Here we go—another dirty trick from the Biden regime.
Back when he hired his new army of 78,000 new IRS agents, nearly tripling the roughly 45,000 we already had, greedy Joe Biden claimed he was only going after “the rich tax cheats.” Now we have the proof that his real targets are poor people—specifically the poor WORKING people.
In my October article, I already mentioned that tax collections from wealthy people, in spite of their much higher tax rates, generate only a tiny fraction of the revenue that the IRS extorts from middle and low income people: “In the IRS fact book for 2019 (the most recent year of available records), the IRS audited about 343,000 individual tax returns, but only 8200 were incomes above $500,000. The IRS audited LOWER incomes OVER 4,400% MORE than higher incomes. The tax yield was $28 million from 4350 $1 million earners. But 184,000 audits of low incomes of $1 to $25,000 yielded an extra $707 million.”
What is Biden’s game this time? He is already spouting that there won’t be any tax increases for anybody. Even if that claim is really true, he and his cronies are still about to load us with reams of new and expensive, invasive paperwork. After all, he has jobs for those 78,000 new agents. Otherwise, he wouldn’t have an excuse to hire them. That also means additional toil for us—unpaid slave laborors without a nickel of compensation.
Furthermore, this scheme is another serious privacy invasion which allows the government to stick its nose even deeper into the smallest details of everybody’s financial affairs.
Until now, few of us had ever heard of the IRS Form 1099-K. Most of us never file a 1099 of any kind. Those are for relatively rich self-employed people who do work on the side.
Last year (2022), Congress made some changes in the American Rescue Plan Act of 2021 and sneaked in a nasty little surprise that’s almost impossible to find. It lowered the threshold for the 1099-K from $20,000 to a piddling $600. That means that this year (2023), low income taxpayers who never suffered a burden like this before are likely to be inundated with 1099-Ks from payment services like Square, Venmo, PayPal, Apple Cash, and also eBay, Etsy, Facebook and Amazon.
The 1099-K is sent to people who sell goods and do part-time work and are paid with these services. Each one will send a separate form, meaning many individuals will receive several to fill out. We will be smothered with “a tidal wave of Forms 1099-K hitting millions of unsuspecting taxpayers and... overworked tax preparers.”
Prior to 2022, this form was required only for 200 or more annual third-party transactions totaling $20,000 and above. But Biden’s “Gestapo” has now lowered that minimum all the way down to ONE transaction totaling a mere $600. SIX HUNDRED DOLLARS—an amount so absurdly low, almost everybody who earns money in this manner will be forced to perform extra paperwork and suffer the agonizing liability of a painful audit if he fails to comprehend its complications and makes mistakes. Many will suffer the extra expense of hiring professional tax services to avoid the likely penalties of failure. The tax professionals will probably be the only people who could benefit from this scandal. They will certainly profit from the extra work—unlike the poor taxpayers who are forced to perform free extra labor and suffer the agonies of performing complicated mandated bookkeeping duties.
Even working children can be impacted. Those who mow lawns and baby-sit for only $600 annually will be required to document every little job and keep careful records. If they should become a bit negligent, they and their parents could be victims of IRS retribution. Now a single transaction or several totaling $600 will receive a 1099-K.
This is just one more case of runaway government overreach where it utterly lacks the morals and common sense to just leave things alone.
Last August (2022), over 70 mostly conservative and free market organizations, including the National Taxpayers Union, Americans for Tax Reform, the Center for a Free Economy and the American Business Defense Council, sent an open letter to congressional leaders emphasizing the urgency of the issue:
“Under the prior law, a 1099-K was issued only in the event that a business charged customers at least 200 times in a year, and $20,000 in the aggregate.
“H.R. 1319 eliminated the 200 transaction threshold entirely, and lowered the dollar hurdle to just $600. As a result, both very small business ventures and unwitting non-business taxpayers have found themselves caught in the 1099-K reporting net. Millions of Americans who have never received a 1099-K form before, and don’t know what to do with it, will get one. If they seek help from the IRS, they will quickly run into an overwhelmed agency trying to process this gusher of new 1099-K returns, keep up with filing season, clear out prior backlogs, respond to correspondence, and even answer the 800-number telephone line.”
Ryan Ellis stated:
“The letter raises the urgent issue of 1099-K information reporting. If Congress doesn’t act before the end of the year (2022, millions of unwitting teenage babysitters and lawn mowers, college student tutors, people selling junk from their garages and basements, roommates splitting rent, and friends sharing bar tabs will get a new (to them) “1099-K” form from their payment processor.
“With the IRS ready to hire 87,000 new auditors (and unable to do simple customer service tasks like answering their 800-number), this is the wrong time for the IRS to see every new jot and tittle of your financial life.”
There is one bright spot in this debacle. When the law was originally written, the 1099-K forms would have included all income earned in 2022, including income received prior to the law’s passage—before any taxpayers would have ever thought about keeping the records needed to comply.
Fortunately, on January 3, the IRS spotted this catastrophic mistake and made adjustments for the change to begin this year (2023). But now, get ready for the upcoming 1099-K tsunami.
If the IRS wants more compliance, it should first consider using more carrots and fewer sticks. When the taxpayers are mad, they are less inclined to comply with excessive and abusive regulations. Minimize and simplify the paperwork. There is no reason why we can’t have a single two-sided piece of paper for everybody’s entire tax return; that is ample space to list all of the income and deductions the IRS should ever need.
Another reform the IRS should consider is to go back before 2010, back when it sent every taxpayer a complete booklet in the mail that contained all of the forms and instructions needed to file a return, including an addressed envelope. Better yet, it should also have a stamp on it so we won’t have to run to the post office to buy the one stamp that we use every year.
The IRS should also sell its guns and ammo and use the money to purchase enough phones and supporting equipment to promptly answer their 800 number from people with tax questions.
Just do it. Contented taxpayers will be far less angry and less inclined to cheat.
1. Cohn, Michael, IRS warns about 1099-K compliance, November 22, 2022. https://www.accountingtoday.com/news/irs-warns-about-1099-k-compliance
2. Cohn, Michael, Congress may raise 1099-K reporting threshold in tax extenders package, September 15, 2022. https://www.accountingtoday.com/news/congress-may-raise-1099-k-reporting-threshold-in-tax-extenders-package
3. Ellis, Ryan, 70 Conservative Leaders Demand that Congress Address Nightmare IRS 1099-K Tax Form Debacle, August 9, 2022. https://www.centerfreeeconomy.org/post/70-conservative-leaders-demand-that-congress-address-nightmare-irs-1099-k-tax-form-debacle
4. IRS Statements and Announcements, IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K, January 3, 2023.