On November 26, 2024, the IRS announced transitional relief for the much-maligned tax reporting requirement for third party payment networks. The reporting threshold will now be $5,000 for the year 2024 rather than $600 to start. The IRS will ease third party payment networks into the $600 threshold with gradually decreasing threshold amounts.
As we originally discussed December 16, 2021, third party payment networks such as PayPal and Venmo were required to report to the IRS transactions in excess of $600 beginning on January 1, 2022.
The $600 threshold was further delayed in December 2022. The new relief will require reporting for transactions in excess of $5,000 for the year 2024, but it will decrease to $2,500 in the year 2025 and finally $600 in the year 2026. The full text of the IRS Notice 2024-85 can be found here.
