Prepare for New 1099-K Reporting Requirements Across the U.S.

David Dobbins
May 14, 2020

A trend is emerging across the country. In the last year, Illinois, Virginia, Florida and Maryland changed their reporting requirements for the 1099-K.

Below are the new requirements, by state:

Illinois:

Beginning with tax year (TY) 2019, issuers of Form 1099-K will be required to submit those reports to Illinois electronically if required by the IRS to file them electronically. Beginning with TY 2020 and after, issuers of Form 1099-K will be required to submit those reports to Illinois electronically when four or more separate transactions that exceed $1,000 are reported or if you are required by the IRS to electronically file Form 1099-K. The filing due date for TY 2019 will be March 31, 2020. Find more information here.

Virginia:

Under the new law third-party settlement organizations (TPSOs) must report payments made to participating payees with a Virginia address if those payments are greater than or equal to $600. This change is effective July 1, 2020, applicable to payment transactions made on or after January 1, 2020 with reporting due in April 2021. Find more information here.

Florida:

Under Section 212.134 of the Bill, payment settlement entities and other third-party facilitators who handle payment card and third-party network transactions must file a 1099-K return with Florida pursuant to IRC Section 6050W. 1099-K returns will be due by the 30th day following the IRS due date and are required from payment settlement entities operating in Florida or those filing 1099-K reports on behalf of participating payees with an address in Florida. All returns must be filed electronically. Failure to file a required 1099-K return will result in a $1,000 penalty for each failure for each month the return is due, with the total penalty amount imposed on a reporting entity capped at $10,000 annually. Penalties may be waived by the executive director if a failure to file was due to reasonable cause and not willful negligence, willful neglect, or fraud. This 1099-K filing requirement will become effective January 1, 2021.

Maryland:

SB 192 requires TPSOs who must issue Form 1099-K to report payments made to their payees if the amount of the reportable payment meets or exceeds the filing threshold under §6041(A) of the Internal Revenue Code. This change effectively strips away the transaction number from the federal reporting threshold established in §6050W of the Internal Revenue Code and lowers the dollar amount to $600 or more in reportable payments. SB 192 is effective as of June 1, 2020 and is applicable to payments made on or after January 1, 2020 with reporting due to the Comptroller’s Office and the participating payee at least 30 days before the federal filing deadlines for the information. Find more information here.

There are currently 9 states, including Maryland, that have 1099-K threshold reporting below the federal threshold: Massachusetts, D.C., Mississippi, Vermont, New Jersey, Arkansas, Illinois, Virginia and Maryland.

According to tax and regulatory experts, many other states will follow suit, and soon.

To learn more about recent state reporting changes, download our free webinar – “How to Conquer State Reporting Like the Experts”.

Download for free today.

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The new stimulus bill will have impacts on both 1099-K reporting requirements and reporting threshold. If you’re a gig worker or selling through a TPSO, learn how this affects your taxes.

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David Dobbins

Content Marketing Manager
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