Additional Transition Year for 1099-K Reporting Requirements

Beginning in 2022 (as part of the American Rescue Plan), third party settlement organizations must report payments of more than $600 for the sale of goods and services, with no minimum transactions.

Last year, the IRS delayed these new reporting requirements. The IRS has issued another delay, announcing 2023 as an additional transition period. This means the requirements revert to the reporting thresholds enacted in 2008, before the American Rescue Plan.

In addition to the recent Form 1099-K delay, the IRS also announced an expected increase in the reporting threshold to $5,000 in tax year 2024, which will be filed in 2025.

What is the requirement in 2023 for Form 1099-K?

In 2023, because of the additional transition year, the threshold remains 200 transactions per year, totaling over $20,000 of sales of goods and services. If a Form 1099-K is required, the filing deadlines are:

• Provided to the payee on or before January 31, 2024.
• Filed with the IRS on or before February 28, 2024.
• If filing electronically, March 31.

What is Form 1099-K?

Form 1099-K, Payment Card and Third Party Network Transactions, is an informational return filed by a third party settlement organization to report gross payments to a payee for:

• Goods sold, including personal items such as clothing or furniture.
• Services provided.
• Property rented.

Gross payment amount means the total dollar amount of reportable transactions without regard to adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts.

Third Party Settlement Organizations

A third-party settlement organization includes the following:

• Payment app
• Online community marketplace
• Craft or maker marketplace
• Auction site
• Car-sharing or ride-hailing platform
• Ticket exchange or resale site
• Crowdfunding platform
• Freelance marketplace

What happens next?

Taxpayers must continue to track and report taxable income when applicable, regardless of whether income is reported on Form 1099-K by a third party settlement organization.

On occasion, taxpayers may receive Form 1099-K in error, reporting income that is not taxable. If this occurs, the IRS recommends contacting the issuer to request a corrected Form 1099-K, keeping sufficient documentation of the correspondence, and filing a timely tax return with the correct income amount. Additional instructions are available on irs.gov.