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The Internal Revenue Service (IRS) announced a delay in the $600 threshold tax reporting requirements on Friday.
The law, which was set to be introduced, required e-commerce platforms, such as eBay (NASDAQ:EBAY), Etsy (NASDAQ:ETSY), and others, to give the IRS information about users with over $600 in revenue.
However, the delay of the $600 reporting threshold for third-party payment platforms means they will not be required to report the tax year 2022 transactions on a Form 1099-K early in 2023.
The IRS said the calendar year 2022 will be a transition period for implementing the lowered threshold reporting for third-party settlement organizations, including Venmo, PayPal (NASDAQ:PYPL), and CashApp.
“The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” said Acting IRS Commissioner Doug O’Donnell. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes.
He added that the additional time will help to “reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand” the new requirements.
The $600 threshold for Form 1099-K was passed by Congress in March 2021 as part of the American Rescue Plan Act, with lawmakers wanting to lower the threshold to boost tax compliance.
