IRS Postpones Harassment of Side-Giggers
Internal Revenue Service Postpones $600 1099-K Rule for One-Year
The Internal Revenue Service (IRS) has provided additional guidance on the changes to the 1099-K reporting requirement that were included in the American Rescue Plan Act (ARPA) of March 2021. These changes lowered the threshold for reporting by third-party payment processors, such as eBay, Amazon, and PayPal, from $20,000 in revenue and 200 transactions to $600 in revenue.
The IRS has stated that it will not impose penalties on taxpayers or payment processors for failure to comply with the new $600 threshold for the 2021 tax year, in order to provide clarity and ease the burden on taxpayers and payment processors as they navigate the changes. It is important to note that the IRS has not delayed the implementation of the changes to the 1099-K requirement, but rather is providing additional guidance and relief from penalties for the 2021 tax year. The changes to the 1099-K requirement are intended to improve tax compliance and close the supposed $1 trillion gap between what Americans pay and owe in taxes, according to the IRS.
However, some members of Congress from both parties have argued for increasing the threshold or abolishing the mandate, as it may ensnare Americans who use peer-to-peer payment services for personal transactions, such as reimbursing friends or sending gifts, and create confusion for taxpayers, accountants, payment processors, and the IRS.