Many more third party payments (PayPal, Venmo, etc.) and online marketplace transactions (eBay, Etsy, etc.) must be reported to the IRS under a little-known provision in the American Rescue Plan Act (ARPA) of 2021. Prior law required the reporting form, Form 1099-K, to be filed only if a user had received at least $20,000 from a minimum of 200 transactions. ARPA changed that to just $600 with no transaction minimum. The IRS delayed enforcement for two years, and then adopted a non-statutory $5,000 threshold for 2024 and $2,500 for 2025.
The $600 threshold dramatically expands the number of taxpayers who could receive the form—creating confusion, unnecessary paperwork, and potential overpayment of taxes. The 2024 and 2025 IRS thresholds are not authorized by law and raise serious legal and administrative concerns. The House’s reconciliation bill and standalone legislation would restore the original threshold and bring relief before next tax season.
ARPA Drastically Expanded 1099-K Reporting Requirements
Prior to 2022, platforms were only required to issue a 1099-K—to both the user and the IRS—if a user had more than 200 transactions totaling over $20,000 in a calendar year.
ARPA slashed the threshold to just $600, with no transaction minimum—dramatically expanding the number of affected taxpayers.
The IRS expanded its 2024 estimate from 16 million to 44 million forms—nearly three times the 2023 total.
ARPA’s Lower Threshold Is a Major Source of Taxpayer Confusion
The 1099-K form has earned the nickname “Venmo tax form.” When it shows up unexpectedly in the mail, many taxpayers don’t realize the reported amounts aren’t necessarily taxable—and out of fear of the IRS, they may end up overreporting income and paying more than they actually owe.
Form 1099-K is intended to track business income, but it often captures personal or non-taxable transactions, confusing casual users who use apps for things like splitting rent or selling used household items.
It reports the gross amount of payments—including shipping, sales taxes, and platform fees—which are not actually income to the seller.
Millions of taxpayers will now have to sift through app histories, research the original purchase price of items bought years ago, or hire tax professionals—all just to prove they don’t owe tax on personal transactions.
The burden falls especially hard on lower- and middle-income Americans, who are less likely to have tax advisers or detailed documentation.
People shouldn’t have to treat their personal lives like a business just because they use a few apps.
The IRS Is Enforcing a Threshold That Congress Never Authorized
The IRS delayed enforcement of the $600 threshold for 2022 and 2023, with the Commissioner admitting the Service was “not ready to administer in a way that provides taxpayers the clarity they need.” The IRS moved forward with its own made up non-statutory thresholds of $5,000 in 2024 and $2,500 in 2025.
Tax Year | Statutory Threshold | Threshold Enforced by the IRS |
Pre-2022 | $20,000/200 transactions | $20,000/200 transactions |
2022 | $600 | $20,000/200 transactions |
2023 | $600 | $20,000/200 transactions |
2024 | $600 | $5,000 |
2025 | $600 | $2,500 |
Congress never authorized these phased thresholds—and there’s no clear legal basis for the IRS to rewrite the law on its own.
This raises serious concerns about agency overreach, sets a troubling precedent, and adds confusion for taxpayers already struggling with unclear guidance.
Congress Must Act to Fix the 1099-K Mess Before It Gets Worse
Reverting the threshold would prevent a flood of unnecessary forms. The IRS projected 44 million 1099-Ks in 2024, nearly triple the 16 million issued in 2023. That number will only grow as the threshold drops to $2,500 in 2025 and $600 in 2026.
The pre-ARPA threshold of $20,000 and 200 transactions would provide a safe harbor for people who sell online or only make occasional and primarily non-taxable sales.
The House Ways and Means Committee has included a provision in its reconciliation package to reverse the ARPA change and restore the previous 1099-K reporting threshold.
In addition, Rep. Carol Miller has introduced H.R. 1882, the Saving Gig Economy Taxpayers Act, a standalone bill that would provide the same fix and protect casual users of payment apps from unnecessary tax forms and confusion.