The 31 million tax forms that never arrived

The number most widely published about Form 1099-K is wrong, and it is wrong on the first page of Google.

A search for the reporting threshold returns, among the top ten organic results, one page stating that the 2024 figure is $5,000, another stating that the 2026 figure will be $600, and a third stating that 2025 will be $2,500. None of those thresholds is in force. None of them ever was, in the sense that matters, because every one of them came from an Internal Revenue Service transition notice rather than from the statute, and the statute has since been rewritten backwards over all of them.

The operative text is short. Section 6050W(e) of the Internal Revenue Code now reads:

A third party settlement organization shall be required to report any information under subsection (a) with respect to third party network transactions of any participating payee only if (1) the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions exceeds $20,000, and (2) the aggregate number of such transactions exceeds 200.

That is the whole rule. What follows is the part almost nobody has counted: how many forms the abandoned $600 threshold was expected to generate, and how many it actually generated. The Service published the answer four times, in four consecutive editions of its own projection series, and the four numbers do not agree with each other by a factor of three.

What is the 1099-K threshold?

The federal Form 1099-K threshold is $20,000 in gross payments and more than 200 transactions, for a single payee on a single platform in a calendar year. Both tests must be met. It applies only to payment apps and online marketplaces, and it was restored retroactively to calendar year 2022 by the One Big Beautiful Bill Act.

Two words in that sentence do more work than they appear to. The first is "and." A seller who takes $80,000 across 190 transactions is below the threshold, because the transaction count was not exceeded. A seller who takes $9,000 across 400 transactions is also below it. Only the seller who clears both is reportable.

The second is "exceeds." The statute does not say "$20,000 or more." Gross payments of exactly $20,000.00 across exactly 200 transactions are not reportable. The Instructions for Form 1099-K, revised December 2026, restate both tests in the same conjunctive terms.

A platform may still send a form below the threshold, and many do, because the statute sets a floor on the obligation rather than a ceiling on the practice. The Service's own guidance page says so directly: you may receive a Form 1099-K even when total payments or transactions are less than the reporting threshold.

Why do so many pages still say $600?

Because for three and a half years the $600 threshold was the law, and the only thing standing between it and taxpayers was a series of one-year enforcement notices issued each December. Each notice set a different number. Each was published so late that the calendar year it governed was nearly over.

Section 9674 of the American Rescue Plan Act of 2021 rewrote section 6050W(e) to require reporting above $600 with no transaction test at all, effective for returns for calendar years beginning after 31 December 2021. Then the Service began delaying it, and the sequence is worth reading as a whole.

Notice 2023-10 treated calendar year 2022 as a transition period, holding the threshold at $20,000 and 200 transactions for that year. It reached the Internal Revenue Bulletin dated 17 January 2023. The year it governed had already ended, and the statements it relieved were due to be furnished a fortnight later.

Notice 2023-74 did the same for calendar year 2023. Bulletin date: 18 December 2023.

Notice 2024-85 went further and built a staircase. Calendar year 2024 would be relieved above $5,000, calendar year 2025 above $2,500, and from calendar year 2026 the full $600 would apply. Every one of those figures carried the phrase "regardless of the number of such transactions," which is to say the 200-transaction test was gone from the transition thresholds too. Bulletin date: 16 December 2024.

Those three notices are where the $5,000, the $2,500 and the $600 in circulation come from. They are also the reason the numbers on the search results page are stale rather than invented. A page written in December 2024 was accurate in December 2024.

Then section 70432 of the One Big Beautiful Bill Act, Public Law 119-21, enacted 4 July 2025, rewrote subsection (e) back to the pre-2021 text. Its effective date clause is the unusual part. The amendment "shall take effect as if included in section 9674 of the American Rescue Plan Act," which reaches back to returns for calendar years beginning after 31 December 2021.

So the $600 threshold was not repealed going forward. It was erased. As a matter of enacted law there is now no year in which it applied, and the staircase in Notice 2024-85 describes thresholds that never governed anything. California's Franchise Tax Board states the position for its own filers in one line: the phase-in thresholds previously announced in Notice 2024-85 are now superseded and no longer apply.

The Service confirmed the federal position in IR-2025-107 on 23 October 2025, alongside updated frequently asked questions in Fact Sheet 2025-08.

How many Forms 1099-K did the $600 threshold actually produce?

Almost none. Money & World compared the Internal Revenue Service's forecast of Form 1099-K volumes across four consecutive editions of its own projection series. For calendar year 2024 the Service at one point expected 44,000,000 forms. It received 12,866,267, an overshoot of 31,133,733 forms, or 70.8 percent.

The series is Publication 6961, Calendar Year Projections of Information and Withholding Documents, produced annually by the Statistics of Income division. Each edition reports one actual year and nine projected years, which means the same calendar year is forecast four separate times by four separate editions. Setting those forecasts side by side is what makes the episode legible.

Here is what the Service expected for a single year, calendar 2026, as the law moved underneath it.

Edition	Published	Forecast for CY2026
2022 Update	Rev. 3-2023	16,240,800
2023 Update	Rev. 8-2023	48,510,000
2024 Update	Rev. 9-2024	33,464,700
2025 Update	Rev. 9-2025	13,340,100

The 2023 Update was written while the $600 rule was scheduled to bite for returns filed in 2024, and it priced the wave in: 44,000,000 forms in calendar 2024, 46,200,000 in 2025, rising to 61,912,400 by 2031. Notice 2023-74 landed four months later. The 2024 Update cut calendar 2024 to 21,414,300 and pushed the wave forward a year. Notice 2024-85 landed three months after that. Then the statute was repealed, and the 2025 Update put the series back on its old trend.

The current edition states the reason without embarrassment. The One Big Beautiful Bill Act, it says, has not been integrated into its projections at all, "except for F1099-K," because the Act's implications for that form are discernable, and the new figures "realign the projections with the pre-ARPA long-term historical trend."

The size of that realignment is the finding. Against the prior year's edition, the 2025 Update lowers the calendar 2026 forecast by 20,124,600 forms, a cut of 60.14 percent. That is the largest revision, in percentage terms, of any information return in the Service's comparison table with a volume above ten million. Form 1099-B was revised down by 1.22bn forms, far more in absolute terms, and that was a cut of only 24.46 percent.

Now set the forecasts against what actually happened.

Calendar year	Forms 1099-K filed	Change
2021	11,088,745
2022	12,980,970	+17.1%
2023	12,287,189	−5.3%
2024	12,866,267	+4.7%

Nothing happened. Across the entire period in which the $600 threshold was nominally the law of the land, the number of Forms 1099-K filed rose from 11.09 million to 12.87 million, an increase of 16.0 percent over three years, and it fell in 2023. The forecast for one of those years moved by 31 million forms. Reality moved by 579,078.

The full series, all four editions, is available as a CSV.

There is a plainer way to say what the record shows. A reporting requirement that is deferred every December for four consecutive Decembers is not a reporting requirement. It is an announcement, and the Service's own planning documents show it was treated as one: staffing and processing forecasts were built and rebuilt around a wave of paperwork that the agency was simultaneously postponing.

Does the threshold change what is taxable?

No. Section 6050W governs who must file an information return. It has never governed what counts as income. A seller who clears $4,000 of profit through a payment app owes tax on it whether or not any form is issued, and the restored threshold increases the number of people in exactly that position.

The Service repeats this on every 1099-K page it publishes, and the repetition is warranted, because the two questions are constantly conflated. Its guidance is blunt: whether or not you receive a Form 1099-K, you must still report any income on your tax return.

The distinction cuts the other way as well. Money received from friends and family as a gift or as reimbursement for a personal expense is not income and should not appear on a Form 1099-K at all. Splitting a restaurant bill is not a third party network transaction for the provision of goods or services within the meaning of section 6050W(c)(3), and no threshold makes it one.

What the higher threshold does change is the information asymmetry. Roughly 31 million forms per year that the Service once expected to receive, and to match against filed returns, will not exist. Voluntary compliance on that income now rests on the taxpayer alone.

Do card payments get the same threshold?

No, and this is the most commonly missed point on the subject. Subsection (e) is titled "Exception for de minimis payments by third party settlement organizations," and it reaches only those organizations. There is no de minimis exception anywhere in section 6050W for payment card transactions.

A merchant acquiring entity, meaning the bank or processor with the contractual obligation to pay a merchant who accepts cards, files a Form 1099-K on every participating payee regardless of amount or count. The Service states it without qualification: if your customers pay you directly by credit, debit or gift card, you will get a Form 1099-K from your card processor no matter how many payments you got or how much they were for.

So a market stall that ran $600 through a card reader gets a form. A seller who moved $19,000 through a payment app across 500 transactions does not. The two are treated differently because the statute treats them differently, and no version of the threshold debate over the last five years touched the card side at all.

What happened to backup withholding?

The repeal left a three-year seam. Backup withholding under section 3406 is triggered when a payee fails to furnish a taxpayer identification number or furnishes an incorrect one, and section 3406(b)(4) provides that whether a payment is of a reportable kind "shall be made without regard to any minimum amount which must be paid before a return is required."

Read that alongside section 3406(b)(3)(F), which lists payments reportable under section 6050W among the payments subject to withholding, and the consequence follows: the de minimis floor did not shield a payee from withholding. Congress had written a carve-out for section 6041 payments in subsection (b)(6). It had written none for third party network transactions.

Section 70432(b) of the Act supplied one, adding a new section 3406(b)(8) under which a third party network payment is reportable for withholding purposes only once the payee exceeds both the transaction count and the dollar amount in section 6050W(e), measured "at the time of such payment." A payee who was reportable in the prior year gets no benefit from it.

The effective dates diverge. The threshold restoration in section 70432(a) reaches back to calendar year 2022. The withholding carve-out in section 70432(b) applies only to calendar years beginning after 31 December 2024. Congress rewrote one half of the problem retroactively and the other half prospectively, in adjacent subsections of the same section, and left calendar years 2022 through 2024 sitting in the gap.

Notice 2024-85 had separately promised not to assert penalties for a failure to withhold during calendar year 2024, while stating that for 2025 and after the Service would assert them. That promise was overtaken within seven months by a statute removing the underlying obligation from the same year.

The rate is 24 percent. Section 3406(a)(1) does not state a number: it sets the withholding at the fourth lowest rate of tax under section 1(c), which section 70101 of the same Act made permanent by striking the 2026 expiry from section 1(j).

What else changed in the same bill?

Two things, and both cut against the idea that this was a simplification.

Section 70433 raised the general information reporting threshold in section 6041(a) from $600 to $2,000, which is the threshold governing Forms 1099-MISC and 1099-NEC. It applies to payments made after 31 December 2025 and is indexed for inflation for calendar years after 2026, off a 2025 base, rounded to the nearest $100. This is the first time that $600 figure has moved since it was enacted, and it does not touch Form 1099-K, which runs on its own threshold in section 6050W(e).

The second change went the other way. Section 70201, the tips provision, amended section 6050W(a) to require a third party settlement organization to report the portion of reportable payment transactions "reasonably designated by payors as cash tips" together with the payee's occupation. The December 2026 instructions carry the result: a new box 1c for cash tips, and a new box 1d for the Treasury Tipped Occupation Code, with up to two codes per payee and a code of 000 where tips were received in a nonqualifying occupation. That requirement applies to taxable years beginning after 31 December 2024, with a transition rule permitting reasonable approximation for periods before 1 January 2026.

The same bill that removed 31 million forms added two fields to the form that remains.

Do state thresholds follow the federal one?

Not automatically. States set their own information reporting requirements under their own law, and a federal repeal does not reach them. The clearest documented example is California, which follows the $20,000 and 200-transaction rule generally but keeps a separate $600 threshold for payments in settlement of third party network transactions to app-based drivers. The Franchise Tax Board states that the change "does not impact the separate requirement to issue a Form 1099-K for payments in settlement of third-party network transactions to app-based drivers for California purposes; the $600 threshold still applies to those payments."

We have not compiled a fifty-state table and do not publish one here. The point is structural rather than numerical: a platform operating nationally may be below the federal floor and above a state one for the same payee, and the federal reversion did nothing to resolve that.

Method

The volume series is drawn from Table 2, all media grand total, of four editions of Internal Revenue Service Publication 6961: the 2022 Update (Rev. 3-2023), the 2023 Update (Rev. 8-2023), the 2024 Update (Rev. 9-2024) and the 2025 Update (Rev. 9-2025). The first two are distributed together inside a single PDF portfolio at the 2023 archive URL and must be extracted from it as attachments, which is why the 2022 Update carries a 2023 revision number.

Each edition's first column is an actual and the remaining nine are projections, so the four actuals used here, calendar years 2021 through 2024, each come from a different edition. The percentage revision for calendar 2026 is taken from Table 1 of the 2025 Update, which performs the edition-to-edition comparison itself and reports the 1099-K change as 20,125 thousand forms and 60.14 percent. That figure reconciles to Table 2 of the two editions to within rounding.

One limit is worth stating. These counts are all media and cover both halves of the form, third party network transactions and payment card transactions together. Publication 6961 does not split them, so the forecast collapse cannot be attributed to the third party side alone by arithmetic. It can be attributed to it by the Service's own statement of cause, which names the threshold change as the reason for the revision, and by the fact that the card side was never affected by any of the legislation described here.

Frequently asked questions

Do I have to report income below the 1099-K threshold? Yes. The threshold governs whether a platform must file an information return. It has no bearing on whether the income is taxable. Payments received for goods or services are reportable on your return whether or not a Form 1099-K is issued.

Is the threshold $20,000 or 200 transactions, or both? Both. Section 6050W(e) is conjunctive. Gross payments must exceed $20,000 and the number of transactions must exceed 200 in the same calendar year, for the same payee, on the same platform. Clearing one test alone does not create the obligation.

Does the $20,000 threshold apply to 2024 and 2025 returns? Yes. The restoration took effect as if it had been included in the 2021 legislation, so it reaches returns for calendar years beginning after 31 December 2021. The $5,000 and $2,500 figures from Notice 2024-85 are superseded.

Why did I receive a Form 1099-K for less than $20,000? Either the payments came through a card processor, which has no de minimis threshold at all, or the platform chose to issue a form below the floor. Both are permitted. Section 6050W(e) sets a minimum obligation, not a prohibition on reporting.

Does a higher threshold mean the IRS will not see the income? It means the Service will not receive a matching document from the platform. It does not remove your obligation, and it does not prevent examination. The practical change is that compliance on those amounts now depends on self-reporting rather than on document matching.