In a Christmas miracle for some, the IRS has announced that it's delaying a requirement for e-commerce platforms, such as PayPal, Venmo, Cash App, and Etsy to send tax forms to customers who received payments of more than $600. The requirement, which was set to take effect in 2022, would have generated millions of new forms going out to taxpayers and their accountants and who knows how much money generated in taxes.
The IRS had previously set a $600 threshold for sending 1099-K forms, which is a form used to report income from electronic payments. This would have applied to gig workers, sellers, and other individuals who receive payments through digital platforms.
Following concerns expressed by the tax community, the electronic transactions industry, and some lawmakers, the IRS announced this month that it would delay the $600 threshold for sending 1099-K forms until 2023. This is a major win for taxpayers as it means they will have more time to prepare for the new requirements.
The IRS also noted that payments through apps like PayPal for goods and services were always taxable, but many Americans did not report such income on their tax returns.
The new, lower $600 reporting threshold for reporting credit card and cash payment app transactions will likely lead to problems for taxpayers. Taxpayers will need to be more vigilant in tracking their income and expenses, and they should also factor in any taxes that may be due.
It is worth noting that the IRS is still encouraging taxpayers to report income from digital platforms on their tax returns (good luck with that). The IRS has made it easier for taxpayers to do this, with new online tools that allow taxpayers to track their income from digital platforms. The IRS has also created new tax forms to make reporting easier.
This is a Christmas miracle for sure if you ask me. Taxation is theft anyway so the less money that is stolen from us through government force, the better.