The Virginia legislature recently passed legislation which makes significant changes to the reporting obligations of gig economy participants and specifically third-party settlement organizations. SB 211 makes changes to tax information reporting for gig economy participants, specifically third-party settlement organizations (TPSOs) who must issue Form 1099-K to report payments made to their payees. Under the new law TPSOs must report payments made to participating payees with a Virginia address if those payments are greater than or equal to $600. This new threshold significantly lowers the Virginia reporting threshold when compared to the federal threshold for information reporting on Form 1099-K: federally TPSOs are required to report payee activity that exceeds $20,000 and 200 transactions.
SB 211 is effective July 1, 2020, applicable to payment transactions made on or after January 1, 2020 with reporting due in April 2021. As a result, gig economy participants and TPSOs will likely see an increase in tax information reporting activity for this calendar year going forward.
To review the newly passed legislation please click here.
