Experts believe that the Internal Revenue Service’s decision to impede the new $600 filing level for 1099-k tax forms will cause a potential problem for the upcoming filing season.
IRS Impedes The NewTax Requirement
A few days ago, the revised legislation passed under the American Rescue Plan Act of 2021, mandated that IRS requires Payment Card and third-party transaction networks like Venmo, Paypal, eBay, and Etsy will provide the 1099-K for users who had more than $600 in financial transactions during the year. The prior threshold had almost 200 transactions at $20,000 each according to eSeller365.
Yahoo!finance reports, that the professional groups want to examine before implementing the forms which are scheduled to distribute in January because they believe it would create confusion for many Americans who use the payment services for a variety of nontaxable events.
The Possible Confusion
The biggest concern is that experts worried that many taxpayers would have received 1099-K for personal transactions that are not taxable. Before the delay, Tom O’Saben, director of tax content and EA enrollment agent at the National Association of Tax Professionals told Yahoo Finance. People may receive official documents that appear to be money for nothing more than presents given going exchange between family members.
Selling used items for more than $600 and getting payment via third-party cash apps could have also triggered the reporting requirement, generated a 1099-K form, and required extra tax return calculations to demonstrate the occurrence wasn’t taxable.
Due to the delay, the IRS will now have more time, to asses and assure a smooth transition when the reporting threshold is finally implemented.