The Internal Revenue Service recently revised its frequently asked questions (FAQs) with almost 50 new or updated ones regarding Forms 1099-K, Payment Card and Third Party Network Transactions, published in fact sheet FS-2024-03. These updates supersede the FAQs published in a March 2023 fact sheet.
The revised FAQs include substantial changes for both individual taxpayers and companies that issue the statements. Updated guidance can be referenced within each following sections:
- General Information
- What to Do If You Receive a Form 1099-K
- Common Situations
- Third-Party Filers of Form 1099-K
- Should My Organization Be Preparing, Filing and Furnishing Form 1099-K?
To recap from this past November, in Notice 2023-74 the IRS again delayed the effective date of the $600 threshold for Form 1099-K reporting for third-party settlement organizations (TPSOs) and stated it will treat 2023 as another transitional year. This continued delay was in direct response to collective comments from taxpayers, tax professionals, and payment processors. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023. Please note, taxpayers may still receive a Form 1099-K for lesser amounts and fewer transactions.
As referenced in the fact sheet, a taxpayer who reasonably and in good faith relies on the FAQs will not be subject to penalties that provide a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance causes a tax underpayment.
In an additional effort to clarify some of the concerns, the IRS updated its resources page Understanding your Form 1099-K located on IRS.gov page as well as other communications.