Current:Home > MyIRS delaying $600 payment reporting rule for PayPal, Venmo and more — again -Secure Growth Solutions
IRS delaying $600 payment reporting rule for PayPal, Venmo and more — again
View
Date:2025-04-15 18:22:10
The IRS on Tuesday said it is again delaying the implementation of a 2021 law that requires payment platforms such as Venmo, Paypal or Cash App to send tax forms called 1099-Ks to anyone who received more than $600 in the current tax year.
It's the second consecutive year the IRS has delayed enacting the new regulation, after the tax agency last year pushed off the new law until 2023. On Tuesday, the IRS said it will push the regulation back another year "to reduce taxpayer confusion" after hearing from taxpayers, tax professionals and payment processors.
Without that delay, an estimated 44 million 1099-K forms would have been sent to millions of taxpayers for the current tax year, even though they may not have owed taxes on the payments and wouldn't have been expecting such a form, the IRS said.
Instead, the IRS will rely on a preexisting threshold — more than 200 transactions that exceed $20,000 in income — for sending 1099-Ks in early 2024 for completing the current tax year's returns.
Reporting threshold raised to $5,000
In a key revision to the law, the IRS said that starting in tax year 2024 it will transition toward the new rule by increasing the reporting threshold from $600 to $5,000. That means people who receive more than $5,000 in payments via PayPal and other apps in 2024 would receive the 1099-K tax form in early 2025 to complete their 2024 tax returns.
For the 2025 tax year, the threshold would step down to $600, unless the IRS makes additional changes.
"The IRS's decision to delay implementation of the new Form 1099-K reporting requirements is good news for taxpayers, tax professionals and payment processors," said Erin Collins, the National Taxpayer Advocate, an arm of the IRS focused on the interests of taxpayers.
She added, "Equally important is the IRS's announcement today that it will adopt a phased-in approach and only require reporting of transactions totaling more than $5,000 next year. Taxpayers and tax professionals need certainty and clarity about what is expected of them."
Some Republican lawmakers said the IRS' second consecutive delay is a sign that the $600 rule has generated confusion and is "unworkable."
"Given that even Democrats now admit that this law is unworkable and are trying to rewrite a key provision, it's time to scrap it and start over," said Rep. Jason Smith of Missouri, the chair of the House Ways and Means Committee.
A provision in 2021 American Rescue Plan requires users to report transactions through payment apps including Venmo, Cash App and others for goods and services meeting or exceeding $600 in a calendar year. Before the ARP provision — and now for this year — the reporting requirement applied only to the sale of goods and services to taxpayers who receive over $20,000 and have over 200 transactions.
Pushback from online sellers
The rule had sparked significant pushback from online selling platforms such as eBay and Etsy, with some of the companies arguing that the reporting requirement would create confusion and difficulties for sellers who rely on these platforms to make a living.
At the same time, Republican lawmakers had decried the plan as government overreach and argued that it could hurt people who rely on payment apps to reimburse friends and family members.
IRS officials said one reason for the delay is taxpayer confusion over what sorts of transaction are reportable under the new law. For instance, transactions between friends and families, like selling a couch or car or repaying a friend for pizza, would not be reportable. Likewise, selling used items such as clothing or furniture for a loss through a service like eBay could also generate a 1099-K, even though those sales would create no tax liability.
Yet other sales could be taxable, such as a small business that is selling goods or services for a profit.
"Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion," IRS Commissioner Danny Werfel said in a statement. "It's clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area."
—With reporting by the Associated Press.
- In:
- IRS
- Tax Reform
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
TwitterveryGood! (4)
Related
- From family road trips to travel woes: Americans are navigating skyrocketing holiday costs
- Proof Gwyneth Paltrow and Chris Martin Are Still Hollywood's Most Amicable Exes
- Charli D'Amelio Offers Behind-the-Scenes Look at 2023 Nickelodeon Kids’ Choice Awards
- Is Miranda Cosgrove Up for a Drake & Josh Revival? She Says...
- Most popular books of the week: See what topped USA TODAY's bestselling books list
- Channel Nature Into Your Wardrobe With The Fashion-Forward Gorpcore Trend
- Finland offering free trips after being named world's happiest country six years in a row
- Ellen Star Sophia Grace Gives Birth to Her First Baby
- EU countries double down on a halt to Syrian asylum claims but will not yet send people back
- France strikes and protests over pension changes heat up as Macron defends his controversial reforms
Ranking
- A Mississippi company is sentenced for mislabeling cheap seafood as premium local fish
- Australia reptile catcher finds 6-foot-long, highly venomous snake lying in bed looking at me
- Tom Sandoval Has Not Moved Out Despite Ariana Madix Split
- Kate Spade 24-Hour Flash Deal: Get This $330 Shoulder Bag for Just $75
- Paula Abdul settles lawsuit with former 'So You Think You Can Dance' co
- Over 2,000 ram skulls discovered in Egypt's temple of Ramses II, a new mystery for archaeologists
- Senate advances bill to repeal Iraq war authorizations in bipartisan vote
- Teen allegedly shoots his mom, then kills 2 police officers in Canada
Recommendation
Biden administration makes final diplomatic push for stability across a turbulent Mideast
Why Women Everywhere Love Selena Gomez's Rare Beauty
Why Women Everywhere Trust Jessica Alba's Honest Company
Pete Davidson and Chase Sui Wonders Involved in Car Accident in Beverly Hills
'Survivor' 47 finale, part one recap: 2 players were sent home. Who's left in the game?
See Meghan Markle's Royally Chic Black Leather Look for Her Date Night With Prince Harry
Jay Leno Reveals His Brand New Face After Car Fire
Monarch butterfly presence in Mexican forests drops 22%, report says