The Biden administration is rethinking its recent tax change intended to crack down on tax evasion by small business and independent contractors working in the "gig" economy, reports The Wall Street Journal.
The Internal Revenue Service on Friday said it is delaying by one year a new rule mandating small business owners who are paid for goods and services through apps such as PayPal, Venmo, Cash App, Etsy, StubHub, and Airbnb to report their earnings, closing a tax loophole for online sellers.
Previously, those companies only informed the IRS if a user received payments exceeding $20,000 through more than 200 transactions in one calendar year, though Democrats in Congress in 2021 reduced the threshold to $600 and just one transaction as part of the Biden administration's efforts to narrow the $7 trillion "tax gap" between revenue that is owed and revenue that is collected.
"The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan," Douglas O'Donnell, the acting IRS commissioner, said in a statement. "To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the I.R.S. will delay implementation of the 1099-K changes."
He added: "The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements."
Several Republicans asked the IRS to delay implementation of the new rules, calling it "confusing and unworkable."
Sen. Joe Manchin, D-W.Va., in a statement urged the IRS to "to use their authority now to delay the implementation and allow Congress to continue working to find a lasting solution that prevents this harmful regulation from impacting small businesses."
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.
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