IRS Webinar: Form 1099-K Third Party Payment Network Transactions

IRS Webinar: Form 1099-K Third Party Payment Network Transactions

All right, I see it's the top of the hour. For 
those of you just joining us, welcome to today's   Webinar, Form 1099-K Third Party Payment Network 
Transaction. We're glad you're joining us today.   My name is Michael Smith and I'm the Senior 
Stakeholder Liaison with the Internal Revenue   Service, and I'll be your moderator for today's 
webinar, which is slated for approximately 60   Minutes. Before we begin, if there is anyone in 
the audience that is with the media, please send   An email to the address on this slide and be sure 
to include your contact information and the news   Publication that you're with. We have our Media 
Relations and Stakeholder Liaison staff are ready   To assist you and answer any questions you may 
have. As a reminder, this webinar will be recorded   And posted to the IRS Video Portal in a few weeks. 
The portal is located at Now   One thing please note, continuing education 
credits or certificates of completion are not   Offered if you view any version of our webinar 
after this live broadcast. Again, we hope you   Won't experience any technology issues, but if 
you do, this slide shows some helpful tips and   Reminders. We've posted a technical help document 
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So, if you're having trouble hearing the audio   Through your computer speakers, please click the 
closed captioning drop down arrow located on the   Left side of your screen, and this feature will 
be available throughout the webinar. If you have   A topic specific question today, please submit it 
to us by clicking the Ask Question drop down arrow   To reveal the text box. We will be answering those 
questions later in the webinar, so please do feel   Free to add those in throughout the webinar at any 
time. Simply type your question in the text box   And then click Send. Now very important note here, 
please do not enter any sensitive information   Or taxpayer specific information, just general 
questions. During the presentation, we'll take   A few breaks to share knowledge-based questions 
with you. At those times a polling style feature   Will pop-up on your screen with a question and 
multiple choice answers. Select the response you   Believe is correct by clicking on the radio button 
next to your selection and then click Submit.   Some people may not get the polling questions and 
this may be because you have your pop-up blocker   On. So please take a moment now to disable your 
pop-up blocker, so you can answer the questions  

Throughout the webinar. We've included several 
technical documents that describe how you can   Allow pop-up blockers based on the browser you're 
using. We have documents for Chrome, Firefox,   Microsoft Edge, and Safari. And you can access 
these by clicking on the materials drop down arrow   On the left side of the screen. So, let's take 
a minute now and test that polling feature. So,   Here's your opportunity to ensure your pop-up 
blocker is not on, but you can receive the polling   Questions throughout the webinar. And it is a 
very simple question. Have you ever downloaded   An IRS national webinar recording from our video 
portal? Very simple set of answers. A, for yes; B,   For no; of course, C, where is that video portal? 
Go ahead. Take a moment. Hopefully everybody sees   That pop-up with the polling question, click the 
radio button and select your answer. All right,   And I'm just going to read this one more time just 
to make sure everybody has a chance to make sure   They can get that working. Question read, have you 
ever downloaded an IRS national webinar recording   From our video portal? A, for yes; B, for no; and 
C, you were wondering where our video portal is.   All right, we'll give it just a few more seconds 
to let these responses come in. All right, let's   Go ahead and close the polling now. And I'll check 
in with my team and see how the majority of you   Responded. Okay, we'll just give them a minute and 
get back to you with that number. Okay, it looks   Like we have 65% that thought they have not 
downloaded an IRS national webinar recording   From our video portal, so if you're not familiar 
with that resource, it is an excellent one,   Our video portal is located at 
And you'll be able to find archived versions of   Webinars just like this one. All right, I hope 
you received the polling question and you were   Able to submit your answer. If not, now is the 
time to check your pop-up blocker and make sure   You have it turned off. Again, we've included 
several technical documents that describe how   You can allow pop-up blockers based on the browser 
you're using. Just click on that materials drop   Down arrow on the left side of your screen 
and download your browser document. Again,   Welcome and thank you all for joining us for 
today's webinar. Now, before we move along with   Our session, let me just make sure you're in the 
right place. Today's webinar is Form 1099-K Third   Party Payment Network Transactions, Card and 
Electronic Payments. This webinar is scheduled   For approximately 60 minutes from the top of the 
hour. And I'd like to introduce today's speaker,   Kelly Stephenson. Kelly Stephenson was appointed 
as Program Manager of the 1099-K initiative in   February 2023. She leads the daily cross agency 
1099-K operations with the IRS. She began her   Financial career with ADP and joined IRS federal 
service as a Revenue Agent 16 years ago. She began   Her management track 10 years ago, taking on 
increasingly more responsibilities, including   Positions as a Territory Manager and Senior 
Operations advisor for the Director of Field   Examination. So, with that, I'm going to turn it 
over to you, Kelly, to begin the presentation.   If you're all set, the floor is yours. Hey, 
thank you, Michael. I appreciate that. Hello,  

Everyone, my name is Kelly Stephenson, and thank 
you for joining us for today's webinar on Form   1099-K Third-Party Payment Network Transactions. 
Today's objectives are to provide you an overview   Of the Form 1099-K filing threshold for third 
party settlement organizations, or TPSOs; I'll   Provide information on the 2023 implementation 
delay, provide information on the planned 2024   $5,000 threshold, and provide you with resources 
to educate and help you prepare your clients   For the 2024 filing season. And what we will 
cover includes friends and family transactions,   Or peer-to-peer transactions, and some definitions 
of terms. We'll talk about how to report Form   1099-K amounts on the tax return. Tell you what 
taxpayers should do if a Form 1099-K is incorrect,   Discuss some recordkeeping and how it will help 
file taxes accurately, and cover available   Resources and information to share with your 
clients. The previous 1099-K reporting threshold   For third-party payment network transactions was 
over $20,000 and 200 transactions. The American   Rescue Plan Act of 2021 lowered the reporting 
threshold to total gross payment of more than   $600 for the year, regardless of the number of 
transactions for calendar years after December 31,   2021. The law further clarified that the minimum 
reporting threshold for calendar years after 2021   Apply only to payments settled through payment 
settlement entities, or PSEs, like popular payment   Apps and online marketplaces for the sale of 
goods or services, there is still no threshold for   Payment card transactions, which include credit, 
debit, and gift cards. The threshold change did   Not change the definition of reportable payments. 
The IRS announced that 2022 was a transition year,   And on November 21, 2023, the IRS announced that 
2023 will be another transition year to implement   The new requirement. This means that for 2023, 
popular payment apps and online marketplaces   Are only required to send out Forms 1099-K to 
taxpayers who receive over $20,000 and have over   200 transactions instead of payments over $600. 
This was in response to feedback from taxpayers,   Industry, and stakeholders, and was intended 
to help reduce confusion and provide more time   For taxpayers and stakeholders to prepare and 
understand the lower reporting threshold. Now,   Despite the delay, some taxpayers may still 
receive a Form 1099-K in January 2024. Backup   Withholding payments greater than $600 will also 
generate a Form 1099-K. The delay has no impact   On the taxpayer's responsibility to timely and 
accurately report their income. Taxpayers must   Continue to report all income unless it's excluded 
by law. The Internal Revenue Code gives the IRS   Commissioner broad discretion to administer the 
tax law. This delay is consistent with many others   We've taken in the past like FATCA and ACA. The 
IRS is planning a $5,000 threshold for tax year   2024 as part of a phased-in approach to implement 
this $600 reporting threshold enacted under the   American Rescue Plan. The IRS is still assessing 
if there will be a requirement for the number of   Transactions with the $5,000 reporting threshold. 
This phased-in approach will allow the agency to   Review its operational processes to better address 
taxpayer and stakeholder concerns. Our objective  

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Is to implement the laws that Congress passes with 
as little complication to taxpayers as possible.   Now, it's important to restate anyone who's 
selling goods or services at a gain is expected   To pay taxes on that income regardless of the 
threshold. Now, let's take a look at the actual   Form. Form 1099-K Payment Card and Third Party 
Network Transactions is an information return.   Payment settlement entities are required to file 
this document with the IRS by February 28th of   The year following the transactions, if they're 
filing on paper. If they're filing electronically,   They must file Form 1099-K by the last day of 
March. Payment settlement entities must also   Furnish a copy of Form 1099-K to the taxpayer 
with the same information reported to the IRS.   They must send payee or taxpayer copies to the 
taxpayer by January 31. Box 1a reports the gross   Amount of transactions. It is the total dollar 
amount of reportable payment transactions for each   Participating payee without any adjustment for 
credits, discount amounts, fees, refunded amounts,   Or any other adjustments to the gross amount. 
Now, this part can be confusing to taxpayers,   So it's important to know that in the first 
or second quarter of 2024, there are plans to   Improve the form's instructions with this type 
of clarification. Box 4 is used to report backup   Withholding if required. Now, as a reminder, 
a 1099-K is required if this is $600 or more   Despite the delay. Boxes 5a through 5l are used 
to report the gross amount of reportable payment   Transactions for each month of the calendar year. 
Information returns increased compliance and   Taxpayers use this form to help them determine 
income to report on their tax returns. So,   Who typically receives a Form 1099-K? Taxpayers 
likely to receive a Form 1099-K are businesses,   Sole proprietors, self-employed individuals, gig 
workers such as rideshare or delivery drivers,   Anyone selling goods and services, particularly 
through online marketplaces or who receive payment   Through an app. Those who rent out properties 
through a payment platform, app, or website,   And people with side jobs. For example, someone 
selling items at a holiday craft fair. There is   No change to how money earned is taxed, 
but many more taxpayers could receive a   Form 1099-K that should be used in combination 
with their books and records for preparing tax   Returns. For many taxpayers, 2023 or 2024, may 
be the first year they receive a form 1099-K and   They may have questions when they come to you. has been updated with information   To help taxpayers, practitioners, and VITA tax 
volunteers. resources include updated   Content at the Understanding your Form 1099-K 
page and the Gig Economy Tax Center webpage,   Which has resources that will be helpful for 
taxpayers. The IRS continues to develop resources,   Including more FAQs and communication products. 
Friends and family transactions – Only payments   From goods and services should be reported on 
a Form 1099-K. Money sent between family and   Friends received as a gift or for reimbursement 
is not required to be reported on a Form 1099-K,   Because it's not a payment for goods or services. 
For example, a payment app is not required to  

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Report money sent as a gift to a student for 
college expenses. A payment app is not required   To report money sent to a friend for reimbursement 
of dinner or a trip. Payment app is not required   To report any type of gift. These are all personal 
transactions and not transactions for goods or   Services. Form 1099-K should not be sent for these 
types of payments. Some individuals may receive a   Form 1099-K for the sale of personal items. The 
sale of personal items is reportable on a Form   1099-K if taxpayers receive more than $20,000 
and have more than 200 transactions. Examples   Could include selling a couch, a bike, or even 
gently use baby clothes. If a taxpayer receives   A Form 1099-K that is incorrect or receives a 
Form 1099-K for a friend or family transaction,   They can find guidance on IRS 
has updated guidance to direct taxpayers to   Report sales of personal items with offsetting 
adjustments on the Form 1040, Schedule 1. See   The Understanding your Form 1099-K for 
additional information. So, let's talk a bit about   Those terms that I mentioned previously. A PSE can 
take two forms, a Merchant Acquiring Entity or a   Third Party Settlement Organization, which is also 
the TPSO I referenced previously. Banks are an   Example of a PSE, also known as Merchant Acquiring 
Entity. We will talk some more about Third Party   Settlement Organizations on the next slide. The 
term payment card includes debit cards, credit   Cards, and gift cards. These types of transactions 
or payments were not impacted by the American   Rescue Plan Act threshold reduction. Reporting 
threshold has always been all transactions no   Matter the amount are reportable. Let's talk a 
little bit about a TPSO, which is really what most   People are interested in. So, what is the actual 
definition of a TPSO? It's a central organization   With a contractual obligation to make payments 
to participating payees generally a merchant   Or business of third party network transactions. 
The definition is certainly a mouthful. So, let   Me try to bring it down to more plain language. 
A TPSO is basically an online marketplace and   Digital payment app that are accessed online 
or on a smartphone as examples of TPSOs. These   Were impacted by the American Rescue Plan Act's 
threshold reduction. The new threshold is more   Than $600 and any number of transactions, where 
it was previously more than $20,000 and more than   200 transactions with delayed implementation 
for 2022 and 2023. We've given you a lot of   Information. So, how about we pause here for a 
polling question, Michael? Great idea, Kelly. So,   Audience, if you look to your screen, you should 
see a polling question. This is our first polling   Question and it reads, taxpayers likely to 
receive a Form 1099-K from a payment app are: A,   Sellers of goods and services or personal items; 
B, individuals earning money on a side hustle; C,   Businesses, sole proprietors, or self-employed; 
D, gig workers; or E, all of the above. So,   Which taxpayers are likely to receive a Form 
1099-K from a payment app? Take a moment to   Read through the question, click the radio button 
that best answers the question. I'll give everyone   A few more seconds to make your selection now. 
All right, let's stop the polling now, and give  

Me one second while I check in the background and 
get the count. And let's share the correct answer   On the next slide. So, the correct answer here 
was the all of the above. And I'm just getting   The number 97% of you answered that question 
correctly. Excellent job, everybody. All right,   Kelly, you're doing great. Passing it back to 
you. Thanks, Michael. Great job, everybody,   Answering that question. So next, let's talk 
about where do gig workers report. Gig workers   Often don't understand that they are by nature 
self-employed and subject to self-employment tax.   Gig workers who receive a Form 1099-K generally 
will – their proceeds on Schedule C in combination   With any other self-employment income received. 
Their net earnings are subject to self-employment   Tax if $400 or more. We recommend that gig workers 
should consider the following for their taxes too.   Increasing withholding from W-2 wage earnings to 
cover additional tax due and making estimated tax   Payments. Now, let's walk through an example of 
selling a personal item that might impact these   Individuals. Taxpayers who sell personal items and 
receive payment through an app could now receive   A Form 1099-K. The item sold may be considered a 
capital asset. Taxpayers may have questions on how   To report the information provided on their tax 
return. The sales price may be included in gross   Proceeds reported on Form 1099-K if the threshold 
is met. And they may have a gain or loss on the   Sale of personal capital or non-capital items. And 
it's generally the difference between the amount   Paid for the item, which is the purchase price or 
basis, and the amount received when they sell it,   Which is the sale price. So, you have the 
sale price minus purchase price equals   Either a gain or a loss. Losses on the sale 
of personal items are not deductible and gains   Are reportable. If the sale was of a capital 
asset, gains should be reported on Form 8949,   Sales and Other Dispositions of Capital Assets, 
and Form 1040, Schedule D, Capital Gains and   Losses. Publication 551, which is Basis of Assets, 
is available for guidance on this. So, let's run   Through an example of a gain. You buy a boat for 
$15,000. Something unavoidable comes up and you're   Forced to sell it for $20,000. You have a taxable 
gain of $5,000, which is the $20,000 sales price   Minus the $15,000 purchase price, which gives you 
your $5,000 gain. You might receive a Form 1099-K,   But either way, the transaction is taxable and the 
$5,000 gain should be reported as income. Remember   Those forms we referenced earlier? The gain goes 
on Form 8949 and Schedule D. Now, let's cover when   The sale is a loss. You bought a boat for $40,000. 
Unfortunately, you discover you get seasick and   You have to sell it. You sell it for $25,000. 
The buyer sent money to you through an app or   A digital platform, you have a loss of $15,000. 
The $25,000 sales price minus the $40,000 purchase   Price equals a $15,000 loss. Now, regardless 
of whether you receive a 1099-K, the loss is   Not deductible because losses on personal use 
items are not deductible and there is no tax due,   Because it's a loss, not a gain. Now, you have two 
options for reporting the loss. The first is Form   1040, Schedule 1, where you would use Lines 8z and 
24z or Form 8949 and Form 1040, Schedule D. Let's  

Look at the next few slides for specific reporting 
after we do another polling question. All right.   Thank you, Kelly. Audience, your second polling 
question should be popping up on your screen. And   That polling question reads, taxpayers who receive 
a Form 1099-K for the sale of a personal capital   Asset at a gain should: Is it A, report the gain 
of capital asset using Form 8949 and Form 1040,   Schedule D; option B, report the gain on 
Schedule C; C, do not report the gain; or D,   None of these options. This one might be a little 
trickier. Take a moment, reread the question, and   Then click the radio button that best answers the 
question. Now, I'll give you all just a few more   Seconds to make your selections on this one. Okay, 
we will close the polling now. And let's look to   The next slide to see the correct answer here. All 
right. And the correct response was A, you report   The gain of capital asset using Form 8949 and Form 
1040, Schedule D. And checking in with the team,   It looks like, all right, excellent work, 94% 
of you answered that correctly. Great job,   Everybody. Thanks for putting in your responses 
so quickly. All right, Kelly, I think it is   Back to you to discuss some specific reporting 
situation. Thanks, Michael. All right, remember   You sold the boat for $25,000 in the previous 
example. Let's walk through reporting that loss.   We've reported on Form 1040, Schedule 1, Part I 
Line 8z, Other income. List the type and amount,   Which is your Form 1099-K personal use item sold 
at a loss for $25,000. On the same Form 1040,   Schedule 1, Part II, which is Line 24z, under 
Other Adjustments, we're going to list the type   And amount, Form 1099-K personal use items sold 
at a loss of $25,000, which will net zero out the   1099-K given to you for $25,000. Now, if you want 
to report it on Schedule D, you would start with   Form 8949, and then throw the $25,000 in Column 
D as proceeds, enter the $40,000 in Column E as   Cost or your basis, enter L in Column F, enter 
$15,000 in Column G as the adjustment amount,   And it results in a zero gain or loss in Column 
H. Now, I usually suggest using Schedule D instead   Of Schedule 1 if your client has other 
items to report on Schedule D. Otherwise,   Schedule 1 is just a simple option for reporting. 
So, who issues the Form 1099-K if there are   Multiple payment settlement entities or PSEs? 
Many online transactions are handled by multiple   Payment settlement entities, such as an online 
marketplace where the goods or services are sold,   And the payment app who distributes the funds to 
the seller. If there are multiple PSEs, the one   Who makes the payment to the seller will generally 
be required to file Form 1099-K. So, for example,   John sold all of his furniture through an online 
marketplace because he was moving. John accepted a   New job across the country, and he has a big house 
and decided to sell absolutely everything through   An online marketplace. John received more than 
$20,000 and there were more than 200 transactions.   The payments were distributed to John via a 
payment app. Because the payment app distributed   The funds to John, the payment app would generally 
be required to furnish John with a Form 1099-K,   Which will also be filed with the IRS. If your 
client receives payments for selling goods or  

Services through multiple platforms, your client 
may receive one Form 1099-K, from each platform.   Hey, Michael, how about another polling question? 
Sounds good, Kelly. Audience, here is our third   Polling question. And this question reads, if you 
received a Form 1099-K for the sale of a personal   Item at a loss, you should that: A, report the 
entire loss of the personal item on Schedule C; B,   Zero out the reported gross income, so you don't 
pay taxes on it, you would use Form 1040, Schedule   1, or Form 8949 and Form 1040, Schedule D; option 
C, simply ignore it; or D, none of these options.   Again, these are a little bit more technical, but 
we'll give you a little bit of extra time to read   Through these. Take a moment to click the radio 
button that comes up with the best answer for the   Question. And I'll give everyone a few more 
seconds to make those selections. All right,   Looks like we will stop the polling now, and we'll 
share the correct answer on the next slide. Okay,   As Kelly [ph] had discussed with us, the correct 
response here is B, zero out the reported gross   Income, so you don't pay taxes on it and you can 
use Form 1040, Schedule 1 or Form 8949 and Form   1040, Schedule D. Let's see how we did. Okay, 
82% of you answered that one correctly. So,   Pretty good. Good job. But it does get a little 
more technical at this point. So, Kelly, thanks   For all the information you're providing so far. 
And I will turn it back to you. Thanks, Michael.   Let's talk a little bit about recordkeeping. 
So, what should you do if your client receives   A Form 1099-K? Have your client review payment 
activities? Records can show whether your client   Has a profit or a loss and help prepare you and 
your client to accurately file a tax return when   It comes time. Have your client identify sources 
of income or gross proceeds? Some examples, gig   Work, food delivery service, online marketplace 
sales, online rental or vacation property income,   Rideshare app driver, provides professional 
or creative services, et cetera. Also,   Sale of a personal asset, track gross proceeds 
of sales for each item. Ask for client to track   Deductible expenses throughout the year, unless 
your client records expenses when they occur,   Your client may forget when the tax return is 
prepared. There are several publications that   Can assist with determining qualifying expenses. 
Pub. 463 is for Travel, Gift, and Car Expenses.   Pub. 535 is for Business Expenses. Pub. 583 is 
for Starting a Business and Keeping Records.   Pub. 527 covers Residential Rental Property, 
including Vacation Homes. And we suggest reviewing   Withholding and estimated tax options with your 
client. Gig workers may require estimated tax   Payments. And it's important to note that gig 
workers and content creators have fluctuating   Income. They may make a large amount of money 
this month and no money next month. Form W-4   Can be used to request additional withholding from 
gross proceeds received to avoid making estimated   Tax payments. Increased withholding from a wage 
earning position as an employee may help avoid   The need to make estimated tax payments. Have your 
client keep track of basis in property. Did your   Client sell concert tickets? They should keep 
a copy of the original purchase receipt to help  

Determine if there's a gain or a loss on the sale 
of a personal use asset. And then it's time to   Prepare the tax return. Your client's good record 
keeping throughout the year will help your client   Provide accurate income and expense amounts for 
the tax return for you to prepare. What should   You do if there's an issue with a 1099-K receipt? 
If your client receives a Form 1099-K by mistake   Or the information is incorrect, you can do the 
following. Contact the issuer of the Form 1099-K   Immediately to request a correction. The issuer's 
name appears in the upper left hand corner on   The form along with their phone number. But it's 
important to note, please don't wait to file their   Taxes. If your client cannot get a corrected Form 
1099-K, then report it on Form 1040, Schedule 1,   Part I Line 8z. You can list the dollar 
amount received for line 8z as Other Income,   Form 1099-K Received in Error. Then list 
the dollar amount received for Part II,   Line 24z as Other Adjustment, Form 1099-K Received 
in Error. This will zero out. Hey, Michael,   Do we have another polling question? We sure do. 
Audience, here is our fourth polling question. And   This should be coming up on your screen now. This 
one is pretty technical. I'm not going to read   The whole question to you, but I'm hoping that you 
see it on your screen. The question reads, if you   Receive an incorrect Form 1099-K, you cannot get 
it corrected from the issuer, what should you do?   A, you ignore it; B, you report the incorrect 
dollar amount from Form 1099-K on Form 1040,   Schedule 1 as follows: I'll let you read that part 
from your screen, C, you report the error as a   Capital gain; or D, report the error on Schedule 
C, profit or loss from a business. I'll give you   A few minutes, just to make sure you have time to 
read the whole question. We'll take a moment now,   Click the radio button that best answers the 
question. And I'll give everyone a few more   Seconds to make those selections. All right, we're 
going to stop the polling now. And let's share the   Correct answer on the next slide. And we will get 
the number of correct answers in just a second.   But if you had not guessed already, the answer 
was B, you would report the incorrect dollar   Amount from Form 1099-K on Form 1040 as seen 
on your screen. Okay, it looks like 97% of you   Answered that one correctly. I was hoping you 
would see a high number like that. Great job,   Everybody. Thanks for sticking with us and making 
sure to answer those poll questions. All right,   Kelly, I believe you have some additional resource 
information to share with everyone. I do. Thank   You, Michael. There's a wealth of resources on 
the IRS website, and we will continue to update   Our content as we develop further guidance. The 
available resources include information to help   With Understanding the Form 1099-K, in addition 
to the Form 1099-K FAQs, which are being updated,   And the Gig Economy Tax Center. There are also 
other helpful topics like Recordkeeping and how   To make estimated tax payments. There are also 
products you can post on your website or print and   Share to help educate your clients. The IRS will 
continue to deliver communications and outreach   To help taxpayers understand the threshold change 
and their income tax responsibility. You can help  

Us in this effort. If you have a website, you can 
include a link to or add this   QR code that's on the screen, which will direct 
your customers to for more information.   You can also stay in touch with us through 
a variety of IRS social media channels we   Have available to keep you up to date with your 
activity. You can like or share our messages and   Videos on your website or social media platform 
to increase the audience and our messages reach; will give you a 
comprehensive list of every social media   Account the IRS uses. You can also tune into the 
IRS YouTube channels. There are four channels   In total to watch short practical videos in 
English, Spanish, Chinese, and ASL. Twitter or X,   IRS tweets include tax-related announcements 
for individuals, businesses, tax professionals,   And people looking for IRS jobs. This platform 
is a good way to stay up to speed on the latest   Scam alerts, too. There are eight IRS Twitter or 
X accounts available. Facebook. The IRS Facebook   Pages are in English and Spanish and post useful 
information, event announcements, and tips for   Taxpayers and tax professionals. There are four 
pages you can follow there. On Instagram, the IRS   Shares taxpayer-friendly information, including 
tax law changes, the latest tax scam information,   And helpful hints to combat tax-related 
identity theft. Updates are periodically   Shared in Spanish and other languages. There is 
one page to follow on Instagram. On LinkedIn,   The IRS page posts agency update, tax 
information, and job announcement. There   Are also e-news subscriptions that come straight 
to your email inbox and can be customized to   Individual preferences. Now back to you, Michael. 
All right, thank you so much, Kelly. All right,   It looks like next we will be moving into our Q&A 
session. So, audience, earlier I mentioned we want   To know what questions you have about Form 1099-K 
for our presenter. Kelly is staying with us to   Answer your questions. One thing we may not have 
time to answer all of the questions coming in,   But we do greatly appreciate all of those from 
you. So please submit those as we go through these   Or at any time throughout the end of the webinar. 
So, if you haven't input your questions already,   There is still time. Go ahead and click on the 
drop down arrow next to the Ask Question field,   And then simply type in your question and make 
sure to click Send to submit the question. All   Right, let's get started. So, we can get to 
as many questions as possible. And Kelly,   As I go through these, if there's something that 
comes through from the audience that you're not   Able to answer on a national webinar, feel free to 
let me know, no need to provide specific technical   Information that should be shared at this time. 
Just let me know and we'll pass to the next one.   But let's see, we'll start with one that is coming 
in pretty commonly. We hear this a lot. And so,   The question is pretty general, how does the IRS 
have the authority to delay the 1099-K rule? Well,   You're right, Michael. We do get this question 
a lot. The Internal Revenue Code gives the IRS   Commissioner discretion to administer the 
tax law. We've done this in the past where  

We've delayed implementation of laws in the 
interest of tax administration. For example,   We delayed implementation of the Employer Shared 
Responsibility provision under Section 4980H for   1 year. Likewise, we had to delay the companion 
information reporting provision under Section   6056. We also provided penalty relief for several 
years under 6055 and 6056 for the time to file.   And in the early years, if filers demonstrate good 
faith efforts to file accurately. Additionally,   The IRS-related withholding under the Foreign 
Account Tax Compliance Act, which is FATCA, and   Certain other FATCA timelines. Okay, okay. Good to 
know. Now, here's another kind of a tougher one,   And don't take this wrong way. The decision for 
the IRS to delay the 1099-K implementation, and   I believe last year and this year, it came late in 
the year. So the question that we're seeing a lot   Is, why did it take so long to make the decision 
to delay? It's an understandable question. Well,   Throughout the year, the IRS had many taxpayers, 
tax professionals, industry groups on other types   Of engagements. It just became increasingly clear 
that we needed additional time to further refine   Our approach. And we at the IRS had concerns about 
creating confusion and unnecessary reporting for   Taxpayers. And we wanted to avoid that, as well 
as the impact it would have on the third party   Groups, the tax professionals, and others in 
the tax community. So, it just seems like the   Right choice. Okay. All right. Thanks for that. 
Let's see, the next question is, what, if any,   Are the proposed changes for the Form 1040? Yes. 
So, again, after all of the external stakeholder   Engagements and input that we've received this 
year, we are considering changes to the 1040   And the related schedules. So that when the full 
$600 threshold is implemented, taxpayers will be   Able to more easily report the amounts on the 
form when they file their taxes. This will be   Especially important for those who sold personal 
items at a loss or otherwise don't have any kind   Of a tax obligation from, say, a friends and 
family transaction. Okay, good to know. Let's   See here. All right, next question, and again, 
if you're not able to provide specific dates,   Just general timelines is fine, or whatever you're 
able to provide with us on this. So, this one is,   When will the IRS implement the $600 threshold? 
Good question. Well, we're committed to a smooth   Transition and minimizing confusion for taxpayers. 
So, we're taking this phased-in approach,   Because we think it's the right approach to 
implementing the law efficiently and effectively.   The IRS will evaluate the planned threshold 
of the $5,000 as it's implemented in 2025,   While we continue to work on updating our 
internal operational processes. Okay. Let's   See. And then we have a number of questions coming 
in from the audience. So, thank you everybody,   Please keep those coming. We'll try to get to 
some of those more specific ones. Okay, here's   More of a general one for you, Kelly. What are 
the industry groups that the IRS is meeting with   Or has met with? Sure, that's a good question. So, 
throughout the year and continuing into next year,   We heard from taxpayers, tax professionals, 
industry groups, payment processors, and others,  

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Which also included the filing industry. So good 
groups. All right, lots of great. All right,   Let me find another question here. All right, this 
question reads, this is kind of a long one. So,   I'll try to make this little brief. A question 
reads, how do you report the sale of personal   Property that was purchased years ago, 
and you no longer know the purchase price,   But it was sold less than the original 
purchase price? We know it was a loss,   But you do not recall the correct, the original 
purchase price. This is a good question. It's one   That we get often in relation to basis. I would 
like to say that there are some good examples   On 1099K that refer 
back to this. If you don't know, if you don't keep   The original records for a personal asset, say, 
a couch that you purchased that you are positive,   You've now sold at a loss. We encourage you 
to look into it a number of different ways,   You can Google to see if you can locate some sort 
of historical price. You can go on to a website   And search for similar items to see what the 
purchase price is. You can take a look at perhaps   Your credit card receipt or debit card receipt, 
those statements, and see if you can recreate the   Price that way. Those are our best recommendations 
for recreating an original purchase price or basis   On and documenting the sale of a personal item 
at a loss. Okay, good answer. Thanks for that,   Kelly. And, yeah, it just makes me realize how the 
importance of record keeping longer than you might   Have thought. Yeah, very good information. Okay, 
this next question, I do have the paraphrase one   Of these. So, this next question reads, although 
the threshold amount for implementation has been   Delayed, are there still situations when a 1099-K 
will be issued using that $600 threshold? Good   Question. Yes, it is still possible that taxpayers 
may receive a 1099-K utilizing the $600 threshold.   That's why it's important to keep good books and 
records, as you mentioned, Michael. And then,   Determine whether the item was sold, for goods 
and services at a loss or a gain. And then,   Determine whether it's best to report that on the 
1040 Schedule 1, Lines 8z and 24z or the Form 8949   And Schedule D on the 1040. Okay. All right. Let's 
see. I am going to skip one, move to another one.   Let's see. Okay, this question reads, how do 
we handle a 1099-K that includes both business   And personal transaction? Great question. Sorry, 
go ahead, Michael. Oh, I was just going to say,   These will get a little bit complicated as I am 
reading directly from our audiences' questions,   So I do kind of have to rephrase this 
sometimes just to simplify it. But if at   Any time it's unclear, please ask me to repeat the 
question, I am happy to do so. I appreciate that,   Michael. Thank you. It is very possible that there 
could be a commingling of business and personal   Transactions if the individual doesn't have 
separate accounts for business and personal. So,   First, I would start with encouraging good record 
keeping for your clients, so that they understand   Which of their transactions are business and which 
are personal. The second thing I would recommend   Is that they create separate accounts, which make 
separating those transactions incredibly easy.  

Utilize just the business account for their 
transactions and then their personal account   Which for those that are friends and family 
transactions peer to peer which are non-taxable,   Those should not generate a Form 1099-K out 
of the personal account for friends and family   Transactions, unless they're marked as for goods 
and services which is a possibility. So that's my   Recommendation is to document that through 
recordkeeping and utilize the two separate   Accounts. Now, if for some unforeseeable reason 
that the client did not do either of those. Then,   You're going to need to go back with your client 
and advise them to look through each individual   Transaction to see if they can determine which are 
business and which are personal. In which case the   Business transactions will likely be reported on 
Schedule C subject to self-employment tax. And   Then the personal transaction, you can report them 
on 1040 Schedule 1, Lines 8z and 24z to net zero   Out those personal transactions. Or if you're 
already preparing Schedule D and you choose to   Report it on Form 8949 and Schedule D, you can do 
that as well for those personal transactions. I   Hope that answers the question. Yes, I think that 
definitely covers it. So, thanks for answering   That. And just for anybody wondering, I know we 
are kind of covering technical procedures here.   If you're not taking active notes and maybe hard 
to remember all of this, just a quick reminder,   All of these webinars, and this one specifically 
will be recorded and posted on   And you can even read this transcript later. So, 
these are great questions. Thanks to our audience.   All right, let's see if we can get another one in 
here. All right. Okay, this one might be similar   To one of your prior answers, but we're getting 
a lot that are related to this. So, the question   Reads, what should we as tax preparers do if 
our clients do not know their original purchase   Price of a personal item that they sold? Yes. I 
think we had something similar a few questions   Ago. My recommendation is to do the best that 
you can to recreate the basis. For example,   There are examples on, Understanding 
Your 1099K page that can help. But some of the   Things that we recommend are searching historical 
purchase prices to see if you can recreate the   Price that way, searching through credit 
card statements or debit card statements,   As well as searching Google to see if you can 
find something similar with the price and back   Into it that way currently. And, therefore, that 
should help you determine whether you have a gain   Or a loss. Okay, great. All right, good option. 
Thank you. All right, next question. All right,   This one is a little bit longer as well. This 
question reads, will you as a taxpayer, will the   Taxpayer receive a 1099-K for every person that 
pays them more than $600? Or will it be one 1099-K   With all the reportable income included? That is a 
good question. Oh, go ahead, Michael. Sorry. Oh, I   Was going to say that there is the name of a third 
party settlement organization in that question,   But I won't read that on Okay, I appreciate that. 
The answer to the question is, they will receive   A 1099-K from each payment platform. So, the Third 
Party Settlement Organization, or TPSO, that paid  

Them, it will be one per TPSO or platform as long 
as it is above the threshold. The threshold is not   Set on per person payments, it's aggregate per 
platform. So, say, your client received $28,000   From each of three different platforms, and they 
would receive 1099-K from each of those three   Platforms, so three Form 1099-K. I hope that 
answers the question. I think it does. That's   Excellent. All right, Kelly. Okay, I'm getting 
the word. We are wrapping up our questions. That   Is the end of our time for this. So, thank you 
so much for staying on and answering those live   Questions with our audience. Before we leave, 
do you have any key points that you want our   Attendees to remember from today's webinar. Oh, 
absolutely. Thanks for asking. The key takeaways   From today's webinar are that the American Rescue 
Plan Act of 2021 lowered the reporting threshold   To total gross payments of more than $600 for the 
year, regardless of the number of transactions   For calendar years after December 31, 2021. The 
law further clarified that the minimum reporting   Threshold for calendar years after 2021 apply only 
to payments settled through payment settlement   Entities like payment apps and online marketplaces 
for the sale of goods or services. There is still   No threshold for payment card transactions. The 
threshold change did not change the definition of   Reportable payments. Personal transactions between 
friends and family for gifts and reimbursements   Are not reportable payments. The IRS announced 
on November 21, 2023 that 2023 will be another   Transition year to implement the new requirement. 
This means that for 2023 popular payment apps and   Online marketplaces are only required to send out 
Forms 1099-K to taxpayers who receive over $20,000   And have over 200 transactions instead of payments 
over $600. The IRS is planning a $5,000 threshold   For tax year 2024 as part of a phased-in approach 
to implement the $600 reporting threshold enacted   Under the American Rescue Plan. Now, despite 
the delay, some taxpayers may still receive a   Form 1099-K in January of 2024. The delay has no 
impact on the taxpayer's responsibility to timely   And accurately report their income. Taxpayers must 
continue to report all income unless it's excluded   By law. But it's important to restate, anyone 
who is selling goods or services out of gain is   Expected to pay taxes on that income regardless 
of the threshold. And has an abundance of   Information available and is a great resource for 
you and your clients. Audience, that's my time for   Today, and I thank you for your participation. 
And Michael, back to you. All right. Thank you,   Kelly. Great information today, and thanks to you 
and our audience for all the engagement, all your   Questions, and a wonderful webinar. Audience, we 
are holding a 2-hour ethics webinar coming up next   Tuesday, December 19th. And to register for the 
ethics webinar or any of our upcoming webinars,   You can visit us at and do a keyword 
search for webinars, and select the link for   Webinars for tax practitioners or webinars 
for small businesses. And when appropriate,   We will be offering certificates of completion and 
continuing education credits for those upcoming   Webinars. We invite you to visit our video portal 
that's at You can view archived  

Versions of all of our webinars. Now, again, 
continuing education credits or the certificates   Of completion that you receive for these webinars, 
those are not offered if you view an archived   Version of any of our webinars on the IRS video 
portal. Another big thank you to Kelly Stephenson   For a great webinar and sharing her expertise 
today. And I also want to thank you all of our   Attendees for attending today's webinar, Form 
1099-K Third Party Payment Network Transactions,   Card and Electronic Payments. If you attended 
today's webinar for at least 50 minutes after   The official start time, you will receive a 
certificate of completion that you can use with   Your credentialing organization for one possible 
CE or continuing education credit. Again, the time   We spent chatting before the webinar started 
does not count towards those 50 minutes. If   You're eligible for continuing education from the 
IRS and you registered with your valid PTIN, your   Credit will be posted in your PTIN account. If 
you are eligible for continuing education from the   California Tax Education Council, your credit will 
be posted to your CTEC account as well. If you   Qualify, but you haven't received your certificate 
and/or credit by December 31, 2023, please email   Us at 
And you'll see that email address on this   Slide. If you're interested in finding 
out who your local stakeholder liaison is,   You can send an email using that address and 
we'll send you that information as well. We would   Appreciate it if you would take a few minutes to 
complete a short evaluation before you exit. If   You'd like to have more sessions like this one, 
please let us know. If you have thoughts on how   We can make these better, let us know about it 
as well. And if you have any requests for future   Webinar topics or pertinent information you'd 
like to see in an IRS Fact Sheet, a Tax Tip,   Or an FAQ on, then please include your 
suggestions in the comment section of the survey.   Just click the survey button on the right side of 
your screen to begin. And if it doesn't come up,   Check to make sure you disable that pop-up 
blocker. It's been a pleasure to be here with   You. And on behalf of the Internal Revenue Service 
and Kelly, our speaker, we would like to thank you   For attending today's webinar once again. It's 
important for the IRS to stay connected with the   Tax professional community, individual taxpayers, 
industry organizations, along with federal, state,   And local government organizations, you make 
our job a lot easier by sharing the information   That allows for proper tax reporting. 
Thanks again for your time and attendance,   And we wish you much success in your business or 
practice. You may exit the webinar at this time.

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