Accounting
IRS urged to take action on new 1099-K and 1099-A information reporting requirements
The Internal Revenue Service needs to do more to get ready for new reporting requirements on the Form 1099-K and 1099-DA, according to a new report.
The
The report discussed the recently lowered Form 1099-K reporting threshold, pointing out that the American Rescue Plan Act of 2021 changed reporting requirements for Third-Party Settlement Organizations, such as some online marketplaces that connect users to goods and services. The reporting requirements will apply to many widely used payments received through services such as Venmo, PayPal, Airbnb, eBay, Etsy, StubHub, Cash App and more. Previously, TPSOs were not required to report payments on Form 1099-K unless they exceeded $20,000 and there was an aggregate of at least 200 transactions. However, under the ARPA law, TPSOs have to report payments that exceed $600 annually. In response to concerns about millions of taxpayers suddenly receiving the unfamiliar forms, the IRS decided to delay full implementation of the requirement for two years, but it didn’t consistently document the risks for its decisions. Some lawmakers have questioned the IRS’s decision to start phasing in the new requirement at a level of $5,000 in tax year 2024 without congressional authorization.
“Documenting risks will help ensure IRS has a sound rationale for decisions and is prepared for the reporting threshold change,” said the report.
For Form 1099-DA for reporting on digital assets, which was also the result of another recent law, the Infrastructure Investment and Jobs Act of 2021, the IRS has begun planning its outreach and education efforts for new cryptocurrency reporting in its communication strategy. “But the IRS is missing an opportunity to apply lessons learned from its Form 1099-K implementation efforts, such as what did and did not work well,” said the report.
The GAO noted the IRS did not have plans to evaluate its communication efforts. “Incorporating lessons learned and evaluating outreach and education efforts could help IRS more effectively prepare for the new reporting and adjust communication efforts, if needed,” said the report.
Information returns provide benefits, but also create burdens, the report pointed out. For example, Congress’s Joint Committee on Taxation estimated that digital asset reporting will increase revenue by $28 billion over 10 years after implementation. But third-party filers will still face costs and challenges in tracking such information for reporting.
The GAO made four recommendations in the report to the IRS, including updating its policies and procedures to require documentation of risk; incorporating lessons learned into its Form 1099-DA communication strategy; and evaluating its outreach and education efforts. The IRS agreed with and intends to implement all four recommendations.
An IRS official said the agency is “working judiciously” to implement both the 1099-K and 1099-DA requirements. “We acknowledge the benefits and burdens of expanding third party information reporting and share GAO’s goal of continuously evaluating and improving information reporting administration to improve voluntary compliance,” wrote IRS chief tax compliance officer Heather Maloy in response to the report. “We will continue to use information return data to improve our compliance efforts.”
Aprio, a Top 25 Firm based in Atlanta, has acquired JMS Advisory Group, a firm that specializes in unclaimed property compliance and escheat process development, also based in Atlanta
Financial terms of the deal were not disclosed. Aprio ranked No. 24 on Accounting Today’s just released
JMS was founded in 2006 and helps clients mitigate risk and capitalize on opportunities through managed unclaimed property compliance. The team includes attorneys, CPAs, CFEs and others.
JMS has a wide range of clients, including enterprise companies, financial institutions, credit unions, insurance companies, hospitality and health care organizations.
“As Aprio continues its rapid growth, we are committed to expanding our services to meet the evolving needs of our clients,” said Aprio CEO Richard Kopelman in a statement Tuesday. “The addition of JMS gives us the opportunity to continue strengthening our position as a future-focused advisory firm. JMS’s focus on escheat management and asset recovery not only enhances our current capabilities but also allows us to deliver even more impactful solutions to help businesses navigate complex compliance challenges.”
JMS president and CEO James Santivanez is joining Aprio as a partner and provides guidance to clients on unclaimed property and state and local tax issues.
“We created JMS to make an impact nationally in the unclaimed property consulting industry, and I’m proud of our nearly 20-year history of helping clients mitigate risk and capitalize on opportunities resulting from accurate and properly managed unclaimed property compliance,” Santivanez said in a statement. “Joining with Aprio takes us to the next level, allowing us to build upon our success while providing even greater value to our clients. This is an exciting next step in our journey.”
JMS founder and director Sherridan Santivanez is also joining Aprio as a partner. He specializes in representing clients before state enforcement authorities and managing complex audits and voluntary disclosures for some of the world’s largest companies. She provides strategic guidance on audit preparation and navigates interactions with state and third-party auditors.
Aprio received a
The American Institute of CPAs and the National Association of State Boards of Accountancy are asking for comments on their proposal for an additional pathway to CPA licensure through
The AICPA and NASBA proposed the
The UAA changes would:
- Enable states to adopt a third licensure pathway that requires earning a baccalaureate degree with an accounting concentration, completing two years of professional experience as defined by Board rule, and passing the Uniform CPA Examination;
- Shift to an “individual-based” mobility model, which allows CPAs to practice in other states with just one license; and
- Add safe harbor language to ensure CPAs who meet existing licensure requirements preserve practice privileges.
The proposals come as several states are already moving forward with their own changes, including
The updates reflect feedback gathered during a late 2024 exposure draft period and forward-looking solutions being advanced by state CPA societies and boards of accountancy to increase flexibility for licensure candidates while maintaining the integrity of the CPA license.
The AICPA and NASBA are asking for comments on the proposed changes by May 3, 2025. They can be submitted through this
The UAA offers state legislatures and boards of accountancy a national model they can adopt in full or in part to meet the licensure needs of each jurisdiction.
The proposal would maintain the current two pathways to CPA licensure:
- Earning a post baccalaureate degree with an accounting concentration, completing one year of professional experience as defined by Board rule, and passing the CPA exam; and,
- Earning a baccalaureate degree with an accounting concentration, plus an additional 30 semester credit hours , completing one year of professional experience as defined by Board rule, and passing the CPA exam.
Small business employment held steady last month, according to payroll company Paychex, while wage growth continued below 3%
The
“Our employment data continues to show moderate job growth and wage growth below three percent,” said Paychex president and CEO John Gibson in a statement Tuesday. “The consistent long-term trend we’re seeing is a small business labor market that is resilient and stable with little job movement among workers. At the same time, small business owners are optimistic about future business conditions despite uncertainty about how to adapt to a rapidly evolving legislative and regulatory landscape.”
The Midwest remained the top region in the country for the ninth consecutive month with a jobs index level of 100.54. Seven of the 20 states analyzed gained more than one percentage point in February, led by Texas (up 2.11 percentage points).
Phoenix (101.92) increased its rate of small business job growth for the fourth month in a row in February to rank first among the largest U.S. metros.
Construction (3.29%) regained its top spot among industries in terms of hourly earnings growth in February, followed closely by “other services” (3.27%) and manufacturing (3.21%).
The pace of job growth in manufacturing gained 2.39 percentage points to 99.52 in February, the industry’s biggest one-month increase since April 2021.
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