WASHINGTON — Users of Venmo, Cash App and different fee apps will get a tax reprieve this 12 months. The IRS introduced it’s going to delay implementing new reporting necessities of transactions over $600 that have been to take impact for the approaching tax submitting season.
Originally, app customers who made $600 or extra promoting items and companies would have been required to report these transactions to the IRS, a brand new threshold required by the American Rescue Plan handed in March 2021.
Instead, fee apps and on-line marketplaces will ship out separate tax varieties — referred to as 1099-Ok paperwork — for taxpayers who obtain over $20,000 and make over 200 transactions promoting items or companies.
For 2024, the essential reporting threshold might be elevated from $600 to $5,000, the IRS mentioned.
IRS officers say one motive for the delay is taxpayer confusion over what types of transaction are reportable.
For occasion, peer-to-peer transactions, like promoting a sofa or automotive, sending lease to a roommate, and shopping for live performance tickets wouldn’t be reportable, whereas different purchases would apply.
“Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion,” IRS Commissioner Danny Werfel mentioned. “It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area.”
This new requirement was delayed final 12 months as properly.
“We spent many months gathering feedback from third-party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements,” mentioned Werfel.
A provision within the American Rescue Plan requires customers to report transactions by way of fee apps together with Venmo, Cash App and others for items and companies assembly or exceeding $600 in a calendar 12 months. Before that provision — and now for this 12 months — the reporting requirement utilized solely to the sale of products and companies to taxpayers who obtain over $20,000 and have over 200 transactions.
Lawmakers throughout the aisle celebrated the delay.
Democratic Sen. Jon Tester of Montana, who final week despatched a letter to the IRS calling for a delay of the reporting requirement, mentioned “I’m glad to see the IRS heard my concerns and I’ll continue to fight back against burdensome bureaucratic policies.”
Republican Rep. Jason Smith of Missouri mentioned the delay showcases a flaw within the provision within the American Rescue Plan, which handed on close to get together traces. “Given that even Democrats now admit that this law is unworkable and are trying to rewrite a key provision, it’s time to scrap it and start over,” Smith mentioned.
Source: www.bostonherald.com”