For decades payment processors like paypal weren't required to 1099 you unless you made $20,000 & 200+ transactions. But that has been decreased to $600, so my question is what year will be the first year in which this is applied? Will this be applied for 2021? I.e. If in 2021 $600 is processed through a paypal account will paypal be required to 1099 that account? Or will it remain $20,000 until 2022? I.e. this page states that payment processors like paypal will only 1099 accounts processing $600 starting in 2022, but some other sources have other information.
It seems like there is some ambiguity. From Sovos:
While the threshold change is clear, the effective date of the change is not. Specifically, the bill indicates that the change “shall apply to returns for calendar years beginning after December 31, 2021.” It seems so simple – but in practice, I’ve already received these two questions:
Does this mean that the change is effective for returns filed after December 31, 2021? If so, this means that the Forms 1099-K for the 2021 calendar year are impacted.
Does this mean that the change is effective for returns issued after December 31, 2021? If so, this means that the Forms 1099-K for the 2022 calendar year are impacted.
As I told Liz Farmer at Forbes, the budget analysis for the Act includes expected increases in tax revenue associated with this change for Fiscal Year 2022 which is the calendar year 2023. Therefore, I interpret the second scenario is correct – so returns issued for the 2022 calendar year that are filed in early 2023 are impacted.
I guess we’ll know for sure when the IRS releases follow-up communications.
This seems logical to me, and most sources agree: the change is for 2022 transactions, reported in 2023. But there's always a chance the IRS surprises us.