The Internal Revenue Service quietly reneged on their 1099-K tax scheme yesterday – a scheme that would force American taxpayers to file an individual 1099-K for every single online transaction that involves the act of selling goods and services if the amount surpassed $600, or 200 transactions or more. This would include all cash apps like PayPal, Venmo, Apple Pay, Stripe, and many others like Etsy or eBay, or anything that allows revenue to be collected. Donations and charitable giving did not count.
The move was quietly slipped into the American Rescue Plan in 2021. The Economic Ninja was one of the only few that shed light on this major move at the time.
It was only until recently did the media remind taxpayers to get ready to file these 1099-Ks, as all affected companies would automatically have to send a record of theirs to the IRS. If the taxpayer did not correctly file or were dishonest on their taxes the IRS would already have a record of the transactions and most likely an audit would be coming.
The Wall Street Journal reported on the IRS’ move to delay this require for 2023.
The additional time will help reduce confusion during the upcoming 2023 tax-filing season and provide more time for taxpayers to prepare and understand the new reporting requirements.
Acting IRS Commissioner Doug O’Donnell, said
The WSJ wrote: ‘In the waning days of this year’s congressional session, lawmakers in both parties discussed raising the $600 threshold or delaying implementation. After those efforts failed, the IRS stepped in with the delay. Treasury Department and IRS officials said Friday that they hope to work with industry groups over the next year to make sure the forms go to the right taxpayers.’
We are not looking to nickel and dime a taxpayer over a $100 couch on eBay. That is not the future state of the IRS.
Melanie Krause, acting IRS deputy commissioner for services and enforcement, said
However there is a catch: this does not mean that taxpayers can be negligent.
The delay doesn’t change what income is taxable, just what information the IRS will receive. So sellers and gig-economy workers must still track and report their income. The reporting rules are intended only to capture business transactions, not people using Venmo or other payment apps for gifts or splitting the cost of meals.
The WSJ wrote
AUTHOR COMMENTARY
The wicked worketh a deceitful work: but to him that soweth righteousness shall be a sure reward.
Proverbs 11:18
This is not a reprieve: this is a scheme to try and net even more people to falling victim to this draconian tax trap. Most people will forget about this and not even see it because it’s Christmas, and so many people are going to get dinged.
[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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