IRS' Venmo crackdown delayed but not dead this holiday season
The new reporting rule would have created a paperwork nightmare for tax preparers
Rep Andy Biggs pushes to axe IRS funding after alleged plan to audit 'more people'
Rep. Andy Biggs, R-Ariz., weighs in as GOP lawmakers slam IRS dysfunction despite $60B more in funding over 10 years on 'The Evening Edit.'
The IRS just announced a regulatory rule delay that will provide stay-at-home moms and middle-class Americans a little relief this holiday season. Online transactions totaling $600 or more will not trigger tax reporting on Form 1099-K, for now. This issue is not dead though.
This year, selling items through popular apps like eBay, Etsy, Poshmark and Facebook Marketplace; sending money online through Venmo, CashApp and Apple Pay; and conducting online transactions would have triggered an unwanted gift: new income reporting to Uncle Sam.
In 2021, congressional Democrats lowered the reporting threshold for online transactions to an unreasonably low level of $600 or more – and Congress had until Dec. 31 to fix this error. If not, taxpayers and the Internal Revenue Service would have faced a rocky tax filing season in 2024. Millions of unwitting Americans were set to receive one (or multiple) 1099-K forms from the various platforms they used and expected to report that income to the IRS.
Online transactions totaling $600 or more will not trigger tax reporting on Form 1099-K, for now. This issue is not dead though. (istock / iStock)
Unfortunately, the $600 threshold is so low that it will capture transactions that would normally not be reported and likely would not create any tax liability. For example, a woman who used online platforms to sell a used sofa, split the check for dinner and drinks with friends a few times, and consign a few old dresses, could easily surpass this limit.
IRS SETS NEW TAX BRACKETS, STANDARD DEDUCTIONS FOR 2024
Many taxpayers who never previously received a 1099-K form would be inundated with them at the end of the year. The IRS predicted 1099-K forms will jump by 28 million to 44 million this year.
Looking to fund the costly $1.8 trillion American Rescue Plan Act (ARPA), Democrats lowered the previous threshold of at least 200 transactions totaling $20,000 or more to just $600. There is no transaction minimum, so a person could be one used treadmill away from new red tape and tax headaches.
Larry Kudlow: IRS agents should not be armed
FOX Business host Larry Kudlow explains the dangers of a weaponized IRS on 'Kudlow.'
The Left may have been targeting high-powered online sellers and businesses, but this reporting rule would have hit women and middle- and low-income households. According to a survey of casual online resellers conducted by the Coalition for 1099-K Fairness, many are young women and stay-at-home moms earning small amounts of income on the side. Communities of color would also be disproportionately impacted by the new reporting requirement.
IRS RAISES 401(K), IRA CONTRIBUTION LIMITS FOR 2024
If drying up income-generating avenues is not ill-advised enough, the increased reporting was guaranteed to trigger mass confusion next tax season. Reselling used items at a loss or sending money to family and friends is not taxable under the law. However, taxpayers may think they have some tax liability. They would have to prove their innocence to the IRS. Good luck digging up original receipts for resold items or trying to explain every Venmo transaction.
Biden's IRS has been weaponized to target US citizens: Rep. Ben Cline
House Appropriations Committee member Rep. Ben Cline, R-Va., discusses the IRS visiting the home of journalist Matt Taibbi during his Twitter Files testimony on 'The Big Money Show.'
The new reporting rule would have created a paperwork nightmare for tax preparers and accountants – much less for taxpayers who file their own tax returns. Tax filers with relatively simple tax situations would suddenly face more complexity and could make costly mistakes if they didn’t report this income while taking the correct deduction.
The Congressional Research Service predicted that the new reporting requirement would cause errors and problems. Consequently, the IRS would expend more resources adjusting tax returns with losses. Impacted taxpayers’ returns could be delayed.
CLICK HERE FOR MORE FOX NEWS OPINION
Last year, this new reporting rule was set to take effect. The IRS was not prepared then nor now for the onslaught of paperwork and delayed implementation for one year. It plans a phased-in implementation at a $5,000 threshold next year – conveniently after the 2024 election.
Yellen appears to admit that up to 90% of new IRS audits will be on low-to-middle income taxpayers
U.S. Treasury Secretary Janet Yellen on Friday did not deny a claim made by Rep. Adrian Smith, R-Neb., that 90% of new IRS audits will be on individuals making less than $400,000 annually, contrary to promises from the White House.
Congress needs to fix this tax nightmare once and for all. A number of bills would all repeal ARPA’s low $600 threshold – The Saving Gig Economy Taxpayers Act (H.R. 190), the Blocking the Adverse and Dramatic Increased Reliance on Surveillance (BAD IRS) Activities Act (S. 123), the Stop the Nosy Obsession with Online Payments (SNOOP) Act of 2023 (H.R. 488/S. 26), and the Small Business Jobs Act (H.R. 3937).
CLICK HERE TO GET THE FOX NEWS APP
Two bipartisan compromise bills – the Cut Red Tape For Online Sales Act (H.R. 3530) and the Red Tape Reduction Act (S. 1761) – would raise the reporting threshold to $5,000 and $10,000 with 50 transactions, respectively.
Americans are spared this holiday season, but not for good. Instead of leaving it to the IRS, Congress needs to address this burdensome rule before it buries American households in paperwork and tax woes.
CLICK HERE TO READ MORE FROM PATRICE ONWUKA