IRS delays stricter Form 1099-K reporting requirements until 2024

On Nov. 21, 2023, the IRS postponed the lowering of the threshold for Form 1099-K reporting until 2024. This covers payments made to settle credit card and third-party network (e.g., payment apps, online marketplaces, etc.) transactions. Notice 2023-74 (Notice) provides that for 2023, taxpayers will not need to issue the form, unless the gross amount to be reported to a payee for the tax year exceeds $20,000 and the number of the transactions with that payee exceeds 200.

The American Rescue Plan Act (ARPA) had lowered the threshold to $600, regardless of the number of transactions, for tax years beginning after 2021 (see our year-end tax letter article for additional details). However, in December 2022 the IRS announced it was delaying implementation until the 2023 tax year.

In the news release announcing the Notice, the IRS indicated it plans to lower the threshold as required by the ARPA via a phased approach, with a $5,000 threshold applying for the 2024 tax year.

If you have any questions about how this may impact your tax situation, please reach out to a member of our team.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.