Today, the IRS announced in Notice 2023-74 that it will again delay the implementation of the $600 1099-K reporting threshold for third party settlement organizations. For tax year 2023 transactions reported in 2024, the old threshold of $20,000 and 200 transactions will apply. The IRS also announced that tax year 2024 will be a ‘phase in’ year. This means that for tax year 2024 transactions reported in 2025, a $5,000 reporting threshold will apply, with no minimum amount of transactions.
Originally, the $600 reporting threshold for form 1099-K was set to apply to tax year 2022 transactions reported in 2023. But in December 2022, the IRS announced it would delay implementation of the $600 threshold until the following tax season (see Notice 2023-10).
The IRS attributes the delayed implementation to the immense amount of feedback it has received from taxpayers and tax professionals. The $600 threshold is estimated to result in almost triple the amount of 1099-K forms being filed with the IRS and furnished to taxpayers. The IRS recognizes the confusion that this may cause because many taxpayers have never received a 1099-K, don’t expect to receive a 1099-K, and may not even have a tax obligation related to the 1099-K. To help alleviate taxpayer confusion surrounding the 1099-K, the IRS also plans to update Form 1040 and its schedules for tax year 2024 transactions reported in 2025.
The IRS news release can be found here.
Notice 2023-74 can be found here.
Fact Sheet 2023-27 can be found here.
