Ways and Means Committee Chairman Jason Smith (MO-08) issued the following statement after the IRS announced its plans to unlawfully re-write the reporting threshold of Washington Democrats’ 1099-K policy and once again delay its full implementation for the third time in three years:

“Democrats’ 1099-K policy would burden taxpayers by burying gig workers under a mountain of paperwork, with over 90 percent of the tax burden falling on Americans earning less than $200,000. Democrats knew this when they created the new threshold in the American Rescue Plan, but they didn’t care. The Biden-Harris Administration acted unlawfully to save Democrats from the political fallout of this policy with another delay of what their own law called for and has now gone even a step further outside the bounds of what their law says by creating a new $5,000 threshold. With this new scaled phase-in the IRS has decided they will put Democrats’ 1099-K policy on a delayed timer that will fully detonate in the middle of Donald Trump’s second term in office. 

“Across America, the Ways and Means Committee has heard from dozens of workers and small business owners about how this law will negatively impact their livelihoods. That’s why in September the committee voted overwhelmingly to pass Rep. Carol Miller’s bill, the Saving Gig Economy Taxpayers Act, which would repeal this misguided policy. Instead of adding to the tax burden, House Republicans are focused on delivering tax relief for the millions of families, farmers, workers, and small businesses who have been devastated by the Biden-Harris economy. With Donald Trump back in the White House and Republicans in control of Congress we will work to build on the success of the Trump tax cuts and create the best economy in our lifetime once again.”

Background:

• On December 23, 2022, the IRS announced its first delay in implementing the 1099-K provision of the American Rescue Plan Act of 2021 (ARPA) to “help reduce confusions during the upcoming 2023 tax filing season.”
• On April 4, 2023, Chairman Smith and Oversight Subcommittee Chairman David Schweikert (AZ-01) wrote to the Government Accountability Office (GAO) that Americans will struggle to afford accounting and paperwork prep needed to comply with the new IRS reporting scheme.
• On June 13, 2023, the Committee on Ways and Means voted to repeal this policy as part of the American Families and Jobs Act.
• On November 15, 2023, a report from the GAO showed that the IRS was ill-equipped to handle the implementation of the Democrats’ new policy.
• On November 21, 2023, the IRS announced its second delay in implementing the 1099-K provision.
• On December 21, 2023, Ways and Means Republicans sent a letter to IRS Commissioner Daniel Werfel demanding testimony from the Commissioner so that he could provide an explanation for the agency’s legal rationale for delaying implementation of the 1099-K provision for the second year in a row.
• When called to testify before the Ways and Means Committee on February 15, 2024, IRS Commissioner Werfel evaded questions regarding the IRS’s authority to change the Form 1099-K threshold without Congressional authorization.
• On September 11, 2024, the Ways and Means Committee advanced H.R. 190, the Saving Gig Economy Taxpayers Act, repealing the American Rescue Plan Act’s 1099-K provision.