The IRS is out to fleece the taxpayers. Like they weren’t doing enough of that already. It’s going to be a nightmare for lots of people.
You probably heard that the Biden Administration is hiring 87,000 new IRS agents. This may be one of the reasons. This is just another requirement contained within the American Rescue Plan.
A new IRS rule is requiring companies like PayPal, Venmo, Square and Amazon to issue 1099 forms if a user receives more than $600 in revenue. The threshold was previously $20,000 in gross sales and 200 transactions.
This new rule will result in 30 million more returns. Currently, the number is 14 million. That’s quite a leap.
This puts a whole new category of workers subject to 1099’s that never were before. The U.S. Government Accountability Office (GAO) issued a report and said, “this could exacerbate confusion among some taxpayers, such as gig workers, who may not understand the taxability of their payments and taxes owed.”
They further stated, “For example, some of these taxpayers may not know how to calculate profit or loss and may not understand the information reported on the form. This puts them at risk of inaccurately reporting their incomes to the IRS or not meeting their tax obligations.”
The GAO stated that the IRS already faces significant challenges in it’s handling of these “information returns.” Imagine adding another 30 million. Talk about chaos.
They further stated that the agency “does not have a plan” to analyze data or support it’s enforcement and outreach. “This limits it’s understanding of changes in taxpayer burden.”
The report by GAO also said, “IRS lacks centralized leadership to make strategic decisions related to the use of information returns across the agency. For example, IRS has not analyzed information returns comprehensively to determine if the returns’ characteristics (deadlines) meet IRS’s needs. While information returns support multiple IRS compliance programs, no office is responsible to coordinating those efforts.”
The report went on to say, “the IRS will send at least 30 million new 1099-K forms to Americans’ mailboxes come January, even though the agency has no plan on what to do with the new information- and it is unlikely most Amercians will understand how to fill them out.”
So if you sell a few items on eBay or Etsy, you will be subject to the new rule. If you pay a babysitter electronically, watch out.
A Joint Committee on Taxation estimated that the new rule would bring in $8.4 billion over several years. It’s no longer about earned income.
The 1099-K Fairness Coalition said a recent survey indicated the new 600 rule would deter 70% of respondents from selling online. Eighty five percent of respondents said the IRS shouldn’t target casual online sellers. Members of this coalition include Airbnb, eBay, Etsy, PayPal, Poshmark, etc. I’m sure this will have a negative effect on all of these online dealers.
Bear in mind, many of these items being sold may be things like your old used recliner. The sale price is much less than you paid for the item originally so you’re not recouping your cost. That doesn’t matter to the IRS.
This sounds like a nightmare in the making. Can you imagine how chaotic this onerous burden is going to be for the average taxpayer who will have no idea how to handle these forms?
You sure must hand it to the IRS. They can be very creative when it comes to ways to take our money.
This is obviously a way to cut another hole in the taxpayer’s pockets.
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Joyce Krawiec serves in the North Carolina Senate. She represents Davie County and Forsyth County, NC. Christian, wife, mother, small business owner, and conservative.