What Changed
Under the One, Big, Beautiful Bill (OBBB), the reporting threshold for third-party settlement organizations issuing Form 1099-K to payees has reverted to $20,000 in gross payment volume and over 200 transactions. This reverses the lower thresholds enacted under ARPA that many informal and small online sellers briefly experienced. (irs.gov)
Who This Affects
- Sellers using apps or platforms (e.g. Etsy, eBay, social-media marketplaces) now below these old ARPA thresholds should anticipate fewer 1099-K forms.
- Gig economy workers and freelancers receiving payments via TP-entities like Venmo, PayPal, etc., may now only receive 1099-K forms if both volume and transaction count thresholds are met.
- Tax preparers should reexamine clients’ records for transactions that may cross the reinstated threshold. Even if 1099-K isn’t issued, income still needs to be reported. Form 1099-K doesn’t determine taxability; it provides reporting.
Practical Steps & Examples
| Scenario | Before OBBB | Under Restored Threshold | What to Do |
|---|---|---|---|
| Small online seller earns $25,000 from 80 sales | No 1099-K (did not meet both thresholds) | Gets 1099-K (meets both: volume & measurements) | Maintain records and expect IRS matching to Form K |
| Gig worker receives $15,000 across 250 jobs | Meets transaction threshold, meets volume threshold pre-OBBB | Does not receive 1099-K (low dollar amount) | Still report income; 1099-K absence isn’t a shield |
Reporting Accuracy & Recordkeeping
- Keep detailed records of all income, even if no 1099-K is issued. A bank statement + platform summary + invoices works.
- Platforms should furnish statements about payments received; individuals must report their gross receipts fully.
- Review payments where thresholds may be close—many 1099-K forms arrive in January following the tax year.
Tax Planning Tips
- If you anticipate passing the threshold, plan for estimated taxes or withholdings to avoid underpayment penalties.
- Consider structuring marketplace activity vs direct sales—though beware of IRS rules on business vs hobby income.
- Use bookkeeping tools to track number of transactions per payor, not just total dollar value.
Bottom Line
The restored threshold reduces burden on very small sellers, but still places responsibility on taxpayers to report all income. Don’t rely on whether you received a 1099-K; rely on your income records.