The Internal Revenue Service (IRS) is warning American taxpayers that they need to report any transactions that use “third-party” facilitators like Venmo, PayPal, Zelle, and Cash App that are at least $600 in value.
On Tuesday, the IRS shared tips advising U.S. businesses that make $600 or more annually from payments received through “third-party” networks to file a tax form known as Form 1099-K.
“Taxpayers should report the income they earned, including from part-time work, side jobs or the sale of goods,” IRS stated on its website.
“The American Rescue Plan Act of 2021 lowered the reporting threshold for third-party networks that process payments for those doing business.”
It can be recalled the Biden regime required U.S. banks to turn over to the IRS the bank account information for all accounts holding more than $600.
“Prior to 2022, Form 1099-K was issued for third-party payment network transactions only if the total number of transactions exceeded 200 for the year and the aggregate amount of these transactions exceeded $20,000. Now a single transaction exceeding $600 can trigger a 1099-K,” IRS added.
“The lower information reporting threshold and the summary of income on Form 1099-K enables taxpayers to more easily track the amounts received. Remember, money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable. Those who receive a 1099-K reflecting income they didn’t earn should call the issuer. The IRS cannot correct it.”
New York Post reported:
When Congress passed the American Rescue Plan Act of 2021, it included a provision that reduced the reporting threshold to a single transaction over $600.
The Biden administration hopes that by reducing the threshold, the measure will crack down on Americans evading taxes by not reporting the full extent of their gross income.
The proposal was offered as a way to help pay for a $3.5 trillion social spending bill that would invest in climate programs, child care and education.
Tommy Lucas, an Orlando, Fla.-based certified financial planner, told CNBC that filers must include any sum that is reported on Form 1099-K as part of their business income.
Failure to do so could trigger an audit since the IRS obtains a copy of Form 1099-K directly from the third-party payment facilitator.
But the provision has been met with pushback from sites like Etsy and eBay, who joined with smaller retailers to create the “Coalition for 1099-K Fairness,” which they say is aimed at protecting “casual online sellers and microbusinesses from unfair tax and privacy burdens.”
Earlier this year, Biden signed the Democrats’ sweeping economic package that would allocate billions of taxpayer dollars to facilitate the expansion of the Internal Revenue Service’s workforce.
The IRS would receive $80 billion if H.R. 5376, the $750 billion “Inflation Reduction Act” passes the House and lands on Biden’s desk. The funding would mark a 600 percent increase from 2021 when the bureau received $12.6 billion.
The reconciliation package would also double the current IRS workforce by hiring an additional 87,000 employees to the bureau’s staff of 78,661 employees. At 165,661 employees, the IRS is poised to become larger than the Pentagon, State Department, FBI and Border Patrol combined total employees of 158,779.
The most controversial component of the program, arguably, is stepping up IRS enforcement, with 87,000 new agents being added to the force. This stepped-up enforcement, we were told, would be affecting big corporations and those making over $400,000 — although in practice, that’s never how it works.
What will the 87,000 new Internal Revenue Service agents that the Democrats’ new tax and spending bill aims to hire mean for you?