The Maryland legislature recently passed the Budget Reconciliation and Financing Act of 2020 (SB 192) which in part significantly changes the information return reporting obligations of third-party settlement organizations (TPSOs). 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.
In a letter dated May 7, 2020, the office of the Governor of Maryland announced that SB 192 would pass into law without being signed by Governor Hogan. 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.
Maryland is the most recent state to update its reporting thresholds for information reporting relating to TPSOs. Maryland follows Virginia and Illinois which both have lowered their 1099-K reporting threshold recently. More recently Florida passed legislation that requires the 1099-K at the federal threshold, despite requiring no other 1099s. There are currently 9 states (including Maryland) which have 1099-K threshold reporting below the federal threshold: Massachusetts, D.C., Mississippi, Vermont, New Jersey, Arkansas, Illinois, Virginia, Florida, and Maryland..
To review the newly passed legislation, click here to visit the Maryland Legislation Information Website.
To view the Governor’s letter, click here.
