This is going to hurt the lower-to-middle class more than the wealthy. I bet a lot of Americans had to make some extra side income to combat inflation and a difficult few years. Lowering the threshold from $20k to $600 seems like a shitty thing to do.
Perfect timing. It is wrong. Period. While the wealthy have the cash to be able to WRITE THEIR OWN LOOPHOLES, this is happening.
People don't have money to even survive. This is why many people turned to selling stuff online. JUST TO GET BY. They are using credit cards, just to get by. And now they will be in debt to the government because I'm sure a fraction of the people receiving a 1099 actually saved for taxes.
So pathetic they put out this "warning" as if it's going to help anyone. People will have the warning when they receive their 1099s in the mail.
They put taxes on online sales a few years ago. Now this? When the US is in massive debt and seemingly operates without any need for taxes. They just keep raising the debt ceiling. At this point, it's impossible to pay down the debt. Interest payments soon to be higher than GDP. The only solution they seem to be pushing towards is hyperinflation.
Yep, I’m one of the lower/poor class that stopped selling my old stuff on eBay on 12/31/21 as I would have jeopardized my Medicaid status as well as my ability to be used as a deduction.
> ...a lot of Americans had to make some extra side income to combat inflation and a difficult few years...
The impetus does appear to be because of corona, a lot of people might of got used to working or doing business from home and/or freelancing. You know, the true enemies, of not generating enough tax revenue. Why hassle billionaires and millionaires, when you can chase down some struggling people who might have made over $600 dollars.
Looks like some really smart people in high places felt they might be missing out on some cash, somewhere, so needed to step on, squeeze, flip over and shake the lower to middle class as much as possible. The unwashed lower classes might be hiding some loose change under a cushion, so need to make sure to get first dibs on it.
Trying to make ends meet, pay rent, or eat? Don't worry about that, if you made a buck, make sure you know who gets the first cut. And at $600, they might as well go the full monty, and bring it to $0. Any of those with thoughts of extra "side income" or "side hustles", outside that cushy minimum wage job, may need to give that up or enjoy the extra headache. The rich get richer and the poor get poorer.
If CBDC legislation is passed by the upcoming Congress, the implicit threshold would be $0, since all transactions would be centralized, https://news.ycombinator.com/item?id=32777875
Oops, sorry - yes, I meant the tax gap but the wealth gap was implied (in my opinion). Guess we really are going to need some form of bitcoins in the future.
Reducing tax evasion has nothing to do with how much a certain income/wealth percentile is taxed.
Marginal income/wealth/sales/property tax rates determine how much a given income/wealth percentile is taxed (including effects of deductions/credits/allowances).
It has always been against the rules to cheat on your taxes. "We need to let people cheat more easily" is definitely not the right way of addressing financial insecurity.
A 1099k doesn't mean you owe taxes. All this change means is the IRS is going to waste a lot of money on useless information request notices to catch a few people who weren't reporting taxable income while causing stress for millions who already have enough forms to deal with.
We started a revolution in this country over tax on tea. Pinching the lower class like this might not end well for the government in the current socioeconomic climate. Personally, I look forward to the revolution.
>We started a revolution in this country over tax on tea.
That is not the full story. "American colonists objected to being taxed by the Parliament of Great Britain, a body in which they had no direct representation. "[0][emphasis added] It was taxation without representation that was the issue.
Today in America, we have a similar issue for example with the citizens of California, who are woefully underpresented in Congress and the electoral college (because they only get the same two Senators as Wyoming despite having something like 60 times the population).
Why did you intentionally omit the house of representatives where the number of seats is tied to population? The Senate's entire purpose is a balance of power between small states and larger ones where the people are represented in the house. Your post feels ignorant or deceitful.
It is also interesting that US senators used to be selected by each state legislature as opposed to by popular election because their original purpose was to represent the state as a sovereign entity as opposed to the people directly.
>citizens of California, who are woefully underpresented in Congress
You don't know that Congress includes the House of Representatives? I did not "intentionally omit" anything. And I also mentioned the electoral college, which you "intentionally omitted".
Except you did. You framed it as in totally congress is unbalanced because of the senate. To someone not from the US that distinction isn’t a material one and you used that to make it seem that there is no population balancing mechanism. So while you may not believe you were intentionally dishonest, it comes off that way to everyone else.
Yes, that is exactly correct. Not only can laws only pass with the approval of both houses (they each have veto power over the other), but the Senate has extra privileges such as judicial and cabinet appointment approvals that do not allow direct representation. And stupid rules like the filibuster just amplify the effect.
Ironic, isn't it, that while the American revolutionaries did not like taxation with representation, they deliberately created a system which, with the passage of the 16th amendment, enables just that.
Your view, deceitfully presented, is flawed and obtusly (seemingly purposely) ignores every component of the legislative branch in favor of your narrative. Your view of the filibuster is subjective and your stated irony is just a blatent falsehood crafted to sensationally push your agenda's daft poetic imaging.
>Today in America, we have a similar issue for example with the citizens of California who are woefully underrepresented in Congress and the electoral college.
Oh please. California has the most seats in the House of Representatives, the most electoral college votes, and the 2 senators per state was purposely done so that large states like California couldn't bully smaller states through their sheer size. Claiming that California is "woefully underrepresented" is just absurd and purposely ignorant.
Best example is how representation in the federal government is diluted for the more populous states, States with more people have proportionally less say in the house than less populous states. If I live in California, my house representative represents more people than say montana
So have them propose legislation where they get rid of states and just have single government. Could even move all of the decision making in this single body. And for best democracy have all candidates in single pool and top vote winners get elected. Perfect and fair democracy where everyone has equal vote.
Technically you could even get rid of all elected members and just run some blockchain or something and vote for laws that way...
the problem is that enforcement is already applied unevenly… for example, the IRS audits low income people at a much higher rate than the rich (https://trac.syr.edu/tracirs/latest/679/)
So to me this sounds like the IRS continuing to pinch pennies from low and middle income americans instead of going after the people who twist the tax code to hoard wealth
This has become a big problem for people in a niche community I participate in - guitar collecting. A lot of people in that community like to buy guitars, use them for a while, then sell them on Reverb or eBay to fund the next purchase. Typically we sell them at a slight loss, because we’ve usually made some kind of improvements like new components or adjustments to the setup.
With the new reporting rules, it’s now far more complicated to do this. You need to have a receipt for each purchase, otherwise you’re on the hook for the tax on the entire amount of the purchase. Problem is, a lot of gear is purchased through face to face cash sales, where no receipt is generated. Or, the gear was purchased so long ago that the receipt is long gone. And if you make any improvements, better hope you have the receipts for all of those, plus some way to figure out how much value to assign to your time, and the patience to either figure all this out on your taxes or the extra money to pay someone else to do it.
It’s just not worth it anymore to sell online. For now, we’ll head back to Craigslist. It’s really a shame because for a while their Reverb really had a neat thing going.
My uninformed speculation is that Zell wasn't affected because it's first-party (run by the banks themselves) and not affected by a reporting requirement for third-party payment processors. It's probably not much more than a front-end for ACH.
"PayPal is a financial technology company, not a bank. Banking services provided by Synchrony Bank, Member FDIC. PayPal Balance account is required to use PayPal Savings."
So maybe part of this legislation is some sort of attempt to have these payment processor "pseudo banks" have to be more like real banks and deal with banking regulation.
Complexity of tax law is an absolute killer to productivity. I have a small business (not in USA) and I don't know how many times I've wished it could just be a simpler system, even if it meant I have to pay more! The savings in time, accounting complexity, professional fees, mental overhead, and stress would more than make up for it. It would also make efforts to automate compliance more feasible (as opposed to a system of nuanced rules that is constantly changing).
It’s more typical for small business owners to rather have the money. It’s not hard to keep manageable Quickbooks and pay $1k/year for bookkeeping and tax prep. People on the losing end of tax reform would stand to lose thousands (or simply worry they would lose money.) Even a few thousand could mean the difference between viable and comfortable or struggling and viable. Those who are disorganized and/or worry over and internalize financial tasks as you describe tend to do so regardless of the complexity.
That’s not to say we shouldn’t reform, and there are certainly businesses who would benefit from it financially.
$1k/yr? Maybe you could get that rate two decades ago, or for an extraordinarily simple business.
(Or if you want a bargain-bin accountant, which experience teaches will cost you more in hassle over the long term).
Even 7 years ago 77% of small businesses surveyed by SCORE reported spending more[1] (and it presumably doesn't include the day to day bookkeeping they do in-house).
People on the losing end of tax reform would stand to lose thousands
A lot more than that. I suspect those who benefit most from today's complex and loophole-ridden system are not the "ordinary joes" you alluded to in the first part of your reply.
If you're gaining a "few thousand" from the existing complexities, but in the new world could file a return without the need for professional services, then it's a wash. I suppose accountants would lose out, but it turns out they're the loudest voices consistently calling for tax simplification
(eg. see CGA Canada reports from 2011 through 2019).
Those who are disorganized and/or worry over and internalize financial tasks as you describe tend to do so regardless of the complexity.
Not sure if you're trying to insinuate that I'm disorganized, but I'm not going to bite.
There's always winners and losers when you embark on tax reform. I simply feel society as a whole would experience a net benefit from efficiencies gained out of a substantially leaner tax code, and I wouldn't mind even if I personally landed on the slightly-losing side.
Yes, I want to be clear that I was saying you are at least somewhat disorganized (process could be smoother for the same effort and cost), and stressed out by your financials and probably would be in any situation. I didn’t mean to be sneaky with that. :)
You mentioned SCORE; experience with that organization is what leads me to say that some business owners handle this stuff better than others whether their financial complexity increases or decreases. We don’t all have the same personality and gifts and that’s okay.
Replace $1k with the appropriate percentage of revenue for the typical complexity for the industry of the business.
>In America, the "closing the tax gap" have always been adding new laws and filling more forms.
You have omitted "increased enforcement" -- actually collecting the tax as calculated using existing laws and forms. Unfortunately there is a political movement to actually increase the tax gap via defunding the IRS.[0]
The tax gap is due to those who deliberately break the law with impunity, not the complexity of the law.
> Before 2022, the federal Form 1099-K reporting threshold was for taxpayers with more than 200 transactions worth an aggregate above $20,000. However, Congress slashed the limit as part of the American Rescue Plan Act of 2021, and a single transaction over $600 may now trigger the form.
> Aimed at closing the tax gap — a top priority of the Biden administration — the provision is estimated to bring in $8.4 billion from fiscal year 2021 to 2031, according to the Joint Committee on Taxation.
It shows that this $8.5B tax revenue increase is for the 10-year period of 2021-2031, ie, $850M per year. It's at VIII 4. Modification of exceptions for reporting of third party network transactions.
So for a mere $850M/year in new tax revenue, the government is going to require millions (my guess) of people to have to deal with a new tax form. And these 1099's are likely to be very inaccurate. People use eBay all the time to sell personal shit they no longer want, and now they will be getting a 1099 for those sales. Selling $600 of crap around the house is not taxable income: you sure as hell didn't get to take a tax deduction when you bought the junk!
This won't at all address cash-based payments, like for handymen. But I think it's being put in place now, so that when they eventually shove digital currency down our throat, all those cash payments will be tracked and taxed. You may not pay a handyman $20K/year, but might easily pay him more than $600.
Who's closing the tax gap for the ultra rich? They don't seem to be as hard at work on that.
>So for a mere $850M/year in new tax revenue, the government is going to require millions (my guess) of people to have to deal with a new tax form.
$850M to make life more difficult for millions of the poorest Americans, or less than 1% of the money we sent to Ukraine in the last 12 months alone! Government priorities..
I have my roommates send me their share of rent to me via Venmo and then I pay the landlord with the full check on their online portal. Now I have to do a 1099-K because I was just gathering cash to hand to the landlord?
For lack of a better word, this is incredibly "stupid".
This was obvious when the Biden regime added 87,000 new IRS agents. Of course that many agents need a lot of new targets, and those targets are not going to be the ultra-wealthy.
Remember like two months ago crazy conspiracy theorist ultra-Hitler MAGAists were saying that adding a bunch of IRS agents was going to result in additional enforcement against the non-wealthy?
It's an incredible coincidence that we're now seeing additional enforcement against the non-wealthy, even though we know for a fact it has nothing to do with IRS new hires.
