Area residents concerned about new IRS reporting requirements that would impact transactions of only $600 on platforms like PayPal can breath a temporary sigh of relief. But the key word here is temporary.
The implementation of the controversial IRS reporting requirement, a part of the American Rescue Plan, has been delayed by a year.
Both U.S. Senator Shelley Moore Capito, R-W.Va., and U.S. Senator Joe Manchin, D-W.Va., pushed for the delay — arguing it would give Congress more time to correct the flawed regulation.
The requirement, if it is allowed to take effect as currently proposed, would lower the threshold needed on money transaction platforms in order to receive a 1099K from the IRS from the current $20,000 a year plus at least 200 transactions to only $600. A 1099 is usually filed by independent contractors and for rental income.
Why this measure was included in the Democrat-backed American Rescue Plan is anyone’s guess. But it’s a terrible idea that would impact millions of Americans who sell goods online through popular platforms like Ebay.
It’s now up to the Democrat-controlled U.S. Senate and the Republican-controlled U.S. House to find a way to fix or repeal the IRS reporting measure.
“I am pleased the Treasury Department and the IRS listened to my request to delay the 1099K reporting requirement that will harm small businesses and individuals who sell goods online across America,” Manchin said. “This will allow Congress more time to correct this regulation that puts undue burden on our small businesses. I will continue working with Treasury and my bipartisan colleagues to find a permanent solution that supports our small businesses in West Virginia and across America.”
“This very provision was included in the American Rescue Plan that was passed with only Democrat support two years ago,” Capito added. “Republican efforts to repeal these new requirements have been ignored by my Democrat colleagues until the past week when they realized the massive complications that would ensue this tax filing season.”
U.S. Rep. Carol Miller, R-W.Va., also called for a delay in the IRS reporting.
“This is a great relief for taxpayers, small businesses, payment platforms, online marketplaces, and the Internal Revenue Service, who will all be saved from an avalanche of tax forms that were expected to hit in just a number of days,” Miller said. “Now, tens of millions of taxpayers are left in limbo as the courts will need to decide the legality of this action from the Biden administration. Congress must act immediately to enshrine the former $20,000 and 200 transaction threshold into law permanently.”
Miller, Manchin and Capito are all correct. Congress must act quickly to fix this flawed reporting requirement.
Voters across the country expect Congress — both Democrats and Republicans — to get the job done.