IRS provides additional 1099-K relief

On Nov. 26, 2024, the IRS issued Notice 2024-85, further postponing the implementation of the $600 Form 1099-K reporting threshold for third party settlement organizations (TPSOs), providing for two additional phase-in years before asserting penalties. The transitional relief means TPSOs, such as Venmo, Uber, eBay and Etsy, won’t be subject to the $600 threshold until four years after its intended enactment. The thresholds will be $5,000 and $2,500 for the 2024 and 2025 calendar years, respectively.

Change in 1099-K filing reporting threshold and previous delays in implementation

Prior to the American Rescue Plan Act of 2021 (ARPA), TPSOs were only required to issue a Form 1099-K to payees if the total dollar amount of transactions exceeded $20,000 and the total number of transactions exceeded 200. ARPA included a revenue raising provision that decreased the reporting requirements to a total dollar amount of $600 and removed the minimum transaction threshold, effective for the 2022 calendar year. This is the third time the IRS has delayed implementation. Previously the IRS provided the following relief:

• Calendar year 2022 – Notice 2023-10 announced that 2022 would be regarded as a transition period, allowing TPSOs to report based on the $20,000 and 200 transaction thresholds.
• Calendar year 2023 – Notice 2023-74 announced that 2023 would be regarded as a further transition period, again allowing TPSOs to report based on the $20,000 and 200 transaction thresholds. The News Release accompanying the Notice announced the IRS intended to use a $5,000 threshold for the 2024 calendar year in an attempt to phase-in to the $600 amount.

Calendar year 2024 and 2025 additional delays in implementation