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IMPORTANT UPDATE!

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Anyone getting paid for their goods and services through apps like Venmo, PayPal or CashApp, or platforms like Etsy and Airbnb, just got a reprieve from the IRS.

Following concerns expressed by the tax community, the electronic transactions industry and some lawmakers, the IRS said Friday it would delay by one year the implementation of a rule change that would have resulted in a virtual paper chase of tax forms going out by January 31, 2023, to anyone using such apps for their business transactions.

The rule change requires third-party payment platforms to issue a 1099-K to the IRS and the app user for business transaction payments if they add up to more than $600 over the course of the year. A business transaction that is taxable is defined as a payment for a good or service, including tips.

It used to be those platforms only had to issue you a 1099-K if you engaged in more than 200 business transactions for which you received total payments of more than $20,000 in a year.

“The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” said Acting IRS Commissioner Doug O’Donnell. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes. The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements.”

Indeed, the increase in 1099-Ks issued early next year for people’s 2022 tax returns was expected to be, in a word, “ginormous,” according to Wendy Walker, who chairs the information reporting subgroup on the Internal Revenue Service Advisory Council.

Walker works as a solution principal for Sovos, which helps more than 30,000 business clients with tax compliance, including the issuance of all types of 1099s, of which there are at least 16 different varieties.

Some businesses that only had to issue a couple thousand 1099-Ks under the prior rules were looking at a couple hundred thousand, she noted. “Our clients … have reported enormous increases in their potential filing obligations as result of the threshold change,” Walker said.

Meanwhile, those receiving 1099-Ks for the first time will have to figure out what portion of the amount reported on the form is actually taxable versus what portion represents payments that may be deductible business expenses, such as a fee paid to the payment platform or a credit issued to the business, Walker said.

“People are just not going to understand how to take that gross amount and then work off the deductions to get to their taxable amount.”

FOR MORE INFORMATION ABOUT THIS PLEASE READ/CLICK THE LINK BELOW:
https://edition.cnn.com/2022/12/23/investing/irs-delays-threshold-increase-for-business-transactions/index.html

As your trusted financial partner, and at the start of a busy holiday season, we want to keep you and your employees ready for anything. Here’s what you can do to help keep your business and customers’ information safe and protected against common scams.

Ways to protect your business:

• Keep all internal systems up-to-date and ensure that your employees are trained regularly on how to detect and protect against emerging fraud trends
• Designate a single computer for online banking and no other tasks
• Secure your computer network, including mobile devices used to access account information, with appropriate security software, firewalls and regular security scans

Ways Frost can help protect you:

• Positive Pay gives you the ability to verify checks for payment and return fraudulent checks before they post to your account
• Positive Pay with Payee Review provides check-issue information for review and the ability to verify the payee’s name on checks presented for payment
• ACH Fraud Prevention helps protect your financial assets by adding an extra layer of security between your accounts and unauthorized ACH debits and credits
• Be sure to monitor your financial transactions or statements regularly for unexpected activity, and contact us immediately if you notice any unusual activity.

For additional information on our fraud prevention services and to stay up to date on the latest fraud trends, visit frostbank.com/fraud-prevention or call us 24/7 at (800) 513-7678.

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New Hire Reporting - Texas Workforce Commission Reporting new hires and re-hires saves employers money by reducing fraudulent claims for public assistance, worker’s compensation and unemployment benefits.