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IRS Clarity Lacking on Key Tax Thresholds
18 Dec
Summary
- Many AP executives lack confidence in understanding 1099-K, 1099-MISC, 1099-NEC thresholds.
- Just over half of businesses are preparing for the new 1099-DA digital asset form.
- Unclear IRS communication is a major source of tax reporting uncertainty for businesses.
Businesses are encountering significant confusion surrounding upcoming tax reporting changes, particularly concerning Form 1099 series. A substantial number of accounts payable executives express a lack of confidence in their grasp of the reporting thresholds for 1099-K, 1099-MISC, and 1099-NEC. This uncertainty is exacerbated by what respondents describe as unclear IRS communication, with many seeking more explicit guidance from federal and state agencies.
Further complicating matters, preparation for the new 1099-DA form, which applies to digital asset transactions, lags significantly. Only 55% of businesses reported being ready for this new requirement. The complexity of 1099 forms, which represent a family of over a dozen distinct IRS forms, contrasts with the more standardized W-2 reporting.
The One Big Beautiful Bill Act has introduced retroactive changes, including adjustments to the 1099-K threshold, now set at $20,000 and 200 transactions for 2025. The IRS released the final 1099-DA form in January 2025, with evolving regulations and transition relief offered for 2025 digital asset transactions.
