IRS delaying $600 payment reporting rule for PayPal, Venmo and more -- again

[BumRushDaShow]

Source: CBS News

Updated on: November 21, 2023 / 5:12 PM EST


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.

Read more: https://www.cbsnews.com/news/irs-delay-600-reporting-form-venmo-paypal-1099k-2024/

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Article updated.

Original article -

November 21, 2023 / 2:31 PM EST


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. Additionally, the IRS said that starting in tax year 2024, it will raise the basic reporting threshold from $600 to $5,000 as it phases in the new rule.

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.

[SunSeeker]

1. WTF I gotta report when friends Venmo me money to cover lunch, etc.?

[DFW]

5. From what some people say, it appears so

I have no idea. I have never gotten money from either.

[Axelrods_Typewriter]

7. No, only if you are selling goods and services.

Money you get from friends or relatives through Venmo and other things like that isn't taxable.

See this announcement. https://www.irs.gov/newsroom/reminder-service-providers-others-may-receive-1099-ks-for-sales-over-600-in-early-2023

[SunSeeker]

11. But if you get a 1099 for it, you have to report it and explain why its not taxable.

That is a huge hassle. You have to keep track of so many small payments between friends.

[TheBlackAdder]

14. Yeah, does that throw an audit flag? The IRS loves picking on the little guy and lets billionaires slide.

Random my ass. They're afraid of them, much like when Scientology threatened scores of lawsuits to be recognized.

[jimfields33]

28. How about if let's people add to their

Social security credits. Plus the more taxed the more you get at 67. This should be done anyway. I know a women who got paid under the table her career and now cries that she only gets 750 a month from social security. What does she expect?

[DFW]

2. If I were the IRS

I wouldn’t want to be deluged with the responsibility of auditing 44 million transactions of $600 or less, either. I don’t find a much higher reporting limit to be unreasonable. They are understaffed already. Have the ones they have go after cases that will bring in some revenue. The IRS auditing $600 payments is like sending the SWAT team and the bomb squad after every reported case of littering or jaywalking.

[twodogsbarking]

3. It is currently $600 and they are considering raising it to $5,000.

Tax reporting relies on honesty not auditing.

[Calista241]

19. It's currently $20k, and the IRS is talking about phasing in

an interim filing requirement at the $5000 level before it's ultimately lowered to $600. The $600 level is required by law, so the IRS will have to get down to that at some point.

I think the Republicans learned from Obamacare that they should let the painful parts of the law stay in so they can bitch about the whole thing.

[MichMan]

20. The law making it $600 was passed well over two years ago, it's not new

[Polybius]

22. It should have never passed n/t

[MichMan]

9. Why did Congress pass it then?

[Calista241]

18. It was part of the ARP (American Rescue Plan) that passed in 2021.

[Unwind Your Mind]

15. I've been issuing 1099s at work since the late 1980s

And that $600 threshold has never increased in all that time

[twodogsbarking]

4. Even if you receive less than $600 you are expected to report it.

Just because you didn't get a form doesn't allow you to skip it.

[Shermann]

6. I got harassed by PayPal over this last year

I sold a single item for over $600 which triggered their system, and they were requesting my SSN for the IRS submission (I managed to fend them off). Unfortunately, I sold the item at a loss. That doesn't matter though, you are still going to get hassled. If you sell a bunch of used junk, I'm not sure how you can keep track of your cost basis. $600 is simply not the right level for this crap.

[MichMan]

8. Congress passed it intentionally at $600

How is it that the IRS can just ignore the law ?

[SunSeeker]

12. It already does with 501(c)(3) requirements.

It lets scammers call themselves tax free charities with very little charitable work, even though 501(c)(3) explicitly requires that they be organized and operated "exclusively" for religious, charitable, educational, or scientific purposes.

[oldsoftie]

10. This is another reason why our tax system is a JOKE.

Give me VAT like every other major developed country uses.
THAT gets ALL unreported income.
And in the US I'd bet that adds up to trillions of untaxed income.
Its a LONG list of jobs that dont get taxed

[Elessar Zappa]

30. A VAT would be nice.

But I’m afraid if we implemented it that we’d never win another election.

[oldsoftie]

31. Its all in presentation. I would pay MORE under a VAT but I dont care

because I know EVERYONE who's been skirting the IRS is now paying
Its SO easy to NOT pay

[Grasswire2]

13. what a mess, still

I thought the problem would be solved for another year. Ridiculous. EBay looks like a mess these days, too. I guess I'll take some stuff to a consignment shop.

[Unwind Your Mind]

16. The real problem I think is

Potentially 10s of millions of people who could do their own taxes before and now suddenly they need help and the tax preparation industry is not equipped to handle them.

The industry has been tight for years now. Many CPAs retired during Covid and the ones left are overbooked. The services that would handle most of these folks are constantly struggling to hire enough staff.

Yes, a remedy would be to simplify the process but we know that’s not happening anytime soon.

[Jose Garcia]

17. 2024 is an election year. Anger, not confusion, is the concern

[Tom Rinaldo]

21. I avoided selling stuff on ebay this year because of this rule

I will be losing almost all of my non social security income next year and a lot of ebay sales would complicate my taxes this year, so I put it off. Had the IRS announced this sooner I might have made different plans this year. Oh well, they will probably do the same thing next November, but you can't count on it.

[Polybius]

23. Is the law $600 or more for one item?

Or $600 for the year?

[Tom Rinaldo]

25. I believe it would have been over $600 in a year (but that's just how I read it)

That requirement now is suspended for this year. And it seems for 2024 it will be set as over $5,000 in a year, with that limit slated to be reduced to $600 in 2025 as matters now stand.

But I'm just writing something you now can say you read on the internet. I have no expertise in this area, lol.

[CountAllVotes]

27. +1

Thank you. I appreciate your take on this. I agree btw!

& recommend.

[CountAllVotes]

24. I sold my guitar on ebay

I didn't know about this new "law" that never went into effect it seems.

It is a relief for me now but I won't be selling anything else on ebay again.

I had found the receipt for the guitar luckily and I had a $1,000 gain on it. Had I not found the receipt, I'd be looking at taxes on what it sold for.

I found this to be very deceptive. It angers me so much that I won't be selling anywhere again, not just ebay!

[Tom Rinaldo]

26. Techically I think they will allow you to offer a reasonable estimate of your initial purchase price

At least that's what I read somewhere. Seemingly someone in the bureaucracy acknowledges that people can't always find receipts for personal items they bought many years ago. But I believe they have the authority to reject what they consider to be implausible purchase price estimates if you don't have documentation.

[rockfordfile]

29. fking stupid for coming up with pos like that.

Taxing Americans for every little thing is ridiculous.

[samnsara]

32. this is why i quit being a vendor at the local Farmers Market