The Internal Revenue Service (IRS) has released guidance on how to report third-party transactions. The reporting thresholds increased via a provision in the spending/tax cuts law enacted this past July. The new transaction thresholds are 200 transactions in a year and/or transactions that exceed $20,000. The previous threshold was any transaction that exceeded $600.
The IRS said processing companies like PayPal or Stripe will have to issue Form 1099-K returns for individuals or businesses that use those platforms for more than 200 transactions in a year, or for transactions that exceed $20,000.
The guidance also states that the federal rule does not override state rules. So, if a state requires reporting on a lower number of transactions, or a lesser size of transactions, the state rules will prevail.
Prospects: This guidance will be important for any NAIFA member who uses PayPal or another third-party processing platform to accept payment for services provided.
NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org