The Inner Income Service (IRS) is delaying rolling out its new $600 reporting threshold for third-party settlements, saying that extra readability is required earlier than it could actually kick off.
In a brand new press launch, the IRS says that because of the moratorium, third-party settlement companies will not be required to report transactions in 2022 that cross the $600 threshold.
Moreover, the IRS has designated 2022 as a “transition interval” for the implementation of the brand new threshold, which was enacted as part of the American Rescue Plan of 2021.
“The transition interval…delays the reporting of transactions in extra of $600 to transactions that happen after calendar 12 months 2022. The transition interval is meant to facilitate an orderly transition for TPSO [third party settlements organization] tax compliance, in addition to particular person payee compliance with earnings tax reporting.
A collaborating payee, within the case of a third-party community transaction, is any one who accepts fee from a third-party settlement group for a enterprise transaction.”
The IRS says that it’ll present the correct 1099 types required to report the brand new threshold to taxpayers who want them when the time is correct.
“The change below the regulation is vastly essential as a result of tax compliance is larger when quantities are topic to data reporting, just like the Type 1099-Ok. Nonetheless, the IRS famous it have to be managed fastidiously to assist be sure that 1099-Ks are solely issued to taxpayers who ought to obtain them.
As well as, it’s essential that taxpayers perceive what to do on account of this reporting, and tax preparers and software program suppliers have the knowledge they should help taxpayers.”
In accordance with Performing IRS Commissioner Doug O’Donnell, the extra time will assist taxpayers cleanly transition to the brand new system.
“To assist easy the transition and guarantee readability for taxpayers, tax professionals and business, the IRS will delay implementation of the 1099-Ok modifications. The extra time will assist scale back confusion in the course of the upcoming 2023 tax submitting season and supply extra time for taxpayers to arrange and perceive the brand new reporting necessities.”
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