The IRS has postponed the implementation of what many critics say is a massive middle-income tax increase of tax reporting digital cash transactions on Venmo and PayPal.
The IRS claims it delayed the reporting citing efforts “to minimize burden.” However, this delay conveniently comes when President Biden’s poll numbers are shrinking and has to answer questions regarding his pledge to not increase taxes on ANY American households making less than $400,000 per year.
The Biden administration has seen record increases in inflation crushing the American middle-class and trying to tax transactions on payment applications like PayPal and Venmo over $600 may been seen as a tax grab which would only make his poll numbers go lower.
This legislation was passed in 2021 under the American Rescue Plan (ARP) but the IRS again announced the delay.
IRS Commissioner Danny Werfel said in a statement,“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.”
The IRS needs “an additional transition year” where they would implement Form 1099-K targeting those making over $20,000 on the apps followed by other service platforms like Airbnb, eBay, and Etsy who made over $5,000 the following year.
“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 the IRS Commissioner. “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 said. “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.”
The IRS has previously acknowledged the challenges that arise from the newly passed law in a statement, “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 response on social media blistered the Biden administration echoing sentiments where one user said, “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…”