Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.
World News

IRS delays tax change for users of Venmo, PayPal and other digital wallets


The Internal Revenue Service said Friday it was delaying a new tax policy by a year that would require users of digital wallets and e-commerce platforms to start reporting small transactions to the tax collection agency.

The rule’s delay comes following a bipartisan backlash from lawmakers and an outcry from small business owners, who only recently learned of the tax change.

The IRS said the delay was intended to provide a smooth transition period for taxpayers to comply with the policy, which was enacted as part of the 2021 U.S. bailout and was due to take effect this year. Many users of services like Venmo, PayPal, Cash App, StubHub, and Etsy only recently became aware that they would be receiving IRS tax forms associated with their transactions, raising fears of surprise tax bills.

“The IRS and Treasury have heard a number of concerns about the timing of implementing these changes as part of the U.S. bailout,” said Douglas O’Donnell, the acting IRS commissioner. in a press release. “To ease the transition and provide clarity for taxpayers, tax practitioners, and the industry, the IRS will delay the implementation of the 1099-K amendments.”

He added: “The extra time will help reduce confusion in the upcoming 2023 tax filing season and give taxpayers more time to prepare for and understand the new filing requirements.”

Prior to the rule change, services such as Venmo provided users with a snapshot of their earnings called a 1099-K form only if they received more than $20,000 and made more than 200 transactions. The forms were meant to be submitted with tax returns to the IRS and were intended to help determine the amount a taxpayer owed.

These thresholds have been lowered to $600 for the whole year, regardless of the number of transactions, greatly expanding the number of people likely to have to pay more taxes.

The IRS said the old tax reporting rules that were in place before the new law will remain in effect until the change takes effect next year.

Lawmakers from both parties rushed this week to cut or reverse the tax measure in Congress’ spending package, but none of the changes were ultimately included in the final legislation.

The Treasury Department, which oversees the IRS, has come under pressure from lobbyists and lawmakers to find a solution to the widespread confusion before taxpayers begin receiving tax forms in the coming weeks.

“I urge the IRS to use its authority now to delay implementation and allow Congress to continue working to find a lasting solution that prevents this harmful regulation from impacting small businesses,” the official said. Sen. Joe Manchin, DW.Va., in a statement. Thursday.

Confusion over how the change to the tax code would be applied had caused widespread concern in recent weeks and threatened to create another chaotic tax season next year. Taxpayers were bracing for 1099-K forms that could inaccurately characterize their income, creating a customer service crisis for the IRS just as it embarks on an $80 billion modernization project.

In its Friday statement, the IRS emphasized that the law “is not intended to track personal transactions such as sharing the cost of a car trip or meal, birthday gifts or holiday, or the payment of a family member or another for a household bill”. However, he defended the policy change as an “extremely important” way to ensure better compliance with the tax code.

Resistance to tax change demonstrates the challenge the Biden administration faces as it tries to crack down on tax evasion and narrow the $7 trillion “tax gap” in revenue that shouldn’t be collected in the course of the next decade.

The administration has said efforts to curb tax evasion will focus on big business and the wealthy, but the policy of requiring digital wallet users to report small transactions to the IRS primarily affects working people. in the “gig economy” and those who operate small ancillary businesses. The change is expected to generate about $8 billion in additional tax revenue over 10 years.

Arshi Siddiqui, a partner at law firm Akin Gump which represents a coalition of businesses trying to change new tax requirements, said on Friday that consumers and small businesses were “dodge a bullet” with the delay but something had to be done. more.

“We look forward to working with our bipartisan champions in Congress for a permanent solution,” Siddiqui said.

startribune Gt Itly

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button