Notice 2023-10

Notice 2023-10

Revised Timeline Regarding Implementation of Amended Section 6050W(e)

Section 6050W, added to the Tax Code by the Housing Assistance Tax Act of 2008, requires payment settlement entities to file information returns (1099-K) with respect to payments made in the settlement of certain reportable payment transactions.

Section 6050W covers two types of reportable payment transactions: (1) payment card transactions and (2) third-party network transactions. These obligations extend to central organizations, known as third-party settlement organizations (TPSO), that have a contractual obligation to make payments to the participating payees allowing purchasers to transfer funds to providers of goods and services.

As originally enacted, section 6050W(e) only required a TPSO to report third-party network transactions in excess of $20,000 and only if the number of such transactions exceeded 200 (de-minimus thresholds).

The American Rescue Plan Act (ARPA) of 2021 significantly lowered these de-minimus thresholds to $600 without regard to the total number of transactions. The ARPA took effect in the calendar year 2022, and its information returns are due in 2023.

Notice 2023-10 provides much-needed relief. The calendar year 2022 will now be regarded as a transition year for IRS enforcement and administration of the modified de-minimis rule changes. TPSOs are only required to report payments if the gross amount exceeds $20,000, and the number of such transactions with that payee exceeds 200 (the original de-minimus rules). The IRS will not assert penalties under § 6721 or § 6722 for TPSOs failing to file or to furnish Forms 1099-K unless the gross amount of aggregate payments to be reported exceeds $20,000, and the number of transactions exceeds 200.

If you have questions about how to proceed, as there are some additional considerations here if you have already applied and remitted federal withholding or if you are considering reporting amounts under the lower de-minimus threshold, please don't hesitate to reach out.

The complete text of Notice 2023-10 can be foundhere.

_________________________________________________________________________________________________

Copyright © 2019 by S&P Global Market Intelligence, a division of S&P Global Inc.

These materials have been prepared solely for information purposes based upon information generally available to the public and from sources believed to be reliable. S&P Global Market Intelligence, its affiliates, and third party providers (together, "S&P Global") do not guarantee the accuracy, completeness or timeliness of any content provided, including model, software or application, and are not responsible for errors or omissions, or for results obtained in connection with use of content. S&P Global disclaims all express or implied warranties, including (but not limited to) any warranties of merchantability or fitness for a particular purpose or use.

S&P Global Market Intelligence's opinions, quotes and credit-related and other analyses are statements of opinion as of the date they are expressed and not statements of fact or recommendation to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security.

S&P Global keeps certain activities of its divisions separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain divisions of S&P Global may have information that is not available to other S&P Global divisions.

S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence PD credit model scores from the credit ratings issued by S&P Global Ratings.

S&P Global provides a wide range of services to, or relating to, many organizations. It may receive fees or other economic benefits from organizations whose securities or services it may recommend, analyze, rate, include in model portfolios, evaluate, price or otherwise address.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.