Ryan Ellis April 20, 2023
Over 80 conservative leaders signed onto a letter to Congressional tax writers urging them to end the looming threat of IRS snooping on taxpayers using Venmo, eBay, and other common, everyday apps. The text of the letter is below:
Dear Chairman Wyden and Smith and Ranking Member Crapo and Neal:
We write today to urge you to address a major tax reporting issue that will
needlessly burden middle class and lower income Americans with confusing
IRS forms, leading to a nightmare tax filing season and taxes paid in excess of
In 2021, Congress passed the “American Rescue Plan.” That nearly $2 trillion
spending bill contained a provision to alter the reporting rules for IRS Form
1099-K. The purpose of a 1099-K form is for credit cards and other third-
party payment processors to report to companies income that flows from
customers, through transactors, and to businesses.
Under the prior law, a 1099-K was issued only in the event that a business
charged customers at least 200 times in a year, and $20,000 in the aggregate.
Congress eliminated the 200 transaction threshold entirely, and lowered the
dollar hurdle to just $600. As a result, both very small business ventures and
unwitting non-business taxpayers have found themselves caught in the 1099-
K reporting net.
Millions of Americans who have never received a 1099-K form before, and
don’t know what to do with it, will get one early next year. If they seek help
from the IRS, they will quickly run into an agency overwhelmed by the sheer
number of new tax forms. Most taxpayers impacted by the 1099-K changes
and poten ally seeing tax hikes make less than $400,000 per year, a clear
viola on of President Biden’s stated promise to middle class families.
Examples of taxpayers who will newly receive a 1099-K form include:
● Occasional teenage babysitters and lawn mowers
● College students tutoring high schoolers
● People clearing out old garage and basement items on selling platforms
● Roommates and couples splitting rent, vacation, or restaurant tabs
● Sporadic vacation home renting
● Rideshare drivers with even one mile of business
Taxpayers receiving a 1099-K may not know what to do with it, and may be
apt to ignore it on their tax return. Doing so will result in the IRS assessing tax
on the full amount found on the 1099-K, even if the taxpayer has basis or
business expenses that would reduce or eliminate the ultimate amount of tax
The new 1099-K rules are a textbook example of how a well-functioning tax
system must have tradeoffs between complexity and enforcement. This
targeting of Lilliputian pockets of income will result in bad outcomes for
taxpayers, 1099-K issuers, and the IRS. It will fuel illegal and cash economy
transactions which often lead to more serious crimes.
Congressional policymakers have several bills before them to restore the old
1099-K thresholds, or at least greatly increase them from where they are
now. We urge you to consider and adopt these policies before the end of this
year and the next tax filing season.