Based upon an IRS Administrative Procedure issued at week’s end, just prior to the Christmas break, calendar year 2022 will be regarded as a transition period for purposes of IRS enforcement and administration of the modified de minimis exception for Third Party Settlement Organizations (TPSOs) and third party network transactions.
With respect to returns for calendar years beginning before January 1, 2023, a TPSO is not required to report payments in settlement of third party network transactions with respect to a participating payee unless the gross amount of aggregate payments to be reported exceeds $20,000 and the number of such transactions with that participating payee exceeds 200.
IRS action delays $600 threshold for 1099-K reporting for most entities.
For returns for calendar years beginning after December 31, 2022, a TPSO is required to report payments in settlement of third party network transactions with any participating payee that exceed a minimum threshold of $600 in aggregate payments, regardless of the number of such transactions.
The IRS will not regard calendar year 2022 as a transition period with respect to requirements not modified by the American Rescue Plan of 2021.
The effective date of the changes specifically outlined in the notice is for returns for calendar years beginning prior to January 1, 2023.
For more details, read the official IRS Notice 2023-10
