This will increase compliance burdens and cause a great deal of unnecessary confusion for an as-yet countless number of taxpayers, many of whom stand to receive the forms from multiple vendors.īut while this change will undoubtedly create an avalanche of new paperwork for both taxpayers and the IRS, this is not being reflected in official estimates of the burden of tax compliance. With the lower threshold, it is easily conceivable that tens of millions of new 1099-K forms will be reported this year.

This lower threshold eliminates the safe harbor for people who sell items online as an ongoing virtual garage sale, or who use services like Venmo to transfer money to friends and family or pay for a portion of a restaurant tab, payments that are generally non-taxable in any case. In the aftermath of ARPA, the $20,000/200 transaction threshold was replaced with a far lower threshold of just $600, with no transaction threshold. Vendors did not have to file a 1099-K form for a taxpayer unless they had more than 200 transactions exceeding $20,000 in gross income.ĪRPA changed that by dramatically lowering the threshold that requires third party payment systems to report information to the IRS using the 1099-K form. Prior to the American Rescue Plan Act of 2021 (ARPA), the goal of the 1099-K form was limited to ensuring that taxpayers with substantial taxable income from third party sales on online platforms reported that income.

Turbotax numbers