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From Daily Mail. Republicans are crying foul after the IRS reminded Americans they will have to report their $600 transactions on Venmo and PayPal to the IRS.
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In a provision that the Biden administration claimed was to crack down on wealthy tax cheats, the American Rescue Plan required taxpayers add to their 1099-K ‘gross payments for goods or services that exceed $600.’
The IRS posted an explainer Tuesday reminding taxpayers the reporting threshold for 1099-K forms would be lowered from $20,000 to $600. The number of transactions that trigger receiving a form will also be lowered from 200 to 1.
The change applies to payments on third-party processors, such as Venmo or PayPal, and is for transactions such as part-time work, side jobs or selling goods.
‘If you sold a couch, re-sold tickets at the price you paid, or just did some extra work on the side, you could trigger greater scrutiny from the Internal Revenue Service (IRS),’ Republicans on the House Ways and Means Committee wrote in a statement.
Failure to report such payments could trigger an audit since the IRS obtains a copy of the 1099-K form directly from third-party payment processors. …
Tax experts say the new requirement will trigger a flood of new 1099-K forms going out to Americans are aren’t familiar with them and IRS agents will be overwhelmed with the new paperwork they have to look over, increasing processing delays.
Professionals have estimated the number of 1099-Ks alone that could be doled out is as high as 20 million. As of May 2022, the IRS had a backlog of 21.3 unprocessed paper tax returns. …
Already, lawmakers have introduced bipartisan legislation to reverse the change.
Democratic Reps. Chris Pappas, D-N.H., Cindy Axne, Iowa, Linda Sánchez, Calif., and Steven Horsford, Nevada, are leading House legislation to raise the 1099-K reporting threshold to $5,000, called the Cut Red Tape for Online Sales Act.
Sens. Maggie Hassan, N.H., and Kyrsten Sinema, Ariz., are leading parallel legislation in the Senate.
Carol Miller, R-W.Va., in the House and Rick Scott, R-Fla., in the Senate are leading a proposal to revert the reporting threshold back to what it was – $20,000 and 200 transactions – called the Saving Gig Economy Taxpayers Act.
Rep. Michelle Steel, R-Calif., and Sen. Bill Hagerty, La., are leading the Stop the Nosy Obsession with Online Payments (SNOOP) Act, a similar bill that would revert reporting requirements back to what they were.
Another group of Republicans last week wrote a letter urging the IRS to delay the rule’s implementation by a year.
It’s now unlikely that either chamber of Congress will push through a bill to reverse the change before tax forms start going out in January. …
While Biden may have pledged not to raise taxes on those making under $400,000 and his administration has repeatedly insisted the requirement does not amount to a new tax, critics say the administration is ostensibly breaking that promise by increasing the burden on small online sellers and everyday Americans. …
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(Excerpt from Daily Mail. Photo Credit: Getty Images)