The Internal Revenue Service announced that it has updated its frequently asked questions for the Form 1099-K, “Payment Card and Third-Party Network Transactions.”
The update to Fact Sheet 2022-41 follows the agency’s recent announcement that it was pushing back the lowering of the reporting threshold to $600 from Jan. 1, 2023, and will instead treat 2022 as a transition year, so companies are only required to report calendar year 2022 transactions with the old threshold of $20,000 and more than 200 transaction.
The FAQ offers definitions and guidance for reporting businesses, as well as providing information for taxpayers about what and whether they need to report. The IRS noted that while the rules for providing 1099-Ks may have changed, taxpayers’ legal requirement to report income to the agency has not.
The shift to the lower threshold was mandated by the American Rescue Plan Act of 2021, but many industry groups had asked the Treasury and the IRS to postpone the lower threshold, noting the tremendous increase in Forms 1099-K that it will require.