The IRS announced in IRS Notice 2023-74 that a tax law enacted in 2021 that requires third-party collection companies, including credit card merchant service companies like Visa and Mastercard and collection companies like PayPal and Venmo, that settle transactions for purchasing goods or services to send information returns (Form 1099-K) to the IRS and the payee, is postponed for another year until 2024.
The information reporting requirement was originally scheduled to be effective for 2022. The effective date was last extended to 2023 in IRS Notice 2023-10.
The threshold for reporting payments for any payee during 2023 is increased from $600, regardless of the total number of transactions, to $20,000 AND more than 200 transactions.
For example, if your only transaction for 2023 was the sale on EBay of a used refrigerator for $700, with the payment collected via PayPal, you would have received Form 1099-K from PayPal for $700, and would have been required to explain a non-deductible personal loss on your 2023 income tax returns.
Since the requirement is postponed until 2024, you won’t have to explain the sale, although it technically should be reported.
There have been many complaints to Congressional representatives about this onerous requirement for third party settlement organizations and taxpayers. There is a good chance the threshold could be raised again in future tax legislation. I don’t expect any major tax legislation to be passed by Congress until after the 2024 Presidential election.