Monday January 30, 2023 – The IRS recently announced a delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K. Tax year 2022 will be a “Transition” year.
As one tax expert put it, “the new changes constituted one of the largest ‘cash grabs’ by the IRS in recent memory and were likely to hit taxpayers ‘like a truck.’
On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act of 2021. Let’s take a look at how this new law could potentially impact taxpayers.
One area the reporting requirements will hit hard is fantasy sports players. They must report any payments they make over $600 to both the IRS and those receiving payment.
Previously, TPSOs had to report payments only if they were over $20,000 or more in value. A TPSO is defined as any business entity or person who processes credit card payments and/or engages in other activities related to money transfers and various other financial transactions.
Therefore, anyone engaging in fantasy sports leagues where cash payouts are made and processed via a third-party would be subject to these reporting requirements. These players will face increased chances of an audit or taxation. While the IRS has promised not to go after average taxpayers, this new law could target them, nonetheless.
Changes brought about by the American Rescue Plan Act of 2021 have direct implications on ALL taxpayers. The lower reporting threshold means increased 1099s being filed with the IRS and higher chances of audit or taxation.
Attorney Steven A. Leahy will evaluate the impact of the American Rescue Plan Act of 2021’s tax plan on the average American taxpayer on Today’s Tax Talk.