WASHINGTON, DC – As it struggles to process the billions of information returns it currently receives, the IRS may be unprepared to implement Democrats’ new invasive scheme to track Americans’ personal online financial transactions, wrote Ways and Means Committee Chairman Jason Smith (MO-08) and Oversight Subcommittee Chairman David Schweikert (AZ-01) to the Government Accountability Office in a new letter.
Prior to Democrats’ so-called American Rescue Plan, platforms like Venmo, Paypal, and others were required to 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.
The IRS struggles to process its current volume of billions of pieces of incoming information, yet as Chairman Smith and Oversight Subcommittee Chairman Schweikert point out, this scheme would increase the paperwork burden for both taxpayers and the IRS:
“Processing this large amount of information is already a significant undertaking at the IRS – an agency that has struggled to modernize or adequately exercise its customer service responsibilities…Many Americans who will likely be subject to these new requirements – particularly given the low reporting threshold of $600 – are also likely to struggle to afford the level of accounting and tax preparation services that might be needed.”
The Biden Administration continues to roll out initiatives that focus on middle-class Americans at a time when it has publicly said that a supercharged IRS will audit more Americans making less than $400,000. At the same time, the Biden Administration is failing to be transparent about how many middle-class families will be targeted by the IRS – releasing a “plan” this past Thursday that was supposed to lay out how the agency will spend the $80 billion pay raise Democrats gave it in the Inflation Reduction Act but instead punted on important details and did nothing to ease concerns.
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.