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Home Important Update: IRS Form 1099-K Reporting Changes for TPSOs

Important Update: IRS Form 1099-K Reporting Changes for TPSOs

    IRS form 1099-k reporting changes for tpsos

    Stay Informed about Recent Changes to IRS Form 1099-K Reporting Rules for Third-Party Settlement Organizations (TPSOs) Impacting Your Business Transactions.


    For over a decade, Third-Party Settlement Organizations (TPSOs) have been dutifully submitting IRS Form 1099-K, meticulously documenting payments processed for goods and services. Initially, the reporting thresholds were set at a benchmark of gross annual earnings exceeding $20,000 and more than 200 transactions within the calendar year.

    Recent Changes:

    In a significant legislative turn, Congress, through the American Rescue Plan Act of 2021, orchestrated substantial modifications to these thresholds. Although the fresh set of rules was initially scheduled for implementation during the 2022 tax year, the IRS has twice postponed their enactment. Consequently, for the 2023 tax year, the prevailing filing thresholds of $20,000 or 200 transactions will persist.

    Upcoming Changes:

    Come the 2024 tax year, the IRS is poised to introduce a noteworthy adjustment, lowering the threshold to $5,000, with no minimum transaction requirement. Furthermore, for subsequent tax years beginning in 2025 and beyond, the threshold will be further reduced to $600, again without any minimum transaction requirement. Read more about the year-end tax planning strategies.

    Reasons for Delays:

    The IRS is exercising additional vigilance to avert inadvertent filing errors by TPSOs, with a keen focus on ensuring utmost accuracy in the reported 1099-K forms. Concerns regarding potential errors, such as inadvertently including personal payments from family and friends, have played a pivotal role in these delays.

    Action Required:

    For businesses utilizing TPSOs for their transactions, it is of paramount importance to stay diligently informed about these pivotal changes. We strongly recommend scheduling a consultation with us to discuss any questions or concerns that may arise in the context of TPSO reporting.

    Rest assured, we remain steadfast in our commitment to keeping you well-informed and providing unwavering support throughout these transitional phases.

    While many businesses focus on meeting their tax obligations reactively, taking a proactive approach to tax planning can yield significant benefits. Proactive tax planning involves strategizing to minimize tax liabilities through legal means and can result in substantial savings for your business in the long run. Learn more about proactive vs. active tax planning!

    John Gonzales

    John Gonzales

    We write about nice and cool stuffs that make life easier and better for people...let's paint vivid narratives together that transport you to far-off lands, spark your imagination, and ignite your passions.