The IRS announced that its policy to require reporting of Venmo and Paypal payments of over $600 will be delayed for another year.
The Tuesday announcement comes as a relief to many Americans upset over the claimed attempt at government overreach.
IRS delays tax-reporting rule on Venmo, PayPal payments over $600https://t.co/bOwOMHrBY2
— FOX Business (@FoxBusiness) November 22, 2023
"The rule change – approved by Democrats in March 2021 with the passage of the American Rescue Plan – would have required payments platforms, including Venmo, PayPal, Etsy and Airbnb, to send Form 1099-K to the IRS and users if their transactions totaled more than $600 over the course of the year," Fox Business reported.
"Instead, the IRS will treat 2023 as an 'additional transition year,' meaning that payment apps will not be required to send users Form 1099-K unless their gross income exceeded $20,000 or they had 200 separate transactions within a calendar year. Beginning in 2024, that basic reporting threshold will be increased from $600 to $5,000," it added.
IRS delays implementing $600 reporting rule for Venmo, PayPal payments https://t.co/7FJEZqZYtw pic.twitter.com/M470HRdJEH
— New York Post (@nypost) November 22, 2023
“We spent many months gathering feedback from third party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements,” IRS Commissioner Danny Werfel said in a statement.
“Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040. It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area,” Werfel continued.
IRS delays tax reporting rule change for business payments on apps such as Venmo and PayPal https://t.co/N2ojXVe7Ef
— CNBC (@CNBC) November 21, 2023
"The $600 threshold will go into effect for tax year 2025, and taxpayers over the limit can expect to receive a 1099-K at the beginning of 2026," CNBC reported.
"However, business payments have always been taxable and filers should still report 2023 income even if they don’t receive a Form 1099-K," it noted.
The news comes following pushback from some lawmakers in both parties who also noted issues with taxpayer confusion for the coming year.
The IRS expected the change to impact about 44 million Americans, though the number could be much higher by the time the policy is implemented next year.
For now, Americans can rest over the taxpayer issue though it will soon likely move forward unless lawmakers make a change in next year's session.
