New IRS FAQs shed light on Form 1099-K reporting rules

As tax professionals, we continuously navigate changing rules, so our clients stay compliant and stay calm. The IRS released updated FAQs for Form 1099-K, Payment Card and Third-Party Network Transactions. These FAQs supersede the prior version (FS-2024-03) and include several substantial clarifications and additions. 

What is Form 1099-K 

Form 1099-K is the information return used to report certain payments made via payment cards (credit, debit, stored-value) and third-party settlement organizations (TPSOs, like marketplace apps) for goods or services.

The IRS reminds us: obtaining the form doesn’t dictate a tax outcome, it simply provides data. Whether payments are taxable depends on facts. The threshold rule for TPSOs was changed recently by the One Big Beautiful Bill Act (OBBBA), reverting reporting thresholds to more than $20,000 and more than 200 transactions for the TPSO to be required to file for a payee. 

What the revised FAQs tell us

Here are the changes in FS-2025-08 your clients (and you) need to know: 

Thresholds clarified: The IRS reiterates that there is no threshold for payment-card transactions; even $0.01 means a Form 1099-K may be required. For TPSOs, the federal threshold remains “gross payments exceed $20,000 and more than 200 transactions” for the filing requirement. Even if those thresholds are not met, a form may still be issued (for instance, a TPSO may choose to issue one). 

Multiple forms to same payee: The IRS clarified what to do when multiple Forms 1099-K arrive for the same payee (for example, from different payments apps). The payee should use all the forms and their own records to determine their correct tax liability. 

Thresholds don’t dictate tax liability: A client may receive a Form 1099-K but still owe no tax (or less tax) depending on their cost basis, deductions, etc. And conversely, absence of a form doesn’t mean there’s no tax “income is taxable unless law says otherwise.”

Filer obligations matter for payees too: If you advise organizations on whether they must file Form 1099-K, the FAQs clarify when an entity qualifies as a TPSO, when an automated-clearing house does not and what obligations exist for issuance of payee statements.

Helping clients stay informed

For tax professionals, staying ahead of these changes is less about checking boxes and more about building trust. When you explain to clients that yes, a Form 1099-K popped up “but we’ll walk through it and make sure we report it correctly,” you’re giving them clarity and calm. The updated FAQs from the IRS (FS-2025-08) are an opportunity to review client payment-app and marketplace usage, sharpen record-keeping practices and reinforce that reporting automatic tax. 

In your next client meeting, you might bring it up: “Have you used any payment apps or online marketplaces? Did you receive a Form 1099-K? Let’s check how it fits with your books.” That question leads to stronger compliance and better planning.