After Congress Fails To Act, IRS Delays Onerous New 1099-K Reporting For Payment Platforms

Call it a holiday miracle. The IRS has decided, in the absence of Congressional action, to delay for one year the implemtation of a law that requires payment and e-commerce platforms like PayPal
PYPL
, Venmo, CashApp, eBay
EBAY
and Etsy to file Form 1099-K (to taxpayers and the IRS) for anyone receiving over $600 in proceeds on their various platforms. The platforms, known as payment servicing entities (PSEs) in the law, previously only had to file the form if a taxpayer had more than 200 transactions and had received more than $20,000 in revenue from the site.

The delay is a welcome reprieve to tax professionals who were expecting enormous confusion during the upcoming tax-filing season among taxpayers who have been doing a small amount of online selling but have never received this form in the past. It also may mitigate the possibility of millions of additional IRS CP2000 “matching notices” being sent to taxpayers who weren’t aware of the new lower threshold and failed to retrieve the notices from their online accounts and/or who moved and didn’t get mailed notices and, consequently, failed to report the “income” on their annual Form 1040.