Many transactions conducted on TPSOs are non-taxable, such as re-selling an item at a loss. Reconciling taxable and non-taxable transactions will likely be nearly impossible for small business owners and the IRS, further complicating the small business tax administrative burden. 

Delaying this reporting requirement is a victory for the NFIB members who have made their voice heard on this issue. Please urge your Senators and Representative to support the SNOOP Act and the Saving the Gig Economy Taxpayers Act.

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