The Internal Revenue Service (IRS) quietly announced last week that they will once again be delaying a new tax code passed in 2021 under The American Rescue Plan, which would have required anyone collecting or earning $600 or more in revenue from a cash app such as PayPal, Stripe, Cash App, Venmo, or online marketplaces, to file a 1099K tax form. Americans who did not do this would have faced an increased risk of being audited, as credit companies and payment apps are forced to overturn their records automatically.
The IRS said in a press release on November 21st, ‘As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.’
Apparently, according to IRS Commissioner Danny Werfel, the IRS is still having trouble fully implementing the system, and is rather proposing that the threshold be raised higher.
‘Given the complexity of the new provision, the large number of individual taxpayers affected and the need for stakeholders to have certainty with enough lead time, the IRS is planning for a threshold of $5,000 for tax year 2024 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan (ARP),’ the IRS wrote.
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.
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. 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.
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. This is consistent with our Strategic Operating Plan. The IRS is focused on meeting taxpayers where they are and helping them get it right the first time.
Werfel said in a statement
The IRS provided additional reasoning behind the delay in implementing the $600 fee but rather the $5,000 marker instead. The IRS said:
Reporting requirements do not apply to personal transactions such as birthday or holiday gifts, sharing the cost of a car ride or meal, or paying a family member or another for a household bill. These payments are not taxable and should not be reported on Form 1099-K.
However, 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 IRS invites feedback on the threshold of $5,000 for tax year 2024 and other elements of the reporting requirement, including how best to focus reporting on taxable transactions.
ClearValue Tax provides his additional commentary and insights on the matter.
AUTHOR COMMENTARY
Brian did not say this in his video, but I also suspect that a possible reason for a second year of delays are because the digital IDs and central bank digital currencies (CBDCs) are not yet ready to rollout in the U.S.; and/or perhaps FedNow, the instant transfer payment system, which lays the foundation for CBDC transacting, has been heavily criticized and not a lot of banks have signed on as of yet.
That’s really what this $600 is from day one: to get people used to the idea of having petty sales be not just taxed, but to have instantaneous record of it on file and monitored, and then have the fear of ‘the man’ coming after you for it. That’s the philosophy of the social credit score and CBDCs, so you modulate your behavior voluntarily to comply with big-daddy government.
The rich ruleth over the poor, and the borrower is servant to the lender.
Proverbs 22:7
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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“Brian did not say this in his video, but I also suspect that a possible reason for a second year of delays are because the digital IDs and central bank digital currencies (CBDCs) are NOT YET READY to rollout in the U.S.; and/or perhaps FedNow, the instant transfer payment system, which lays the foundation for CBDC transacting, has been HEAVILY CRITICIZED and not a lot of banks have signed on as of yet. ”
I’m glad for this. I hope the delay stretches out for longer, if maybe more brethren would spread the word about the dangers of CBDCs and social credit scores diligently. Not that hard to do this online, for the sake of real ministries, Christians, and decent folks as well.
(It will be a good thing too to start thinking seriously about writing and mailing letters. I haven’t done this in years. First step to ease back into full-blown handwriting when tech fails all around.)