The IRS stated that a crowdfunding website or its payment processor may be required to report distributions of money raised if the amount distributed meets certain reporting thresholds by filing Form 1099-K, Payment Card and Third Party Network Transactions. If Form 1099-K was required to be filed, the crowdfunding website or its payment processor must also furnish a copy of that form to the taxpayer to whom the distributions are made.

Prior to 2022, the threshold for a crowdfunding website or payment processor to file and furnish a Form 1099-K was met if, during a calendar year, the total of all payments distributed to a person exceeded $20,000 in gross payments resulting from more than 200 transactions or donations. For calendar years beginning after December 31, 2021, the threshold is lowered and is met if, during a calendar year, the total of all payments distributed to a taxpayer exceeded $600 in gross payments, regardless of the number of transactions or donations.

The American Rescue Plan Act of 2021 (ARP) ( P.L. 117-2) clarified that the crowdfunding website or its payment processor was not required to file Form 1099-K with the IRS or furnish it to the person to whom the distributions are made if the contributors to the crowdfunding campaign do not receive goods or services for their contributions. Crowdfunding is a method of raising money through websites by soliciting contributions from a large number of people.