The AICPA’s 2025 tax priorities include increasing the reporting threshold for Form 1099-K to $10,000 from the $600 that would go into effect next year, according to a letter Monday to congressional finance leaders.
Other priorities include providing permanent and consistent tax relief to individuals and businesses affected by natural disasters and the extension of some provisions of the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, the AICPA said in the letter to the leaders of the Senate Finance and House Ways and Means committees.
The AICPA sends its recommendations for simple fixes to technical issues to each new Congress.
“Our tax legislation priorities include recommended proposals that would reduce uncertainty and complexity for taxpayers, improve simplification within the tax system, and transform how taxpayers and tax practitioners interact with the IRS,” said Melanie Lauridsen, the AICPA’s vice president–Tax Policy & Advocacy.
The recommendations include several proposals from the AICPA’s 2025 Compendium of Tax Legislative Proposals — Simplification and Technical Proposals, which contains 69 suggested simplifications of and technical changes to provisions in the Code.
Form 1099-K background
In November, the IRS again delayed the effective date of the $600 threshold for Form 1099-K reporting for third-party settlement organizations (TPSOs) and will treat 2024 and 2025 as transition years.
Under Notice 2024-85, a TPSO will be required to report payments in settlement of third-party network transactions when the amount of total payments for those transactions is over $5,000 during calendar year 2024; over $2,500 during calendar year 2025; and over $600 during calendar year 2026 and after.
The IRS has estimated that it will receive 44 million Forms 1099-K, Payment Card and Third Party Network Transactions, under the $600 threshold, more than three times the 14 million that it received in 2023.
Until the American Rescue Plan Act (ARPA) of 2021, P.L. 117-2, was enacted, TPSOs were allowed a de minimis exception to filing Form 1099-K with respect to payees with 200 or fewer such transactions during the calendar year with an aggregate gross amount of $20,000 or less. ARPA amended this de minimis amount to $600, with no minimum number of transactions, effective for calendar years beginning after Dec. 31, 2021.
In a previous letter to Congress, the AICPA supported a threshold of $5,000 or more, saying the $600 threshold “will create confusion for the many taxpayers who will have to report each sale or transaction independent of others to correctly calculate gain or loss.”
The threshold for the 2025 calendar year now is $2,500.
Other AICPA tax priorities:
- Include the Freedom to Invest in Tomorrow’s Workforce Act (H.R. 1151/S. 756), allowing 529 plan funds to be used for post-secondary credential expenses.
- Provide permanent and consistent tax relief to individuals and businesses affected by natural disasters, such as the Filing Relief for Natural Disasters Act (H.R. 517/S. 132).
- Retain the qualified business income (QBI) deduction and expand the QBI deduction limit phase-in range.
- Extend the Sec. 174 research and experimental costs expensing and other related TCJA provisions that have expired or are expiring.
- Preserve the pre-TCJA full deduction for all state and local taxes paid or accrued in carrying on a trade or business, whether paid at the entity level or by a partner/owner.
- Continue the TCJA higher exemption amounts for the individual alternative minimum tax, which simplifies filing for many taxpayers.
- Preserve the current availability of the cash method of accounting for tax purposes.
- Include the Paid Family and Medical Leave Tax Credit Extension and Enhancement Act (S. 400), which would provide certainty to businesses by making a temporary paid family leave tax credit permanent.
— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.
