: Measures to delay $600 tax-reporting threshold for PayPal, Venmo payments fail to make it into omnibus bill

: Measures to delay $600 tax-reporting threshold for PayPal, Venmo payments fail to make it into omnibus bill

Millions of gig workers and sellers that use payment networks like PayPal and Venmo remain on track to receive a 1099-K tax form in 2023 for the first time, after measures that would have delayed a key tax-reporting change failed to make it into a year-end spending bill that passed the Senate on Thursday.

The change, which has taken effect with the 2022 tax year, is that third-party payment networks will be required to send 1099-K forms to workers or sellers who have earned more than $600 in a year through one or more transactions, down from prior thresholds of $20,000 a year and 200 transactions.

The new approach is due to a provision in March 2021’s American Rescue Plan, which was Democrats’ $1.9 trillion COVID-19 aid package. It’s expected to raise $8.4 billion over 10 years.

See:IRS warns about new $600 threshold for PayPal, Venmo payments

One of the senators who pushed unsuccessfully this week for delaying the change —Democratic Sen. Joe Manchin of West Virginia — said he’s now asking the Internal Revenue Service to deliver relief.

“I urge the IRS to use their authority now to delay the implementation and allow Congress to continue working to find a lasting solution that prevents this harmful regulation from impacting small businesses,” Manchin said in a statement on Thursday.

In a similar vein, a coalition of companies that have lobbied against the change asked Treasury Secretary Janet Yellen to provide a delay in a letter on Thursday. That coalition includes eBay EBAY, +0.12%, PayPal PYPL, +0.67%, Etsy ETSY, -0.32% and others.

“A delay will ensure that taxpayers are not overwhelmed by millions of confusing 1099-Ks being issued in early January and will allow Congress additional time to craft a commonsense solution that is in the interest of both tax administration and the American taxpayer,” the letter says.

While critics have described the shift as burdensome, supporters have said it’s about helping workers document their income so they can later get Social Security and other benefits. In addition, one expert said in an interviewlast year that the change isn’t about levying new taxes on gig workers, but rather it has to do with existing taxes that people haven’t been compliant with, because they haven’t gotten 1099-K forms.

The House of Representatives is expected to vote Friday on the $1.7 trillion spending package, after the Senate passed the omnibus bill Thursday.

Now read:Measures to target fake products, help private equity make it into year-end spending bill

And see: 401(k) changes in, cannabis banking out: Here are the details of Congress’ big year-end spending package

MarketWatch’s Andrew Keshner contributed to this report.

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