YEREVAN (CoinChapter.com) — The Internal Revenue Service (IRS) of the United States is going after low and middle-income households. Under a new dictate, the agency mandates US residents to report all third-party transactions exceeding $600.
According to the latest update, people receiving any income over the mentioned threshold via payment apps like Venmo, Zelle, and PayPal must report it to the IRS by filing Form 1099-K. The change will come into force in January 2023.
Although the tax system is not new, the reporting requirement is a huge change. Until now, individuals earning side income through third-party transactions did not require to report them to the IRS if the gross payment did not exceed $20,000.
In addition, if they had less than 200 transactions, then the IRS did not require them to report as income.
However, thanks to President Joe Biden’s American Rescue Plan Act, Americans must report such transactions made after March 11, 2021. This is regardless of how many of those transactions they have had.
According to the development, the IRS requires third-party systems to send Form 1099-K to it and the person receiving the funds.
The $600 threshold is an aggregate. Hence, even if people receive payments in small amounts throughout the year, the payment app (say Vemo) will send them a 1099-K form.
The law does not mandate filings for personal transactions. However, it will not be easy to determine which transaction was personal and which was not. Therefore, one can expect a lot of confusion and harassment of citizens once it comes into force.
Many people have pointed out how millions of citizens will receive Form 1099-K for the first time. This will create a lot of confusion and result in loads of paperwork for the agency.
Moreover, failure to report any payment that users receive could trigger an audit. This is because the IRS would have obtained a copy of the 1099-K form directly from third-party payment processors. This allows no room for citizens to refrain from reporting such income.
The Democratic Party and Joe Biden Have Bizarre Priorities
President Joe Biden and his Democratic Party have their priorities mixed up. In the current economic turmoil, which has rendered many people in the US jobless, going after the side earnings of low-income families is bizarre.
US inflation is over the roof. Between June 2020-June 2022, the consumer price index soared from 0.6% to 9.1%. It has since improved, with the October figures coming at 7.7%, according to Statista. However, it remains relatively high.
As per official figures, the poverty rate in the US is 12.8%. However, children living in Poverty are also significantly high in the World’s richest country. According to US Census Bureau, the child poverty rate in the US was 16% nationwide as of 2020.
The recent economic meltdown has had an impact on children as well. As of January 2022, over 12.5 million live under poverty standards.
In 2021, 10.2%, or 13.5 million US households, were food insecure. According to a report by the Urban Institute, food insecurity in June 2022 reached a whopping 21.4%. The situation was worse for families with children.
“In June 2022, nearly one in four adults who were parents or guardians of children under 19 living with them (23.9 percent) reported their household was food insecure, compared with about one in five adults without children under 19 in their families (20.1 percent),”
the report reads.
The unemployment rate in the US remained at 3.7% in November 2022. With such critical economic problems that US residents face, going after them for their crucial side earnings shows the US Government has misplaced priorities.
Shouldn’t the Biden Administration solve these issues before going after every penny?
Several Republican Politicians and ordinary US citizens are furious at the new dictate by the Internal Revenue Service (IRS). Many wonders why the Biden Administration is not going after the rich instead, as it had promised.
“The IRS will tax people on transfers of over $600. What happened to tax the rich?,”
Others lashed a the financial task force for ignoring other pressing issues. For instance, users pointed out how the US Department of Defense still cannot account for 61% of its $3.5 trillion in assets.
This is the fifth audit in a row that the Pentagon has failed. The US defense budget is around $800 billion. So how is the Department of Defense left off the hook with that budget, but ordinary citizens must report a meager $600?
Other people pointed reminded the alleged money-laundering scandal involving the Democratic Party. As CoinChapter earlier reported, Republicans had alleged the Biden administration used the Russian invasion of Ukraine to launder billions of dollars via Sam Bankman-Fried’s crypto exchange FTX.
“How come the IRS can track a $600 Venmo and cash app transaction but we have no idea where $87 Billion to Ukraine went?”
A survey published in early 2022 by Data For Progress revealed that most Americans (68%) believe the IRS should do more to tax the rich. According to the organization, over 70% also believe the organization should conduct more tax audits of large corporations.
Yerevan-based Editor and writer focusing on topics about cryptocurrencies, NFTs, politics, and international relations. Having completed his Bachelor's and Master's degrees from Delhi's Jawaharlal Nehru University, he currently works as a reporter at CoinChapter.
Contact: [email protected]