IRS delays $600 reporting requirement

[RamAirBirds]

1 more year of the OLD rules for 3rd party payment reporting. Back to 2021 rules...
For EACH 3rd party service you have to have BOTH $20,000 in payments AND 200 transactions. Remember RETURNS don't count and don't reduce either number. At least this is better than $600 in transactions with even just 1 transaction. Of course we know why this is. A one year delay probably so they could get the 87,000 new agents in place to enforce. Spread the word because the way I saw it most people did not even know this was hidden in the 2021 America Recovery Act because most people are not paying attention and as a famous person once said "You have to read it to know whats in it".
Many people were going to be shocked when they got 1 or more 1099-K forms in the mail this January. Spread the word. A real Bummer for some people. They are not looking to the mega rich with all the lawyers and accountants to increase revenue.
This is NOT a political Rant. It is all Fact and information for all in our hobby. Be aware and start keeping records for 2023, What each item you sell COST, the shipping charges, mileage to and from shipping centers, packing supplies etc etc etc. Have to treat it like a regular business now. No exceptions for calling it a hobby.
Merry CHRISTmas everyone.

[Jeff H]

I knew it was coming but it sounds like it only applies to people running some sort of business, not people selling stuff online they don't need. Also, I read in several places it says stuff that adds up to $600 vs several places saying individual transactions $600 and higher.

If you use third-party payment platforms, like PayPal, Venmo or Cash App, to collect payments for your side gig or business, the Internal Revenue Service (IRS) wants to remind you to report payments of at least $600.

This rule is aimed at individuals who run a side hustle, small business or do part-time work. So if you’re just sending money to friends for a restaurant bill or a vacation, or collecting a one-time payment for selling something online, this won’t apply to you.

[cheveslakr]

And audits aren't what most think of in traditional terms. The bulk or the audits are just the IRS reassessing what they have on file, without your interaction. You can challenge it, but on the smaller scale, it's usually too involved to do so, so the average filer will just cave and pay.

[RamAirBirds]

every person will get the 1099-k that has an ebay / paypal / venmo type account personal AND business. If you total $600 in a calendar year you will get one. TOTAL $600 not for $600 transactions and higher. you can have 600 $1.00 transactions and you will get one. Even if you sold your Dining room Table or had a roommate send you some money towards his 1/2 of the rent. It is insane and not well thought out. I agree with "jer" on the normal audits of today but this is before the 80 billion (yes a B) that they are pumping into the IRS to help fund 87,000 new IRS agents and build enforcement for whatthey call the "Gig" economy. This all changes with this funding that was buried in the so called "Inflation Reduction Act" Part of that bill was to create more revenue from "Taxes" to help fund all the NEW projects and Climate programs and Electric car charging stations etc etc etc. Start Paying attention everyone It is all changing.
Thus should hardly be considered a political post as if affects EVERYBODY so i am hoping it stays on the forms to help educate and stimulate conversation. This is the way it USED to be. Thanks.

[Jeff H]

From the IRS site In addition, the Act clarifies that third-party network transactions include only transactions for the provision of ‘goods or services.’ As a result, personal gifts, charitable contributions, and reimbursements are not included. so that sounds like gifts won't be included.

One thing I thought I heard a while ago was that you get the 1099-k and if you have the receipt showing what you paid for an item, you would only get taxed on any profit you made. I don't have time to search for that right now, but I'll take a look when I have time. I guess they figured most people won't make the effort to prove what they paid for something and the IRS will get the full tax on it.

Some of the articles I read about this seemed to misinterpret the new rules which could lead to problems if people think they are ok.

[RamAirBirds]

Yes, If you use paypal friends and family it is not to be included on the 1099-K form and yes you can deduct the cost of the goods along with expenses related to the sale. Basically just like a real business. This is why when you get a 1099-K you will report that income on a Schedule C (business income) along with your 1040. This is where you will deduct cost of goods sold, expenses such as shipping, Packing Supplies, Mileage to and from UPS, USPS, Fed Ex etc.
All that is good but you are creating the requirement to do something most people are not used to doing. Also Ebay and Venmo don't have a friends and family option.
This is starting to sink in with people and the new hiring quota for 87,000 new IRS agents will certainly be a game changer. People will eventually catch on but as usual it will be a little too late. Of course we are all supposed to be paying tax on any income or profit made from a sale but again, this is going to be very new for most people. the new Agents are not being hired to go after the rich or the big corporations. The best scenario is for new Congress to do what they said they would do and block the funding for this massive increase in agents. But of course this was before we gave away the farm in the past week. Out of respect for this Forum this is as deep as I should go. Love this site, A great resource. This is just good to open the discussion a little bit. It is not Political as much as it is Fiscal so Im trying to do my best to keep it at that. Respectfully to all readers.

[luzl78]

Yes, If you use paypal friends and family it is not to be included on the 1099-K form and yes you can deduct the cost of the goods along with expenses related to the sale. Basically just like a real business. This is why when you get a 1099-K you will report that income on a Schedule C (business income) along with your 1040. This is where you will deduct cost of goods sold, expenses such as shipping, Packing Supplies, Mileage to and from UPS, USPS, Fed Ex etc.
All that is good but you are creating the requirement to do something most people are not used to doing. Also Ebay and Venmo don't have a friends and family option.
This is starting to sink in with people and the new hiring quota for 87,000 new IRS agents will certainly be a game changer. People will eventually catch on but as usual it will be a little too late. Of course we are all supposed to be paying tax on any income or profit made from a sale but again, this is going to be very new for most people. the new Agents are not being hired to go after the rich or the big corporations. The best scenario is for new Congress to do what they said they would do and block the funding for this massive increase in agents. But of course this was before we gave away the farm in the past week. Out of respect for this Forum this is as deep as I should go. Love this site, A great resource. This is just good to open the discussion a little bit. It is not Political as much as it is Fiscal so Im trying to do my best to keep it at that. Respectfully to all readers.
I applaud you being tactful but you are correct, the fiscal life of all Americans is screwed.

[69 Post Sedan]

I believe we are over thinking this….the main reason this was done was because the IRS is forecasting over 50,000 agents are going to retire within the next 5 years….these people will need training prior to this.

“Additionally, the IRS is expecting a large number of employees to leave in the next 10 years and will hire new staff to fill those roles. At least 50,000 staff members will leave or retire from the agency in the next five years alone, according to the Treasury Department.”

Also, to go after big corporations who are paying little to no taxes.

“New staff will be hired to improve taxpayer services and experienced auditors who can take on corporate and high-end tax evaders, without increasing audit rates relative to historical norms for people earning under $400,000 each year,” a spokesperson for the Treasury Department said.

These are just a couple sentences in the article. Please read the whole thing when possible.

In conclusion, we need to be diligent about this yet not overthink it either….IMO

Maybe I’m wrong….time will tell.

Kurt







https://www.verifythis.com/article/news/verify/taxes-verify/irs-not-increasing-audits-hiring-87k-new-agents-through-inflation-reduction-act/536-477cb699-a46e-4898-9e5e-0e48d5fffd2a

[RamAirBirds]

So I would then assume that the extra 80 Billion in Funding used to Hire these agents will slowly be returned as agents retire? Good Luck with that. Do we really thing the average age of an agent is 60? Also BIG Corporations as mentioned before all have the best Lawyers and Accountants and all play within the Tax Code. We may not like it but none will being in a gray area that would cause them to give up $$ in an audit. Did anybody see the Dave Chapelle opening monologue on SNL a few weeks back. It is really worth a look.
Something to ponder.
Merry CHRISTmas everyone.

[TMagda]

A couple of things. Reporting cash transactions with a 1099 does not change the taxability of the transaction. This was always taxable unless excluded for other reasons (1035 exchange comes to mind). I have met so many that believe if you are transacting in cash it is not a taxable event. Not true. But, the tax is on the profit, not on the gross receipts so if you sell a used $3000 dining room table for $600, no worries. Second, big corporations pay tax. They are audited constantly. The company I have worked at for 45 years has never been out of an audit. The army of lawyers and accountants are generally putting deferrals in place meaning the taxes are just paid in a later fiscal period. Additionally, the US tax code requires taxation of global corporate income providing a complex calculation for a credit on taxes paid offshore to prevent double taxation. It is possible for a multinational, which many are, to actually have a US credit derived from foreign income taxes paid that exceeds the US liability in that period, therefore "no taxes". This is clearly not a scenario where the corporation is paying no taxes. This has been misrepresented by activists with a "tax the rich" agenda. I would say that corporate and international taxation, as well as some advanced individual tax planning is incomprehensible to 99.9% of the population (even professionals) but that never prevented anyone from speaking confidently on the subject.

[markinnaples]

I've been working with governmental regulatory compliance for about 30 years, and trust me, every single rule that is passed by the govt has been analyzed closely. I know they say that the bills like the "Inflation Reduction Act" are massive, and congress isn't given proper time to review and understand them, but I guarantee that this bill has been developed over some years and the people who wrote it absolutely understand what's in it, at least the section they were responsible for. What they don't understand, what no one understands, are the unintended consequences (sometimes even if they seem intended), and these are usually the things that trip everyone up. I'll leave any politics out of this post, but the truth is, government in general is a self-feeding entity that wants more and more money, and more and more control, and will continue to grow if not checked and limited. Happy New Year.

[69 Post Sedan]

Also BIG Corporations as mentioned before all have the best Lawyers and Accountants and all play within the Tax Code.

And right here IS the problem that needs to be resolved……

For example, we know of companies/organizations that pay little to no taxes due to misleading/false information on their taxes. They exaggerate on their assets to get loans yet lie about the value of assets to pay less in taxes. Our government needs to put a stop to this!!! Or make them held accountable! Corporate welfare is killing this country, not some measly $600 transaction.

Hopefully some of the new hires will be working on this never ending battle. I’m staying optimistic……..

Kurt

[markinnaples]

Most large corporations aren't able to lie on their taxes due to the high level of audits and examinations by outside auditors, the SEC, and whoever their federal regulators are. I think if they're paying low or no taxes, it's because they did whatever they had to within the confines of the tax laws, not cheating or lying. And when I say large, I mean large enough to be listed on one of the stock exchanges. This especially applies to large banks who actually usually have an examiner on-site full time, and honestly, most of the time they are under review by one of the above. Imagine that, 50-52 weeks of being under audit or review, but that's how it works.

[RamAirBirds]

markinnaples is 100% accurate in these last comments. Everything is the typical "Talking Points" that get regurgitated over and over again until the point that people begin to believe and regurgitate them themselves. Classic.
Remember a great Mark Twain Quote...from well over 100 years ago.
"It is easier to fool a man than to convince him that he has been fooled"
CNN does a great job with the former don't they? Our hard part is to do the later. That seems to be more of an uphill battle everyday that passes.

[RamAirBirds]

Sorry, Meant to say "Everything ELSE is the typical talking points" Just to clarify. markinnaples comments ARE NOT talking points but the truth.

[TMagda]

And right here IS the problem that needs to be resolved……

For example, we know of companies/organizations that pay little to no taxes due to misleading/false information on their taxes. They exaggerate on their assets to get loans yet lie about the value of assets to pay less in taxes. Our government needs to put a stop to this!!! Or make them held accountable! Corporate welfare is killing this country, not some measly $600 transaction.

Kurt

Kurt, you cannot make a general statement like this and be taken seriously. If you have a specific example, fine, we can discuss. Spouting out unsupported talking points only dilutes the argument. For clarity, do you take any deductions on your tax return? Or do you pass on them to pay extra taxes? Corporations are under perpetual audit by not only financial auditors who validate the accuracy of the books and records, but also by the states, the IRS, governing bodies in other countries, etc... There are federal taxes, state taxes, property taxes, payroll taxes,... the list goes on. As I said above, the current corporate tax rules are incomprehensible to 99.9% of the general population, and 100% incomprehensible to the current media. Also, the $600 reporting threshold does not alter the tax consequences of those transactions, they were always required to be included in the determination of income, it just makes them easier to audit. Most tax plans can create a deferral, where taxes are due in a later period, but not avoidance.

[69 Post Sedan]

"55 Corporations Paid $0 in Federal Taxes on 2020 Profits"

https://itep.org/55-profitable-corporations-zero-corporate-tax/

Now, I know that they do pay some taxes one way or another but there are too many loopholes that need to be shored up to stop the shenanigans……legal or not!

Kurt

[TMagda]

"55 Corporations Paid $0 in Federal Taxes on 2020 Profits"

https://itep.org/55-profitable-corporations-zero-corporate-tax/

Now, I know that they do pay some taxes one way or another but there are too many loopholes that need to be shored up to stop the shenanigans……legal or not!

Kurt

Loophole and shenanigans are more commonly referred to as tax law and tax planning if you do not work in the media. Deferral and avoidance are not the same thing.

[69 Post Sedan]

Without going down the political rabbit hole…..I’ll use one very good example of tax fraud.

Just recently, there was an organization that was found guilty of 17 counts of tax fraud……including falsifying business records. This company has paid little to no taxes for multiple years using this illegal scheme.

Again, I’m not trying to get in a political debate, but making sure I give a factual example of big money avoiding paying taxes…….illegally.

Kurt

[TMagda]

Here is a good start. https://www.foxnews.com/politics/house-votes-rescind-billions-funding-irs-first-major-majority-action-mccarthy-speaker

[RamAirBirds]

Just to clarify "Tax Fraud" and "Falsifying business records" is just that. FRAUD.
This is not a problem with the corporate tax code. It is Fraud. It is not "Corporate Welfare" it is FRAUD. Can't use this as a legit example.
Of course there are many problems in our tax code. As I mentioned the Dave Chapelle Skit on SNL several weeks back he made fun of the 2016 presidential debate when Hillary tried these Tax Dodging lines on Trump and he turned and said "You use the same tax loopholes I do" "They are all legal". The idea of a corporation paying zero tax is another media Lie that gets eaten up. It's like Warren Buffet claiming his Secretary pays more taxes than he does when what is TRUTH is She was taxed at a higher RATE than he was. Remember that talking point scam? What a play on words. His secretary pays INCOME tax because she physically works for her pay. i.e. income. Warren pays tax on Dividends and long term gains i.e. profit from money he invested...no physical labor. If he was taking INCOME from Berkshire he would be taxed at the same rate she is if he paid himself the same amount. The reason Dividend and Long Tern Gain rate is lower is we want to encourage people to invest there money and not just sit on it.
Such a confusing topic it is easy to fool people with these talking points and easy to mislead. Shame on Warren for even making such a blanket statement without clarifying. All on purpose but of course we know which side of the fence he sits on.
All good stuff and nothing is political here, thats the irony. Just hard to watch the same misleading information continue to makes its way around the block over and over again.
Lots to fix in our Country. Lets start with OBJECTIVE TRUTH NOT SUBJECTIVE TRUTH.
Cheers Everyone!
Love the site!

[TMagda]

Another challenge with the code is that GLOBAL income is subject to US tax requiring the inclusion of a complex foreign tax credit mechanism to eliminate double taxation. Oversimplification, but, it is possible for an entity to pay a level of foreign tax on their income, at higher than US rates, that federal income tax is effectively wiped out. Calling that scenario "a corporation paying no tax" is an intentional mischaracterization used to create a talking point.

[dustinm]

You over tax large corporations and they will simply take their factory and corporate office somewhere else... I for one would rather have everything back on US soil.

[roadster]

You over tax large corporations and they will simply take their factory and corporate office somewhere else... I for one would rather have everything back on US soil.

Before they move they will have to pass added costs onto consumer , till they are able to move or are forced out of business .

[black69]

I did not notice this thread until today. I love that the majority of the posts match what I am telling many of my friends that sell and trade bikes and bike parts, or car parts.

First, this tax play is focused on paying for the incentives handed out for the green new deal. How to do that is go after what most that sold things on ebay that could have added up to 20K are now tracked down to $600. Pretty big change. It will hit the middle and little guy. Totally sucks. And that 87000 agents are clearly labeled as NEW, not replacements or backfill. All expansion.

On the fact of corporations not doing their fair share of paying taxes, you have to think it through a bit more. First give them a break as they employ people that pay taxes. Second, if they chose to invest profits into growth, that means more people hired (paying more taxes) and also they use the money to buy land, building, equipment. If they do nothing with that choice, they pay taxes. Most take the path of expansion (my neighbor with a $25M bearing buisness explained this to me, they always reinvest their profits or lose it to taxes). Only a fool opps out of the growth path. In my neighbors case, they took profits recently to buy a bearing buisness in New York that was in need of being managed by a better company. And its all made in America!

My other friend owned part of a buisness and with ALL the regulations (and then add in lock downs) and high taxes recently sold off his tie-wrap buisness to mexico. Yep, keep demonizing American buisnesses with bad mentality (they dont pay enough taxes!) and this is what you can also get.

Great thread. Its going to be an ugly tax year for many, start finding those purchase receipts. And most that get audited will cave if they dont have records that are solid. Easy task for IRS vs companies with lawyers.

[RamAirBirds]

Great Comments black69. Once upon a time a very wise man called this "Trickle Down Economics". This theory works, always has, easy to understand yet it was demonized for years. Hard to believe that somebody cannot understand this basic concept.
Enter our corrupt Media and the Lies get eaten up because people are made to be ANGRY....This is all part of the plan. Anger is the key here.
Another Mark Twain Quote. "If you don't read the Newspapers you are un-informed, If you DO read the Newspapers you are MIS-INFORMED.
Again, hard to believe this goes back over 100 years.
People need to start paying attention and educating themselves.

[69 Post Sedan]

Lots of information here BUT, most can be refuted……but I digress.

I’ll just leave it as, I’ll agree to disagree.

Kurt :beers:

[RamAirBirds]

Classic. The MSM only gives people just enough to make you believe but not enough to allow anyone to actually debate. Works for most people as most don't really want to get too deep. This is why we are where we are.
All this is written with respect, love and above all concern for our fellow citizens.

[black69]

Bitter sweet ending to this thread. It’s not political. I brought this up in a Schwinn stingray bike forum and they all got it. I posted part of the infrastructure bill that sited the mentioned changes.

I find it hard to debunk how businesses reduce their reported tax liability with real people I know. Oh well.

Can u point me where the delay of tracking less than $600 info is published?

Bob