The Internal Revenue Service extended its transition relief Tuesday for the new Form 1099-K information reporting threshold, setting it at $5,000 for 2024 and $2,500 in 2025 before reaching the statutory level of $600 in 2026 and thereafter.

The threshold applies to payment apps and online marketplaces such as Venmo, PayPal, eBay, Etsy, Airbnb and more, also known as third-party settlement organizations. The American Rescue Plan Act of 2021 lowered the old threshold from $20,000 to $600 as a way of collecting more taxes from people and businesses who receive payment through these third parties.

Many taxpayers and tax professionals had worried the lower threshold would prompt a flood of 1099-K forms arriving in the mail for people who had never been subject to the requirement, prompting the IRS to repeatedly delay the requirement. Last November, the IRS began phasing in the lower threshold at $5,000 for calendar year 2024. Now it is setting the threshold at $2,500 for next year by issuing Notice 2024-85 on Tuesday.

Lawmakers in Congress have complained that the IRS has been overstepping its authority by setting its own thresholds, but legislation to repeal the $600 threshold has not yet passed in Congress. IRS commissioner Danny Werfel has defended the IRS’s authority to phase in the new threshold, as it has done for other parts of the Tax Code that have provoked resistance.

Al Drago/Bloomberg

“There are a variety of examples throughout history where the IRS — to protect taxpayers from undue burden or from potentially being overtaxed — where we have either delayed implementation or ramped implementation,” said Werfel during a congressional hearing in February. “This is not the first time and I’m not the first commissioner that has confronted this tension.”

Under the guidance issued Tuesday, third-party settlement organizations will be required to report transactions when the amount of total payments for those transactions is more than $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and after. Notice 2024-85 also says that for calendar year 2024, that the IRS will not assert penalties under section 6651 or 6656 for a TPSO’s failure to withhold and pay backup withholding tax during the calendar year.

TPSOs that have performed backup withholding for a payee during calendar year 2024 must file a Form 945 and a Form 1099-K with the IRS and furnish a copy to the payee. For calendar year 2025 and afterward, the IRS said it will assert penalties under section 6651 or 6656 for a TPSO’s failure to withhold and pay backup withholding tax. 

Platform Advisors, the professional services arm of Platform Accounting Group, said Tuesday that Finance à la Carte, a boutique accounting firm specializing in the restaurant industry, has joined its Platform Business Advisors team. 

Launched in 2017, Finance à la Carte’s services include running the day-to-day accounting and month-end reporting for restaurants, creating their financial reports, tax returns, recording sales, budgeting, forecasting and more. 

Financial terms of the deal were not disclosed. 

This is the third hospitality and restaurant-industry focused firm to join Platform Advisors this year. In July, Platform added Silver+Co, a New York-based firm that specializes in the restaurant and food service industry, along with labor and tax regulation in the service space. Earlier this year, Platform acquired three firms in Oregon — James L. Shook CPA PC, Bjorklund & Montplaisir CPAs, and Parsons and Germer CPAs LLP. In 2023, it acquired and rebranded several firms in California, including Alpert & King, R.O.A.D., JHS, and Hamilton & Co. 

Finance a la Carte has one founder/partner and 16 staff members. Finance à la Carte owner MaryEllen Georgiadis has spent over two decades managing finance and operations in the hospitality and restaurant industries. Platform now has more than 900 employees, including 72 staff members at Platform Business Advisors.

“We are focused on making sure we have deep subject matter expertise within our network so we can service all of the various types of businesses and industries that need specific financial and accounting advisement,” said Platform Accounting Group CEO Reyes Florez in a statement. “This acquisition brings a best-in-class restaurant-focused team with unmatched experience.”

Tesla Inc.’s electric vehicles would be shut out from consumer rebates under a proposal by California Governor Gavin Newsom, pitting the prospective Democratic presidential hopeful against Republican power player Elon Musk.

Newsom on Monday unveiled plans to offer rebates to EV buyers if US President-elect Donald Trump repeals a federal subsidy. A program California phased out in 2023 could be rebooted in lieu of the $7,500 tax credit, the governor said.

His office told Bloomberg News that the current proposal includes market-share limitations that would exclude Tesla’s popular EV models. The details — including Tesla’s possible omission from the credits — will be negotiated with the state legislature and could change, Newsom’s office said.

“It’s about creating the market conditions for more of these car makers to take root,” according to the governor’s office. It wasn’t immediately clear if other automakers would be excluded.

Musk, Tesla’s billionaire chief executive officer, posted on his X social-media platform that the proposal was “insane,” citing the automaker’s manufacturing presence in the state.

The move would leave market-leading Tesla out of a key incentive program aimed at spurring wider adoption of EVs at a time of slowing growth for all-electric vehicles. Tesla’s models do qualify for the federal credit, which was introduced as part of President Joe Biden’s signature climate bill, the Inflation Reduction Act.

Excluding Tesla could burnish Newsom’s standing on the left as he renews a clash with Musk, who has become a member of Trump’s inner circle and accepted a role helping the incoming administration cut government spending. Musk has said he’s fine with federal subsidies going away.

“This is a slap in Tesla’s face,” Gene Munster, managing partner of Deepwater Asset Management, said of the California proposal.

California tension

Tensions between Musk and Newsom have been strained for years, with the Tesla leader moving the automaker’s headquarters to Texas in 2021, in part citing frustration with California’s politics. 

Musk had angrily denounced state orders to close Tesla’s Fremont factory during the COVID-19 pandemic, labeling them “fascist” in an earnings call. When Musk announced the headquarters move, Newsom said Tesla owed some of its success to California.

Tesla still accounts for more than half of all new EVs sold in California, but its grip on the market is slipping. Tesla’s sales in California fell 12.6% during the first three quarters compared with a year earlier, even as overall electric-vehicle sales in the state rose 1%, according to the California New Car Dealers Association. Tesla made 54.5% of all EVs registered in the state during the first three quarters, a significant drop from 63% during the same period last year.

California clashed with Trump frequently on auto emission regulations during the incoming president’s first term, and the state’s leaders have made clear they are now girding for another fight. Newsom already has sought to shield the state’s policies on issues including reproductive rights, climate and immigration from potential threats under a Trump administration.

Trump has long criticized the Biden administration’s efforts to subsidize EVs in a bid to boost adoption of cleaner cars. His transition team is now looking to slash fuel-efficiency requirements for new cars and light trucks as part of plans to unwind Biden policies the president-elect has blasted as an “EV mandate,” Bloomberg News reported last week.

California, as well as states including Oregon and Colorado, currently are exempt from rules that preempt them from enacting their own emissions standards for new vehicles. More than a dozen states representing more than a third of the U.S. auto market now have formally opted to follow California’s rules.

Trump in his first term targeted California’s right to set tougher gas mileage rules than the federal government. He is expected to make another attempt to roll back the California carve out under the 1970 Clean Air Act after taking office in January.