In another turn of events, the IRS has made a change to the adoption of the new Form 1099-K reporting guidelines.  The 1099-K is generally issued for “reportable payment transactions” made through such “payment settlement entities” such as Venmo, PayPal, and other third-party settlement organization (TPSO) transactions.

The regulations laid out in the American Rescue Plan Act of 2021 had initially pushed for a lower minimum reporting threshold of $600.  This new lowered threshold had been scheduled to be implemented starting in 2022. Significant pushback coming from professional organizations and the public alike have led to multiple delays, however.

The latest update now outlines a laddered approach to phasing in the lowered threshold.  For 2024, the minimum reporting threshold will be $5,000.  In 2025, the minimum will be lowered to $2,500 until it is finally adjusted down to the $600 minimum threshold beginning in 2026.  The IRS will also begin to assess penalties starting in 2025 if a TPSO fails to withhold and pay backup withholding tax, where it is applicable. 

This delay in the Form 1099-K reporting amount does not mean that a seller of goods or services does not have to report income from applicable sales even if the proceeds fall below the form reporting threshold.  All business income must still be reported accurately and completely to the IRS, regardless of whether a business uses a third-party settlement service that issues a 1099. 

Please contact your AHP representative for further discussion if you believe this applies to you.