5 Tips for Communicating Form 1099-K Changes

November 15, 2022

Editor’s note: This blog was updated on November 27, 2023

Update: Since this content was published, the IRS released additional guidance further delaying and making changes to the implementation of the lowered Form 1099-K reporting threshold for 2023 returns. Read our recent blog post for additional details about the latest Form 1099-K reporting threshold requirements.

As the 2023 tax season approaches, ensure your first-time Form 1099-K recipients are prepared for reporting. In 2021, as part of the American Rescue Plan Act (ARPA), the Form 1099-K threshold was changed from $20,000 and 200 transactions to just $600 with no transaction minimum. This threshold was set to go into effect for the 2022 reporting season. However, the IRS delayed the implementation by one year. This means for tax year 2023 and beyond, all third-party settlement organizations (TPSOs) must report Form 1099-K when payments total greater than $600 in the calendar year.

This threshold change will impact a variety of TPSOs, including gig economy payers (e.g., Uber, Lyft), platform marketplaces (e.g., Etsy, Facebook), and other companies that facilitate goods and services payments through electronic platforms (e.g., PayPal). A majority of those who receive Form 1099-K for tax year 2023 will be first time recipients. These workers may not be accustomed to or have knowledge of how to accurately report this type of income on their individual income tax return.  or have knowledge of how to accurately report this type of income on their individual income tax return.

Here are five tips to ensure your Form 1099-K recipients are ready for the 2023 filing season.

Offer pre-season communication

Communicate with potential 1099-K recipients ahead of the tax season. Proactively reaching out to Form 1099-K recipients can help your team as tax season begins. A sizable percentage of those receiving Form 1099-K in tax year 2023 will be first-time recipients. Ensure early communication with these individuals so their questions are answered before reporting begins. This will help limit the burden on your customer service team and help limit calls, inquiries and resources as tax season begins.

Disclose tax identification inaccuracies

Bulk TIN match recipient tax information with IRS and communicate inaccuracies with potential recipients prior to the season. With the lowered 1099-K threshold, form volumes will likely increase for most companies, which means penalties could also increase if companies are filing more forms with inaccurate information. Companies that file inaccurate name and TIN combinations on 1099 forms are subject to backup withholding notices (“B” notices) and penalty notices (“P” notices) by the IRS. If you expect an increase in form volume, it’s recommended to proactively check TIN combinations with the IRS system (or through Sovos’ Bulk TIN matching process) to identify recipients with inaccurate name and TIN combinations. Once identified, reaching out to the recipient for corrected information will prevent IRS notices and proposed penalties for your organization and prevent putting your recipients into backup withholding on future payments.

Provide mailing inserts

Make sure that Form 1099-K recipients receive insert communications. Try to limit the stretch of your customer service department during reporting season. Work ahead of the clock by providing insert communications into your 1099-K forms mailed to recipients. This will help lessen the burden on your customer service team and provide your recipients with essential information regarding Form 1099-K and the upcoming filing season.

Provide quality portal communication

Include additional information in a banner, simplifying portal access, especially if using e-statements. There will be many first-time 1099-K recipients in tax year 2023, so be prepared for questions. It can be difficult for recipients to understand their tax forms, especially if they have not received them previously. Include easy-to-find communications in your portal (especially if utilizing e-statements). Your recipients will have a go-to place for their questions, and it can lessen the amount of calls your team receives during tax season.

Include talk tracks for customer service teams

Investing in customer service training, with solidified talk tracks, is one of the most important best practices of companies seeing a significant increase in 1099-K form volume. Be sure your team is ahead of the game for questions, concerns and corrections.

Take Action

Still have questions about Form 1099-K? Reach out to our experts to learn more.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.



Sovos provides businesses with the confidence needed to navigate an increasingly regulated world. Offering a modern, IT driven response to compliance, Sovos’ solutions are scalable, reliable and secure and provide a great user experience. Sovos has more than 100,000 customers, including half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s cloud-based solutions integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe and is owned by Hg and TA Associates.
Share this post

December 7, 2023
Monaco Insurance Premium Tax: An Overview

Monaco is one of many countries with Insurance Premium Tax (IPT) requirements, specifically the Special Annual Tax and Fire Brigade Tax. This blog provides an overview of IPT in Monaco to help insurance companies remain compliant.   What kind of taxes are applicable in Monaco on insurance premium amounts? In Monaco, there are two types […]

North America Tax Information Reporting
December 6, 2023
Can I Still Register for a New Transmitter Control Code (TCC)?

A transmitter control code (TCC) is necessary for businesses electronically submitting information returns to the IRS. We’ve previously discussed how recent changes now require organizations to re-register for a TCC ahead of tax year 2023 filings. However, some filers may not receive active TCCs before their first filing deadline. On average, the IRS claims that […]

North America Unclaimed Property
December 4, 2023
A Look Back at Fall Unclaimed Property Reporting

Another October unclaimed property filing season is now over for both clients and Sovos. Overall, 70% of reports filed by Sovos on behalf of our clients occur for states with deadlines on October 31 and November 1. The last 60 days of the filing period require significant coordination between our clients and Sovos. Many tasks, […]

November 29, 2023
Taxation of Motor Insurance Policies: Spain

There is a wide variety of indirect taxes and parafiscal charges that apply to the different elements of coverage that can be included under a motor insurance policy in Spain. You can read our blog to learn more about taxation of motor insurance policies in Europe, this blog focuses on some of the specifics to […]

North America ShipCompliant
November 28, 2023
How the Beverage Alcohol Industry Prioritizes DEI Initiatives

Diversity, equity and inclusion (DEI) initiatives have quickly become staples for numerous businesses across industries. The beverage alcohol industry is also demonstrating that these efforts are as core to their company successes as lobbying and member education. We’ve gathered a handful of examples of DEI programs that our partners have implemented, showcasing how ensuring a […]