The IRS is postponing new rules for third-party settlement providers like as PayPal and Venmo to reduce the reporting threshold for commercial transactions to $600.
The Internal Revenue Service is postponing until next year new regulations for third-party settlement businesses such as PayPal and Venmo to record transactions that exceed a minimum aggregate payment threshold of $600.
“The extended time will assist avoid uncertainty during the forthcoming 2023 tax filing season and give taxpayers more time to plan and understand the new reporting obligations,” said acting IRS Commissioner Doug O’Donnell, who defined the current year as a “transition year.”
As part of the American Recovery and Reinvestment Act of 2021, a new rule drastically reduced the annual requirement for reporting business transactions for tax purposes from “more than 200 transactions” to “less than $600.”
The IRS said that the new disclosure rules would become effective on January 1, 2023, and that the legislation was not meant to monitor personal transactions such as splitting the cost of a vehicle trip or lunch, giving a family member or another person a present for a birthday or the holidays.
The IRS said that precautions must be made “to guarantee that 1099-Ks are only given to eligible taxpayers.”
Brokers are not obliged to provide further information on the disposal of digital assets until final rules are established, according to a separate statement on transition guidelines for broker reporting on digital assets.
The government stated that brokers are still needed to adhere to current rules and regulations and that taxpayers are still obligated to disclose income from transactions involving digital assets.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.