Thursday, January 6, 2022

New Rules For Third Party Settlement Organizations (TPSO)

William Delaney, EA
Westwood, MA

Think form 1099-K issued by credit card companies and banks, but only to report 

more than $20,000 and/or if there are more than 200 transactions. Now comes the 

American Rescue Plan Act of 2021 which throws this out the window as of 

January 1, 2022. As of 2022, we have a simple reporting requirement…receipts of 

more than $600 per year.

This matches the current reporting requirement for form 1099-NEC.

This closes the so-called PayPay loophole; TPSOs are now playing by the same 

rules as everyone else. Remember, also, that the definition of a TPSO includes not just

PayPal but also Uber, Lyft, eBay, Grubhub and Etsy, to name a few.

This time next year, expect to see forms 1099-K from clients who never thought that

their income source would be discovered and reported!

Finally, MA already has in place a more than $600 filing requirement for TPSOs, along

with AK, IL, MD, MI, MS, NJ and VT which have enacted various (i.e. lower than

$20,000) filing requirements.

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