There is a new law changing the 1099-K reporting rules which should hike compliance requirements in this area.
What is a 1099-K??? This form endeavors to ensure that all online retailers are reporting sales for tax purposes. It requires credit card companies, such as MasterCard and Visa, and third-party processors, such as PayPal and Amazon, to report the payment transactions they process on behalf of retailers. For individuals, partnerships, LLC and corporations S and C.
Presently, third-party payment networks must send the 1099-K to payees who have over 200 transactions and were paid more than $20,000 during the year.Starting in 2023, these payers must send 1099-Ks to payees who are paid over $600, the same threshold for the filing of Form 1099-NEC on payments to non-employees, regardless of the number of transactions.
More people than ever will get 1099-K forms that they’ll use when filling out individual income tax returns for 2022 and later.