Venmo, CashApp to Send Tax Form to Many New Sellers in 2025 (2)

E-commerce giants such as PayPal Holdings Inc.‘s Venmo, Etsy Inc., and CashApp now know which customers must get a certain tax form for the 2025 tax filing season and beyond.

The companies will be required to send a 1099-K form to taxpayers with more than $5,000 in business transactions during calendar year 2024—formalizing an IRS announcement from last year, the agency said in guidanceTuesday. For 2025, the threshold will drop to $2,500 and for 2026 and after it will be $600.

The IRS said it will not assert penalties on these payment platforms for failure to withhold and pay backup withholding tax during the 2024 calendar year.

A 2021 law that significantly expanded the scope of who gets 1099-K forms—taxpayers with more than $600 in gross payments—was set to take effect for tax year 2022. But the IRS pushed back the effective date multiple times and created the $5,000 requirement for 2025 as companies and taxpayers brace for the transition.

Millions of unsuspecting taxpayers were expected to receive the form for the first time when the $600 threshold gets implemented, a steep drop from the previous requirement of $20,000 in gross payments and over 200 transactions.

Lawmakers from both major parties want to prevent taxpayer confusion by passing legislation to raise the threshold, but that effort has stalled.

Some tax professionals and lawmakers have criticized the IRS for delaying the new requirements beyond what the law stated, though it is generally seen as favorable to taxpayers.

A group representing some of the companies impacted, including eBay and Etsy, called on Congress to act before the new year.

“While today’s IRS announcement on 1099-K reporting thresholds purports to provide relief for taxpayers, it just causes more confusion and delays a necessary fix in law,” the group said in a statement.

“We urge Congress to act this year to provide certainty to taxpayers and end this confusion. There are several bills that have been introduced, and there is bipartisan, bicameral support for a permanent fix in law.”

Republicans took the opportunity to cast blame on Democrats.

“With this new scaled phase-in the IRS has decided they will put Democrats’ 1099-K policy on a delayed timer that will fully detonate in the middle of Donald Trump’s second term in office,” Ways and Means Committee Chairman Jason Smith (R-Mo.) said in a press release.