The IRS has delayed a requirement for third-party payment apps to send Form 1099-K to the IRS and users if transactions total more than $600.
The reporting threshold will be increased to $5,000 in 2024.
The rule only applies to payments received for goods and services transactions, excluding personal transactions.
The change was intended to crack down on Americans evading taxes, but critics say it amounts to government overreach.
IRS Commissioner Danny Werfel said, “Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion.”
“It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area,”
added the official.
The new rule means the IRS will figure out what business owners earned on the cash apps, regardless of what that individual reports.
“This doesn’t include things like paying your family or friends back using PayPal or Venmo for dinner, gifts, shared trips,” warned PayPal.
The lower reporting threshold threatens to sweep up millions of Americans who make money online.
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