The Internal Revenue Service on Friday announced they are delaying new tax-reporting requirements for millions of Americans who made more than $600 of income from e-commerce platforms such as Ebay, Etsy and AirBnB.
The one-year reprieve means that said e-commerce platforms will not give the tax agency information on users whose income exceeds the $600 level, nor will they be required to provide sellers with a blizzard of 1099-k tax forms in early 2023. As the Wall Street Journal notes, this also means that opponents of the $600 rule can push for a change in the law next year.
“The additional time will help reduce confusion during the coming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” according to Acting IRS Commissioner Doug O’Donnell.
Congress passed the $600 threshold for Form 1099-K reports as part of the American Rescue Plan Act in March 2021, scheduling it to take effect for tax year 2022. Until the change, platforms had to report users’ income to the IRS if they had more than 200 transactions and $20,000 of revenue. Lawmakers lowered the threshold to boost tax compliance in an area where it is often lacking—unreported business income.
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 this week, the IRS stepped in with the delay. Treasury 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. -WSJ
The rule was set to affect millions of gig workers who are independent contractors and haven’t been reporting income on their tax returns. What’s more, the law didn’t differentiate between people running a business, and those who are “casual” sellers who are cleaning out closets and attics.
What’s more, the gross revenue on the form isn’t necessarily all income depending on the cost basis of the items being sold, or whether the items were inherited and are now worth less than their value on the date of the death.
The delay doesn’t change what income is taxable, however, just what information the IRS will receive. Gig workers are still required to track and report all income, they just won’t have e-commerce sales platforms ratting them out.
As the Journal also notes, the reporting rules aren’t aimed at people using Venmo or other payment apps for gifts or splitting the cost of meals.
https://www.zerohedge.com/political/irs-delays-600-gig-tax-rule