WASHINGTON, D.C. — U.S. Representative David Schweikert (AZ-01) joined Ways and Means Committee Chairman Jason Smith (MO-08) in sending a letter to the Government Accountability Office recently regarding their concerns that the IRS may be unprepared to implement Democrats’ new invasive scheme to track Americans’ personal online financial transactions.
The IRS struggles to process its current volume of billions of pieces of information returns under the old reporting requirements that mandated platforms like Venmo and PayPal report a person’s transactions to the IRS if, over the course of the year, the user had more than 200 commercial transactions and made more than $20,000 in payments. Now, if a user’s payments total more than just $600 it will trigger the issuance of a 1099-K report filing with the IRS — a form used by the agency to track business or trade payments and dealings.
Schweikert and Smith noted that this scheme would increase the paperwork burden for both taxpayers and the IRS:
“New regulations related to information reporting for transactions occurring across these digital assets could lead to the filing of billions more information returns. This will result in additional paperwork and information being submitted both to the IRS and taxpayers. These new requirements will have a significant impact on low- and middle-income Americans, including many working in the gig economy.”
In a tacit acknowledgement that their latest scheme is going to be a massive burden on taxpayers, the Biden Administration has delayed implementation of this new 1099-K reporting requirement for a year. Democrats’ $600 threshold for reporting Venmo payments will make next tax season even worse by involving the IRS every time an American sells a couch, concert ticket, or pays the neighbor to mow the lawn.
Read the letter here.
- Democrats lowered the reporting threshold to $600 in their so-called American Rescue Plan Act.
- Given how problematic the new requirements will be, the Biden Administration has pushed back the rollout until next year.
- Many Americans likely to be impacted by the lower reporting threshold are also more likely to struggle to afford the level of accounting needed to comply.
- The IRS currently receives nearly 5 billion information returns, the processing of which is already a massive undertaking at an agency struggling to modernize or adequately exercise its customer service responsibilities.
- H.R.190, the Saving Gig Economy Taxpayers Act – introduced by Representative Carol Miller (WV-01), a member of the Ways and Means Committee – would restore the higher threshold of more than 200 commercial transactions and more than $20,000 in payments.