KPMG has made available for download their article, “Evolving Form 1099-K thresholds”, which discusses the Cut Red Tape for Online Sales Act (H.R. 7079). The abstract is as follows:
A bipartisan bill introduced March 15, 2022, would, if enacted, increase the federal Form 1099-K reporting de minimis threshold for reporting transactions made by third-party settlement organizations (TPSOs) from payments exceeding $600 to those equal to or exceeding $5,000. The Cut Red Tape for Online Sales Act (H.R. 7079) [PDF 233 KB], was introduced by U.S. House Representatives Chris Pappas and Cindy Axne in order to reduce the administrative burden encountered by small online sellers, particularly those merely reselling personal goods for less than they were originally purchased.
As noted in a November letter [PDF 602 KB] to House Speaker Pelosi, and Ways and Means Chairman Neal, Rep. Pappas and 15 other members of Congress outlined the issues produced by the reduced threshold for Form 1099-K reporting. Notably, the letter states that the $600 threshold will lead to overreporting of income and overpayment of taxes, potentially rendering some taxpayers ineligible for certain tax benefits. The letter also points out that the increased reporting will require additional collection of personal information, potentially leading to privacy concerns for online sellers. Thus, the bipartisan bill introduced on March 15 would increase the threshold to $5,000, retroactive to the beginning of the 2022 calendar year. In addition, the bill would provide relief for payments made during 2022 by extending the de minimis number of transactions to 200 for one transitional year.
To see the full article, click: “Evolving Form 1099-K thresholds”
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.