IRS Denies Controversial $600 Reporting Limit for Venmo Transactions and Other App Transactions

The IRS has decided, as The Wall Street Journal scooped on Tuesday, to delay the implementation of a rule that would require many Americans who are active in the gig economy — and using Venmo, eBay, AirBnB, Etsy, et al. — to report anything more than $600 in revenue. 

The #IRS The delay in implementing the $600 reporting threshold is due to third-party payment platform issuing 1099Ks. Find out more at: https://t.co/UkUsFqEDQ4 pic.twitter.com/a9S26EYMSS

— IRSnews (@IRSnews) December 27, 2022

The IRS frames its decision not to implement the policy. “the additional time will help reduce confusion during the upcoming 2023 tax-filing season and provide more time for taxpayers to prepare and understand the new reporting requirements.” But more than removing the burden for small business owners and side-hustle aficionados, the delay gives what has become bipartisan opposition to the plan needed time to ramp up their efforts to block the reporting requirement from ever taking effect.   

Congress passed the American Rescue Plan 2021. It will cause a substantial increase in 1099K filings. If it takes effect, the IRS will also add to its growing backlog of tax filings for 2021. Currently, the reporting threshold for 1099-K filers is $200,000 — more than 33 times the new amount set to take effect — or 200 transactions in a year.

As WSJ reported: 

The $600 threshold would affect many gig workers who are independent contractors and haven’t been reporting income on their tax returns. This could be a shock to those earning the income.

There are many issues that sellers face on eBay and similar platforms. This is especially true for casual resellers, who may need to clean out their attics and closets. The gross revenue on the form isn’t necessarily all income. Such vendors