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December 27, 2022 | Posted in:

IRS Delays Digital Transaction Threshold Reporting for One Year

1099-K Reporting

The American Rescue Plan included a provision requiring third-party settlement organizations (TPSOs) to issue Form 1099-K to all taxpayers for whom they processed at least $600 in payments for the calendar year.  A TPSO is an organization like a credit card company, Venmo, PayPal, Stripe, or other similar organization that process payments.  The purpose of this reduced threshold is to increase the tax compliance of the recipients of these payments.

IRS Update for 2022 and 2023 1099-K Forms

The IRS and tax professionals had concerns about the implementation of this change and the IRS has announced that the new threshold will be delayed by one year to include payments made after 2022.  For the 2022 Forms 1099-K, the TPSOs can use the prior threshold of $20,000 and over 200 transactions.

Businesses that pay vendors with credit cards or another TPSO should not include those amounts when preparing Form 1099-NEC or 1099-MISC.  Only payments made by cash, check, ACH transfer or another bank transfer should be included on Forms 1099-NEC or 1099-MISC.

 

Want to learn more on 1099 compliance and reporting requirements? Watch our latest webinar recording on Acing 1099s: Best practices to meet 1099 requirements and deadlines.

 

Alloy Silverstein Accountants and Advisors is here to guide you through the end of the year and throughout tax season. Contact us for a consultation.

Author:

Associate Partner
 
Julie has over 20 years of experience in public and private accounting, representing varied clientele including the medical, legal, and real estate industries and trusts.
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