Virginia Changes Reporting Obligations for Third-Party Settlement Organizations

Paul Ogawa
March 26, 2020

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.

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Paul Ogawa

Paul Ogawa is a Senior Regulatory Counsel at Sovos Compliance. As part of the Regulatory Analysis team, his main areas of focus are state and federal tax withholding, the Affordable Care Act (ACA), and Canadian tax information reporting. Prior to Sovos, Paul worked as a litigation attorney in Boston area law firms, representing clients in insurance subrogation claims, family law matters, and employment disputes. Paul is a member of the Massachusetts Bar, earned his B.A. from Brandeis University and his J.D. from the Suffolk University Law School.
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