Project 00998

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Extend the wait period another year to ensure there is ample time for education and roll out to all taxpaying communities. To evaluate a variety of scenarios that will impact taxpayers and may inadvertently target the underserved community.

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Evaluate the data and 1099-K metrics and review the 1099-K splash page on IRS.gov. How many active users are going to the page. Use data to drive ongoing education and target information to those communities and users.

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Identify the entities and non-profits that are exempt from the 1099-K process Inform taxpayers if churches and other nonprofit communities may be impacted based on the third party app usage

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There should be a process and timely resolution when a 1099-K is issued in error. Justification: make sure we address scenarios of TP mistakes, i.e., toggle wrong wording, incorrectly coded by company; There should be some type of auding of third party payment systems. There should be instructions and a toll free line on how to resolve these issues.

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Develop a decision tree to identify if a transaction should be included. If the transaction is identified in error Make sure multiple forms of communication nd media styles to ensure that we capture all TP communities for that might not have access to internet, etc.

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Develop a 1099-K publication prior to the launch of the new changes. Provides a thorough review and knowledge of how and why the changes are being made for the 1099-K. Ensure that multiple modes of media are used for the roll out.

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Have separate detailed instructions that are clear and concise in multiple forms, language and media. Ensure instructions are up to date and clear on how to complete and resolve issues with the 1099-K form.

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Changes or updates to any 1099-Kforms ensure they are aligned with the schedule C Make sure that Schedule C is reviewed for alignment with changes to the 1099-K per taxpayers’ ease of use.

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Ensure that IRS Payment plan options are compatible with the current payment that taxpayers use, i.e., cash app, Venmo, PayPal, etc. If third party transactions are being reviewed then the IRS should be able to take third party payments via cash app, Venmo etc.

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Streamline the process to include international transactions without an adverse problem for the taxpayer. Ensure that there is a quality system for international taxpayers.

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Require additional education for hobby income, for profit businesses, etc. Ensure all non-standard forms of income are included in the instructions and those that are out of scope for the 1099-K.

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Develop outreach between TAP, TAS, LITC, SPEC/VITA to educate and inform taxpayers. Use the IRS partners to assist with getting the word out on the changes.

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Identify a means that 1099-K taxpayers generate W-4’s to take out necessary taxes. Expand the program where applicable to take out taxes via the W-4 so that anyone getting a 1099-K can manage their taxes outside of estimate payments. Form W-4V may be modified to include payments made by a Third Party Settlement Organization (TPSO) and allow taxpayers to submit the form to the TPSO and have taxes voluntarily withheld. Currently, a TPSO hay must perform back up withholding under IRS Code Section 34069a) so the TPSO may already be set up to allow for withholding. The TPSO would have a backup withholding requirement if the taxpayer did not provide their identification number.

For example, if a person has a Go-Fund-Me account, they should have the option to take out taxes for compliance with tax laws. Just this year when an athlete got hurt on the field, a Go -Fund-Me account was set up that reached over a million dollars. This recommendation would drive increased comp0liance to tax laws.

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Develop and devise an education and communication plan that highlights changes that will educate and inform taxpayers. Taxpayers need the right to be informed

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Provide a seamless process to correct the 1099-K (business to business (BB) and personal to business. Ensure that TAS and other groups are staffed to support the changes and any issues related to the new 1099-K processes.

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Ensure that 1099-K form is launched as a free file fillable form for corrections (Forms that are taxpayer facing should be in Free File Fillable Forms.) Minimize paper usage and reduce costs.

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Use demographic data to target the prevalent community to determine who is using third party vendors and develop education programing and the media forms to reach these communities. Ensure all taxpayers are informed

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Page 1 Column 1 Reminders Who must file Delete this bullet point. The instructions to this form include the Who Must File. A taxpayer looks to the specific form instructions to determine if they must file the form.

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Page 1 Column 1 Reminders When and where to file Delete this bullet point. The instructions to this form should include the When and where to File. A taxpayer looks at the specific form instructions to determine when and where to file.

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Page 3 Who Must File Add a new section labeled General Instructions and move the Who Must File section to Page 1 after Reminders Moving the section to earlier in the instructions makes it easier for the taxpayer to determine if they need to file rather than flipping through to Page 3. The 1040 instructions include the Who must file right after the What’s New Section.

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Page 1 Column 1 After Reminder. Add a Section under the New General Instruction section labeled Purpose of Form. Adding this section is consistent with the instructions for other business Form instructions to include Form 1120 and Form 1065.

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Page 1 Column 1 After Reminders Add a Section under the New General Instruction section labeled When and Where to File. Adding this section is consistent with the instructions for many other forms. It will be easier for the taxpayer to have the information readily available rather than having to refer to other instructions.

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Page 1 Column 1 Reminders Add: Additional information. IRS has included frequently asked questions on its website. You can access these frequently asked questions using the following link. https://www.irs.gov/newsroom/form-1099-k-frequently-asked-questions-general Including the link to the IRS website that has frequently asked questions will help taxpayers complete the form and understand why they may be getting the form.

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Rec #24 Page 1 Column 2 Exceptions for payments made outside the United States by U.S. payers or middlemen to offshore accounts after 2010 Add language to define the United States. The term “United States” means the 50 States of the United States of America and the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Atoll, the Northern Mariana Islands, and any other trust territory or possession of the United States. Alternatively, if the Term United States does not include the Territories, language should be included when referencing the United States (exclusive of the territories). Payment settlement entities may interpret the term United States as only including the 50 states. In some sections of the instructions, language incudes the United States and the District of Columbia. Clarification is necessary to determine if the term United States includes the US Possessions. If not, that should be included in the instructions.

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Page 1 Column 2 Exceptions for payments made outside the United States by U.S. payers or middlemen to offshore accounts after 2010 Use the term United States consistently throughout the instructions. United States is referred to several times within the instructions and sometimes it refers to just the United States and sometimes to the states and the District of Columbia.

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Page 2 Column 2 Nonreportable transactions Add an additional bullet. • Any transaction in which a payment card is accepted as payment for personal gifts, charitable contributions, and reimbursements. Including this language will highlight for the PSE that they will need to track these types of transactions to exclude them from reporting.

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Page 3 column 1 Reporting under sections 6041, 6041A, and 6050W. Add a Tip: Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC, Form 1099-NEC or other Form 1099.

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Form 1099-K page 1 Information returns may also be filed electronically using the IRS Filing Information Returns Electronically (FIRE) system (visit www.IRS.gov/FIRE) or the IRS Affordable Care Act Information Returns (AIR) program (visit www.IRS.gov/AIR). Information returns may also be filed electronically using the IRS Filing Information Returns Electronically (FIRE) system (visit www.IRS.gov/FIRE) or the Information Returns Intake System (IRIS). Reference IRIS will update the form for the new online filing option.

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Form 1099-K box 3 Number of payment transactions Delete the box The number of transactions is no longer relevant for the completion of this form.

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Form 1099-K boxes 6, 7 and 8 Add a TIP: If you need to report information for more than two states or localities, prepare a second Form 1099-K. If necessary, you can issue more than one Form 1099-K to a payee. For example, you may need to report more than two states in Boxes 6, 7, and 8. If you issue a second Form 1099-K, complete the Filer’s name section. Show any items that were not included on the first Form 1099-K in the appropriate boxes. Adding the TIP will inform filers of how to complete this section if there are more than two states. The recommendation is like the instructions to Form W-2 when there are more than two states reported.

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Form 1099-K Page 5 Add: Frequently asked questions (FAQ): IRS has issued FAQs that may be helpful for you when preparing your tax return. The link is https://www.irs.gov/newsroom/form-1099-k-frequently-asked-questions-general The FAQs answers some questions regarding the tax treatment of payments reported on Form 1099-K.