1099-K reporting changes

 Advocates are pushing for Congress to restore the $20,000 threshold for reporting transactions from payment cards and third-party networks after it was lowered by the American Rescue Plan Act to just $600, warning of a tidal wave of Forms 1099-K hitting millions of unsuspecting taxpayers and an already overburdened Internal Revenue Service and overworked tax preparers.

They are hoping that lawmakers will suspend the change in the threshold during the lame duck session in Congress after the midterm elections as part of an end-of-year tax extenders package or at least find some middle ground in between. Last month, a group of over 70 mostly conservative and free market organizations, including the National Taxpayers Union, Americans for Tax Reform, the Center for a Free Economy and the American Business Defense Council, sent an open letter to congressional leaders emphasizing the urgency of the issue.

"Under the prior law, a 1099-K was issued only in the event that a business charged customers at least 200 times in a year, and $20,000 in the aggregate," they wrote. "H.R. 1319 eliminated the 200 transaction threshold entirely, and lowered the dollar hurdle to just $600. As a result, both very small business ventures and unwitting non-business taxpayers have found themselves caught in the 1099-K reporting net. Millions of Americans who have never received a 1099-K form before, and don't know what to do with it, will get one. If they seek help from the IRS, they will quickly run into an overwhelmed agency trying to process this gusher of new 1099-K returns, keep up with filing season, clear out prior backlogs, respond to correspondence, and even answer the 800-number telephone line."