IRS Again Delays Onerous Tax Requirements Following Pappas Advocacy

Today, following bipartisan advocacy led by Congressman Chris Pappas (NH-01), the IRS announced that it would once again delay implementation of its Form 1099-K reporting threshold for third-party platform payments for the 2023 tax year, and use a threshold of $5,000 for reporting for the 2024 tax year.

Millions of Americans sell goods online to supplement their income, clean out their closets and give their goods a second life, and for many, selling used personal goods online has been a much-needed economic lifeline. The Internal Revenue Service (IRS) distributes Form 1099-Ks each year to Americans who sell their goods online. Because the reporting threshold has been lowered from $20,000 and 200 transactions to $600, many people were projected to receive tax forms they’ve never seen before for transactions like selling a bike or used clothes.

“I’m pleased that the IRS has heard the concerns of Granite Staters and heeded my calls to once again delay this wrongheaded and onerous tax reporting provision,” said Congressman Chris Pappas. “But it’s clear after two years of delays by the IRS that this new threshold is overly burdensome for both taxpayers and the IRS. Congress must fix this now. We should permanently raise the reporting threshold to ensure small sellers are not subject to burdensome or confusing reporting requirements.”

In May 2023, Pappas reintroduced his Cut Red Tape for Online Sales Act, legislation to raise the threshold for 1099-K reporting for goods sold on online marketplaces to ensure sellers do not pay more taxes than they owe and limit the amount of personal information they’re required to provide online. It would raise the reporting threshold for 1099-K reporting from $600 to $5,000 and require entities to issue a plain-language description of the taxability of income reported on Form 1099-K to reduce confusion among online sellers. 

Pappas first introduced this legislation in the 117th Congress, and it was listed on the National Taxpayers Union’s 2022 “No-Brainer” list of bills Congress should pass. In December 2022, IRS delayed the implementation of the new $600 reporting threshold following Pappas’s repeated calls to raise the threshold.