IRS delays $600 threshold for 1099-K reporting


The IRS has issued guidance (Notice 2023-10) that postpones the new $600 reporting threshold for third-party payment networks under Section 6050W that had become effective for payments in 2022 under the American Rescue Plan Act of 2021 (ARP).


Under the guidance, taxpayers will generally only be required to report 2022 payments for payees with more than 200 transactions and $20,000 in aggregated payments — the threshold in effect before ARP was enacted. However, taxpayers that applied backup withholding on any payees must still perform the reporting if the payment and withholding amounts each exceeded $600.


Section 6050W generally requires payment settlement entities to report payment card transactions and third-party payment network transactions to sellers on Form 1099-K. ARP had repealed the 200 transaction and $20,000 de minimis thresholds effective Jan. 1, 2022, and replaced them with a $600 threshold. Notice 2023-10 provides that the old thresholds will remain in effect for transactions in 2022, while the new $600 threshold will take effect in 2023. There is no de minimis exception for payment card reporting under Section 6050W.


There is significant bipartisan support for legislatively raising the $600 threshold effective for 2023 transactions, but enactment is far from guaranteed. Third-party settlement organizations should be preparing to perform the reporting based on the $600 threshold for all payments on or after Jan. 1, 2023. Taxpayers should also be applying backup withholding on any payees who have not provided a Taxpayer Identification Number (TIN), or as required for incorrect TINs that are not remedied through the B Notice process. 




Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “§,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.


More tax hot topics