AICPA Endorses Legislation to Modify Requirements to Form 1099-K Reporting Threshold
Washington, D.C. (June 6, 2023) – For many months, the American Institute of CPAs (AICPA) has expressed its concerns regarding the lowered Form 1099-K reporting threshold, which is in effect for 2023 but was originally set to take effect in 2022, noting that this change would lead to significant confusion in the tax system. With bipartisan concerns mounting about the $600 reporting threshold in effect for 2023, the AICPA has voiced strong support for House and Senate legislation that would raise the reporting threshold. While the bills set the new threshold at different levels, both pieces of legislation underscore the importance of establishing a higher threshold that does not unduly burden the Internal Revenue Service (IRS), third party payment networks, or American taxpayers.
In a May letter, the AICPA endorsed H.R. 190, the Saving Gig Economy Taxpayers Act, sponsored by Representative Carol Miller (R-WV), noting that the reduction in the de minimis reporting threshold for third-party network transactions from a $20,000 and 200 transaction threshold to $600 for any number of transactions has created a significant reporting burden. “As a matter of policy, AICPA understands and generally supports the information reporting benefits to a voluntary compliance system. However, the reporting changes should be administrable, equitable, and meet the needs of taxpayers, the IRS and tax practitioners,” said the letter.
Today, the AICPA endorsed bipartisan Senate legislation S. 1761, the Red Tape Reduction Act, introduced by Senators Sherrod Brown (D-OH) and Bill Cassidy (R-LA), which would establish a $10,000 reporting threshold. The AICPA believes this legislation balances the taxpayer’s need to effectively manage reporting requirements with the goal of improving tax enforcement efforts.
“We are concerned about the possibility of the IRS instituting a matching program for 2023 Forms 1099-K that could result in significant taxpayer misunderstanding, and lead to a growth in the IRS correspondence and processing backlog that still haunts the tax system. Because of the concerns expressed above, the AICPA believes the current law $600 Form 1099-K threshold is not workable and must be raised. The $10,000 threshold in S. 1761 represents a reasonable solution to the current situation”.” says the letter.
“AICPA understands the burden that the $600 reporting requirements poses to taxpayers, particularly gig economy workers,” said Peter Mills, Senior Manager for Tax Policy & Advocacy with the AICPA. “We are thankful to Representative Miller and Senators Brown and Cassidy for their leadership on this important issue, and we urge other members of Congress to show their support for a higher threshold.”
About the American Institute of CPAs
The American Institute of CPAs® (AICPA®) is the world’s largest member association representing the CPA profession, with more than 415,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.
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BACKGROUND:
December 16, 2022 – In a letter to Congressional leadership of the Senate Finance Committee and the House Ways and Means Committee, the AICPA expressed deep concerns regarding the Form 1099-K, Payment Card and Third Party Network Transactions, reporting threshold that was lowered to $600 for 2022 and will lead to significant confusion in the tax system in the coming months.
December 23, 2022 – The AICPA released a statement following an announcement by the Internal Revenue Service (IRS) delaying the implementation of the $600 reporting threshold for third-party payment platforms’ Forms 1099-K.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com