IRS Announces Form 1099-K Reporting Threshold Delay

Due to feedback given by taxpayers, tax professionals, and payment processors, the IRS recently released Notice 2023-74, which announces a delay of the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023.

As the IRS continues to work through the implementation of the new law, they have decided to treat 2023 as an additional transition year. This move is meant to reduce the confusion caused by the distribution of an estimated 44 million Forms 1099-K, which were sent to many taxpayers who wouldn’t expect one and may not have a tax obligation. Per Notice 2023-74, reporting will not be required unless the taxpayer receives over $20,000 and has had more than 200 transactions in 2023.

In addition to this, the IRS is planning for a threshold of $5,000 for tax year 2024 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan (ARP).

This post was adapted from an IRS press release. Read the full release here.