What critics are calling a massive middle-income tax grab has reportedly been postponed until after the next election as the IRS cites efforts “to minimize burden.”
President Joe Biden’s readily-touted pledge to not raise taxes on American households making less than $400,000 a year has been proven bunk time and again. Aside from the crushing impact of inflation, the administration advanced a plan to tax income on payment apps like PayPal and Venmo exceeding totals of $600.
Now, after the Democrat-controlled legislature had passed the measure as part of the 2021 American Rescue Plan (ARP), the Internal Revenue Service announced Tuesday that it would be delaying the tax reporting requirement yet again.
“We spent many months gathering feedback from third-party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements,” said IRS Commissioner Danny Werfel in a statement regarding 2023 taxes.
Considering 2023 as “an additional transition year,” the agency made clear that a Form 1099-K will only be required for those who grossed over $20,000 or had at least 200 separate transactions. In the following year, revenue taken in for goods and services transactions on platforms like Airbnb, eBay, Etsy, Eventbrite and Poshmark will need to be reported at the threshold of $5,000.
“Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040,” said Werfel. “It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area.”
“The IRS will use this additional time to continue carefully crafting a way forward to minimize burden,” he contended. “We want to make this as easy as possible for taxpayers. We will work to make the new reporting requirements easier for them, and we’ll work closely with third-party groups, tax professionals and others to find the smoothest path to ensure compliance with the law.”
Previously, it had been reported that the rollout of the threshold would “come as a shock out of nowhere” as tax attorney Nancy Dollar had told Fox Business in 2022. Pew Research Center had found around one in four Americans were making some amount of money through digital platforms.
Even the IRS acknowledged that reality as they pointed out, “the casual sale of goods and services, including selling used personal items like clothing, furniture and other household items for a loss, could generate a Form 1099-K for many people, even if the seller has no tax liability from those sales.”
“This complexity in distinguishing between these types of transactions factored into the IRS decision to delay the reporting requirements an additional year and to plan for a threshold of $5,000 for 2024 in order to phase in implementation,” the agency release stated.
Arshi Siddiqui, Akin Gump partner leading The Coalition for 1099-K Tax Fairness which included most of the aforementioned platforms as well as StubHub, Reverb and others, reacted to the delay and told CNN, “The Biden Administration’s decision represents a victory for common-sense tax policy by ensuring that consumers are not facing a tsunami of 1099-Ks in January.”
The likelihood that the delay was related to the 2024 election did not go overlooked by social media users as one pointed out, “So basically tens of millions of potential voters were going to be hit with a confusing 1099-K form from the IRS right as the election year starts in February of 2024. But the IRS under the Biden administration just delayed that until, maybe, 2025 or 2026. This was part of ARP, and I’m sure Democrats accounted for it as raising revenue to pay for ARP…”
and I’m sure Democrats accounted for it as raising revenue to pay for ARP. But I can’t find out how much they said it would raise. Couldn’t have been much though, which is why it was a huge self-own for them to set it at such a low number.
— Chris (@chriswithans) November 21, 2023
The IRS has chickened out again, deferring the $600 Form 1099-K again.
— Van Der Aa TaxEd (@AaTaxed) November 21, 2023
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