The IRS will delay implementation of a sweeping rule change that requires people to report income over $600 paid through popular apps like Venmo and Paypal, the agency announced Tuesday.
The controversial tax filing rule, which received no Republican votes when it was passed by Democrats in Congress in 2021 as part of the American Rescue Plan, would have resulted in the IRS sending out about 44 million additional 1099-K forms in January. .
The agency, which also delayed implementation of the rule last year, said it will treat 2023 “as an additional transition year” in an effort to “reduce potential confusion” about the new tax obligation and will instead phase in the threshold of $600 above the norm. the next two years.
“We spent many months gathering feedback from third-party groups and others, and it became increasingly clear that we need additional time to effectively implement the new reporting requirements,” IRS Commissioner Danny Werfel said in a statement.
The IRS is delaying a rule change that would require people to report income over $600 paid through popular apps like Venmo and PaypalAP.
“Taking this phased approach is the right thing to do for tax administration purposes and avoids unnecessary confusion as we continue to consider changes to Form 1040. It is clear that an additional delay to tax year 2023 will avoid problems. for taxpayers, tax professionals and others in this area,” Werfel added.
With the delay in place, users of third-party payment apps will not have to complete Form 1099-K in 2023 unless they have received more than $20,000 in income and made more than 200 transactions.
Reporting requirements do not apply to personal transactions such as birthday or holiday gifts or splitting the cost of a meal or household bills, according to the agency. NurPhoto via Getty Images With the delay in place, users of third-party payment apps will not be required to complete the 1099-K in 2023 unless they have received more than $20,000 in income and have made more than 200 transactions. AP
The IRS is planning a $5,000 threshold for tax year 2024 as part of a phase-in, and will presumably implement the $600 reporting threshold in tax year 2025.
The new rule only applies to payments received for transactions of goods and services.
According to the agency, the reporting requirements do not apply to personal transactions such as birthday or holiday gifts or to splitting the cost of a meal or household bills.
The agency, which also delayed implementation of the rule last year, said it will treat 2023 “as an additional transition year” in an effort to “reduce potential confusion” over the new tax obligation.REUTERS
Critics of the rule change, such as the 10-99-K Fairness Coalition, argue that there are privacy concerns that arise from forcing a third-party payment app to reveal details of users’ transactions with the government, as well as an unfair tax burden. That falls on “occasional online sellers and micro-businesses.”
The Biden administration hopes to crack down on tax evasion by lowering the reporting threshold.
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Source: vtt.edu.vn