On November 21, 2023, U.S. Senator Joe Manchin (D-WV) released a statement regarding the decision made by the Internal Revenue Service (IRS) to delay the new $600 Form 1099-K reporting threshold requirement for third-party payment organizations for tax year 2023. Instead of implementing the threshold immediately, the IRS will use a phased-in approach, allowing them to review their operational processes and address taxpayer and stakeholder concerns. Senator Manchin introduced an amendment to require this delay, which was ultimately approved by Congress. This decision will benefit small business owners and individuals who sell goods online.
The decision to delay the implementation of the new reporting threshold is welcomed news for taxpayers, tax professionals, and payment processors. For 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. The IRS plans to implement a threshold of $5,000 for tax year 2024.
The decision to delay the implementation of the new reporting threshold follows feedback from various stakeholders. This phased-in approach aims to address concerns expressed by taxpayers while streamlining the reporting process. More information on the decision and its implications will be available in due time.
Senator Manchin emphasized the need for Congress to enact permanent relief and stated that he will work with his colleagues to ensure that taxation policies keep up with new online landscapes while protecting American taxpayers and small businesses.
Overall, this decision is a positive step towards ensuring that small business owners and individuals who sell goods online are not unfairly burdened with excessive reporting requirements while still providing transparency in financial transactions for tax purposes.