The IRS announced on Tuesday that it is delaying a controversial tax reporting requirement targeting Americans who made more than $600 online through third-party payment apps like Venmo or PayPal.

The rule change – approved by Democrats in March 2021 with the passage of the American Rescue Plan – would have required payments platforms including Venmo, PayPal, Etsy and Airbnb to send Form 1099-K to the IRS and users if their transactions totaled more than $600 over the course of the year.

Instead, the IRS will treat 2023 as "an additional transition year," meaning that payment apps will not be required to send users 

Form 1099-K unless their gross income exceeded $20,000 or they had 200 separate transactions within a calendar year. Beginning in 2024, that basic reporting threshold will be increased from $600 to $5,000. The rule only applies to payments received for goods and services transactions, meaning that using Venmo or PayPal to send a loved one a gift, pay your roommate rent or reimburse a friend for dinner will be excluded. Also excluded is anyone who receives money from selling a personal item at a loss; for example, if you purchased a couch for $300 and sold it for $250, the amount is not taxable.