IRS Pauses Onerous Tax Requirements Following Pappas Advocacy

Today, following bipartisan advocacy led by Congressman Chris Pappas (NH-01), the IRS announced that it would be delaying the implementation of its new $600 reporting threshold for online platforms and third-party payment networks including Venmo, PayPal, Etsy, and eBay. 

Previously these platforms only had to send 1099-K reporting forms to users and the IRS, if users received at least $20,000 in 200 or more separate transactions. The rule, which Rep. Pappas is fighting to change, drastically lowers that threshold to $600 and creates surprise tax bills. That means that millions of individuals will receive Form 1099-Ks for the first time in 2023 – often in instances where there is no tax liability whatsoever, creating significant confusion and administrative challenges.

“I’m pleased that the IRS has heard the concerns of Granite Staters and heeded my calls to delay this wrongheaded and onerous tax reporting provision,” said Congressman Chris Pappas. “Selling used goods online is a pathway for Granite Staters to supplement their income and find old items a second life. While these transactions do not create a taxable income, burdensome reporting requirements may lead to a seller’s incorrect overreporting of income and resulting ineligibility for tax benefits. It is vital that this issue be addressed permanently to eliminate unnecessary confusion. I urge House leadership to heed our bipartisan call to raise the reporting threshold for Form 1099-K filings and support this commonsense fix.” 

Pappas introduced bipartisan legislation, the Cut Red Tape for Online Sales Act, which 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. This legislation was listed on the National Taxpayers Union’s 2022 “No-Brainer” list of bills Congress should pass, and his repeated calls to raise the reporting threshold are supported by the American Institute of CPAs (AICPA).