Starting in 2023, the reporting threshold for companies that use third-party apps, corresponding to Venmo, Etsy, StubHub and Airbnb, was set to lower considerably, from $20,000 to $600.
Now, the Inner Income Service has delayed the decreased reporting threshold for an additional 12 months and introduced that it’s going to start to part within the lowered threshold beginning in 2024, beginning at $5,000 for the 2024 tax 12 months. 2023, then, will merely be handled as one other transition 12 months.
The American Rescue Plan Act of 2021 additionally eliminated the de minimis threshold, which beforehand allowed an exception to submitting Type 1099-Ok. In prior years, Type 1099-Ok was required to be issued for third-party networks transactions provided that the variety of transactions exceeded 200 for the 12 months and the mixture quantity of those transactions exceeded $20,000.
We requested two professors and authors of ALM’s Tax Details with opposing political viewpoints to share their opinions about the newest delay within the efficient date for the lowered Type 1099-Ok threshold.
Beneath is a abstract of the talk that ensued between the 2 professors.
Bloink: This newly lowered threshold goes to create widespread confusion for strange taxpayers. Utilizing on-line cash switch providers has turn out to be extraordinarily widespread. The regulation would require complicated calculations to correctly report achieve or loss — and can apply to many taxpayers who’ve by no means been topic to these kinds of reporting necessities. We’d like the additional time to create a system that avoids confusion and widespread misinterpretation.