West Virginia congressional delegation weighs in on delay of IRS reporting threshold

WASHINGTON (WV News) — The members of West Virginia’s congressional delegation have weighed in on a recent decision by the IRS to delay implementation of a new reporting threshold requirement for third-party payment organizations.

The IRS recently announced the new $600 Form 1099-K reporting threshold requirement for third-party payment organizations for tax year 2023 would not be put in place, and is instead planning a threshold of $5,000 for 2024 to phase in the new law.

The move to delay the new requirements passed under the American Rescue Act is intended to “reduce taxpayer confusion” and was made following consultation with “taxpayers, tax professionals, and payment processors,” according to the IRS.

The phased-in approach will allow the agency to review its operational processes to better address taxpayer and stakeholder concerns, said Sen. Joe Manchin, D-W.Va.

“Today’s decision to delay the implementation of the 1099-K tax reporting requirement is welcome news for small business owners and individuals who sell goods online, but it should not exempt Congress from enacting permanent relief,” Manchin said. “That is why I have joined a number of bipartisan legislative efforts to raise the impending $600 threshold, and I will continue working with my colleagues in Congress on both sides of the aisle to ensure our taxation policies keep up with new online landscapes while protecting American taxpayers and small businesses.”

The previous reporting thresholds will remain in place for 2023, according to the IRS.

For 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions.

Third-party payment organizations include many popular payment apps and online marketplaces.

The provision of the American Rescue Plan lowering the threshold was supported by only Democrats, said Sen. Shelley Moore Capito, R-W.Va.

“Republican efforts to repeal these new requirements have been ignored by my Democrat colleagues until they realized the massive complications that would ensue during tax filing season,” Capito said. “However, this is now the second time they have delayed implementation, which only leads to uncertainty for taxpayers.”

While she supports the delay, she remains concerned about what authority the IRS has to enforce it, Capito said.

“My Democrat colleagues need to take responsibility for their mistake and take real action to fix it,” she said.

Rep. Carol Miller, R-W.Va., also questioned the IRS’s ability to enforce the delay.

“The IRS is completely out of control and must be held accountable as they continue to make up the law as they go,” Miller said. “Last year, the IRS took the legally dubious action of delaying implementation of the lower 1099-k threshold for 2022. Now they’ve done it yet again, giving Americans taxpayers no certainty on what the future of this policy will hold.”

Miller has introduced the Saving Gig Economy Taxpayers Act in the House.

“This bill will keep the reporting requirement at $20,000 and over 200 transactions, protecting Americans who use online payment platforms, gig economy workers, and small e-commerce sellers from being taken advantage of by the IRS and will ensure they have access to modern financial services platforms,” she said.

The bill has already passed the House Ways and Means Committee and “stands ready for a vote on the House floor and swift passage in the Senate,” Miller said.