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Conservative Leaders Call on Congress to End IRS Snooping of Venmo and Online Platform Sales

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

actual liability.


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

owed.


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.


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