The IRS has once again delayed the implementation of the $600 reporting threshold for Form 1099-K. In Notice 2024-85, the IRS announced that 2024 and 2025 will serve as transition years to gradually ease compliance for third-party settlement organizations (TPSOs) and payees.
New Reporting Thresholds for TPSOs:
• 2024: Payments exceeding $5,000 must be reported.
• 2025: Payments exceeding $2,500 must be reported.
• 2026 and beyond: Payments exceeding $600 will be required.
The extended timeline is designed to give TPSOs and payees additional time to comply with Section 6050W(e). The IRS noted that this phased approach will help reduce confusion, ensure smoother implementation, and allow businesses and taxpayers to adjust their systems and processes to meet the new reporting requirements.
The delays address concerns raised by stakeholders about the challenges in transitioning to a lower threshold, including the increased volume of reporting and the potential impact on individuals unfamiliar with Form 1099-K requirements.