PROVIDENCE, R.I. (WPRI) — The Internal Revenue Service (IRS) announced it will not enforce the updated 1099-K tax form this season.
The updated 1099-K form lowered the transaction threshold for independent contractors and small businesses that rely on third-party payment systems such as Venmo, PayPal and Square.
The threshold would have dropped from $20,000 or 200 transactions, to $600 with no limit on the number of transactions as part of the American Rescue Plan Act.
The threshold requires third-party apps to generate the 1099-K form for users who qualify.
IRS Commissioner Doug O’Donnell said the reason for the delay in implementation is “to help smooth the transition and ensure clarity for taxpayers, tax professionals and industry.”
“The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” O’Donnell said.
Gregory Porcaro, a certified public accountant with Otrando Porcaro & Associates, tells 12 News that he feels as if everyone has “dodged a proverbial bullet.”
This year, Porcaro said everyone should start getting into the habit of designating their app payments as either business or personal. That way, they’re prepared when the 1099-K updates go into effect.