A recent survey by tax software provider Avalara reveals that nearly half of accounts payable executives lack confidence in understanding upcoming 1099 reporting thresholds. Just over half are preparing for the new 1099-DA form related to digital assets. Unclear IRS guidance is cited as a major source of uncertainty.
According to Avalara's survey of 1,000 U.S. accounts payable professionals, released this month, 43% of executives express low confidence in their organizations' grasp of the new reporting thresholds for forms 1099-K, 1099-MISC, and 1099-NEC. This uncertainty stems largely from unclear communication from the IRS, with 31% of respondents calling for more explicit instructions from federal and state agencies on the changes and timelines. Such ambiguity complicates planning and raises risks of late or inaccurate filings.
Several updates originate from the One Big Beautiful Bill Act, which retroactively adjusted the 1099-K threshold for apps and online marketplaces. Originally set to phase down to $2,500 for 2025, it now stands at $20,000 and 200 transactions. While the act's no-tax-on-tips provision impacts W-2 forms this year, 1099 processing remains more challenging overall.
Kevin Halverson, general manager of accelerator businesses at Avalara, emphasized the complexity: “Processing 1099s is significantly more complex than processing W-2s. W-2 reporting is highly standardized, with a single federal form and relatively consistent requirements. By contrast, ‘1099’ refers to a family of more than a dozen different IRS forms, each with its own rules, thresholds and reporting criteria.”
A key addition is Form 1099-DA, required starting in the 2025 tax year for brokers facilitating digital asset transactions, such as cryptocurrency exchanges. The IRS finalized the form in January 2025 and offers transition relief: penalties for non-compliance will be waived if brokers show a good-faith effort, including data gathering and meeting deadlines. However, only 55% of surveyed companies are preparing for it, as many are still interpreting the rules and determining broker status.
The filing deadline for most 1099 forms is January 31 following the reporting year, but for 2025, it extends to February 2, 2026, due to the date falling on a Saturday. Currently, about 25% of businesses have fully automated tax compliance, though 78% plan investments in the coming year to handle these demands.
