The Internal Revenue Service announced a delay in the rollout of its requirement for certain third-party settlement organizations to report on transactions over $600. In accordance with the American Rescue Plan of 2021, third-party settlement organizations (TPSOs) were required to report tax year 2022 transactions on a Form 1099-K to the IRS or the payee for the lower, $600 threshold amount. Further, the 1099-K would be issued for a minimum threshold of $600 in aggregate payments, regardless of the number of transaction.”
As part of this, the IRS released guidance on December 23, 2022, stating that there would be a longer transition period for implementation of this threshold, in order to give institutions more time to adjust and comply with the reporting requirement for transactions occurring after calendar year 2022. According to the IRS website, “the transition period is intended to facilitate an orderly transition for TPSO tax compliance, as well as individual payee compliance with income tax reporting.” Lastly, it should be noted that “a participating payee, in the case of a third-party network transaction, is any person who accepts payment from a third-party settlement organization for a business transaction.”
If you or your organization has concerns regarding proper issuance of 1099-Ks or other reporting requirements, please reach out to us today!
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