CHARLESTON, W.Va. – Today, U.S. Senator Shelley Moore Capito (R-W.Va.) and Congresswoman Carol Miller (R-W.Va.-03) introduced the Emergency Taxpayer Paperwork and Audit Relief Act, legislation to delay the implementation of the Democrat budget gimmick in the American Rescue Plan that lowers the threshold for Americans to receive a 1099-K form from the Internal Revenue Service (IRS).

“The Democrats’ so-called ‘American Rescue Plan,’ which contributed largely to our high inflation economy, also included a new tax liability for tens of millions of Americans starting this upcoming filing season,” Senator Capito said. “If Democrats who voted for the American Rescue Plan get their way, you may now be facing additional taxes because you received money from friends or family through payment apps like Venmo and Paypal, or sold tickets to a concert or sporting event. It would also give the government access to any information regarding transactions exceeding $600, regardless of intent. My legislation would immediately delay the implementation of this burdensome and intrusive change to our tax code, and protect West Virginians from unnecessary oversight from the federal government.”

“Democrats in Congress have failed the American people by ignoring an issue they created to fund their ridiculous spending bills,” Congresswoman Miller said. “I introduced the Saving Gig Economy Taxpayers Act in May of 2021 to restore the threshold to levels that were working just fine before Democrats complicated the system and gave taxpayers new headaches. Democrats refused to negotiate a compromise to fix this issue over the last year, meaning tens of millions of taxpayers will receive an unexpected 1099-K form from the IRS in January if a solution is not found by December 31st. The Emergency Taxpayer Paperwork and Audit Relief Act that I introduced today with Senator Capito will delay the implementation of the Democrat’s onerous reporting requirements for one year, giving a Republican-controlled House of Representatives time to fix the issue that Democrats refuse to address and saving West Virginia taxpayers from the pain of inept Democrat governance.”

“Biden and Democrats thought they could come after Americans' PayPal and Venmo transactions without anyone noticing. People noticed,” Grover Norquist, President of Americans for Tax Reform, said. “This bill will prevent millions of taxpayers with more than $600 in transactions from third-party vendors from being told by Biden's IRS that they have a new tax liability this year. Thanks to the leadership of Rep. Miller and Sen. Capito, Republicans will have an additional year to implement a permanent fix to Democrats' failed policies.”

“The $600 threshold for 1099-K information reporting is bound to confuse scores of taxpayers next year who participate in the digital economy, even for non-taxable transactions such as selling used items online at a loss,” Andrew Lautz, Director of Federal Policy, National Taxpayers Union, said. "Neither taxpayers nor the IRS are prepared for the deluge of paperwork, which is why NTU is glad to support Rep. Miller’s and Sen. Capito’s efforts to delay these reporting requirements for a year. This will buy Congress more time to work out a solution that ensures taxes owed are taxes paid while still limiting taxpayer confusion and paperwork burdens.”

“Small businesses that utilize third party payment platforms will soon be inundated with new paperwork as a result of the expanded Form 1099-K reporting requirements,” Kevin Kuhlman, Vice President of Federal Government Relations at National Federation of Independent Businesses, said. “NFIB opposed this expansion since it was buried at the last minute into the American Rescue Plan Act. The increased reporting will further complicate the already difficult tax compliance burden small businesses and individual filers face. Given the tight timeline as this Congress concludes, NFIB thanks Congresswoman Carol Miller and Senator Shelley Moore Capito for pushing to delay the reporting requirement for a year to provide more time to increase the thresholds and reduce the paperwork burden on small businesses. NFIB urges Congress to include this delay in the government funding legislation.”

BACKGROUND:

Prior to the American Rescue Plan, 1099-K forms were issued by the IRS to taxpayers who exceeded 200 transactions totaling $20,000 in a tax year. The American Rescue Plan drastically changed the reporting requirements, and now any electronic payments and transactions from online platforms, apps, or payment card processors equal to $600 will qualify for the 1099-K requirement.

The Emergency Taxpayer Paperwork and Audit Relief Act will provide the Republican-led House of Representatives with more time to raise this threshold and prevent 30 to 50 million new forms from being sent out next month.

Senator Capito is a cosponsor of the Stop the Nosy Obsession with Online Payments, or SNOOP Act, legislation to strike the tax code provision inserted by in the American Rescue Plan that requires third-party payment platforms to report businesses’ gross transaction volumes totaling more than $600 to the IRS. Senator Capito also cosponsored S. 4817, which would prevent the IRS from using any of the $80 billion included in the Inflation Reduction Act funding to conduct audits of taxpayers making less than $400,000. As recently as Thursday evening, Senator Capito supported an amendment which would have repealed the reporting threshold.

Congresswoman Miller previously introduced H.R. 3425, The Saving Gig Economy Taxpayers Act, which will return this threshold to the time tested standard. It has the support of every Republican on the House Ways and Means Committee. Democrats in Congress have refused to acknowledge the problem they created or negotiate a solution. 

# # #