[news.bloombergtax.com]

E-commerce platforms like PayPal Holdings Inc.‘s Venmo and Etsy Inc. got some reprieve Tuesday as the IRS in guidance again delayed the requirement established by a 2021 law that the companies send tax forms to customers with business transactions of more than $600.

Guidance gives some relief to e-commerce platforms, taxpayers
New requirement will be $5,000 for 2025 filing season

As I in another thread, the $5000 threshold is only for the 1099-K form issued by Paypal, etc. The $600 threshold stays in effect if the MSC pays you directly and issues a "normal" 1099 form.

@myst4au wrote:

As I in another thread, the $5000 threshold is only for the 1099-K form issued by Paypal, etc. The $600 threshold stays in effect if the MSC pays you directly and issues a "normal" 1099 form.

PayPal will not be issuing 1099's at the $600 level. For now everything goes back to the way it was before the tax code was changed.

This is unfortunate. Honest folk have no problem with the new requirements. But, another year will go by with dishonest folk being able to get away with failing to report and pay their fair taxes.

@Rousseau wrote:

This is unfortunate. Honest folk have no problem with the new requirements. But, another year will go by with dishonest folk being able to get away with failing to report and pay their fair taxes.

Many people just getting by will be able to keep their money. This was a tax on people just barely getting by.

@johnb974 wrote:

@Rousseau wrote:

This is unfortunate. Honest folk have no problem with the new requirements. But, another year will go by with dishonest folk being able to get away with failing to report and pay their fair taxes.

Many people just getting by will be able to keep their money. This was a tax on people just barely getting by.

Hogwash. It is not a new tax. Indeed, it is not a tax. It is simply a mechanism to help the patriotic public servants at the IRS ensure that everyone pays their fair share. Honest people, even those of quite limited income, report their income no matter how they receive it and regardless as to weather it is reported on 1099s.

When people do not pay their taxes, they aren't "keep[ing} their money," they are stealing it from the United States, their states, municipalities, and schools, libraries, and & etc.

The way to address those "just getting by" through tax policy is not to make it easier to cheat but to raise the income threshold at which point taxes are collected.

Edited 1 time(s). Last edit at 11/23/2023 04:53AM by Rousseau.

@Rousseau wrote:

@johnb974 wrote:

@Rousseau wrote:

This is unfortunate. Honest folk have no problem with the new requirements. But, another year will go by with dishonest folk being able to get away with failing to report and pay their fair taxes.

Many people just getting by will be able to keep their money. This was a tax on people just barely getting by.

Hogwash. It is not a new tax. Indeed, it is not a tax. It is simply a mechanism to help the patriotic public servants at the IRS ensure that everyone pays their fair share. Honest people, even those of quite limited income, report their income no matter how they receive it and regardless as to weather it is reported on 1099s.

When people do not pay their taxes, they aren't "keep[ing} their money," they are stealing it from the United States, their states, municipalities, and schools, libraries, and & etc.

The way to address those "just getting by" through tax policy is not to make it easier to cheat but to raise the income threshold at which point taxes are collected.

While I do not think you are not wrong in your analysis, the problem - as with most things the federal government tries to implement - is that the language used is confusing, and often broadly written. This is one reason why even tax professionals have expressed concern about the rule. What this rule will invite will be more audits - even against honest people who honor their duty to report. If I receive $25,000 through PayPal from personal property I've sold at a loss, I would not need to report that. However, not reporting $25,000 that the IRS now knows I received may raise an eyebrow or two, and flag me for an audit. At which point, you're off into the weeds, having to come up with documentation for old personal items you've sold at a loss. I, for one, don't think more IRS audits are a good thing. There are a lot of ways this can go sideways and, like always, working people, especially small business owners, will be the ones hurt. What would be far better is for the government to stop the spending spree, cut wasteful programs, and let working people keep as much of their hard-earned money as possible. I'm not opposed to taxes. I believe if the government requires taxes, you pay them. I am opposed to large government because a large government requires more tax money to support its over-bloated budgets.
Edit to add I also believe taxpayers should be given a choice where their tax money goes. It is by no accident that taxpayers can choose to have $3 of their taxes paid to the Presidential Election Campaign Fund.

Edited 1 time(s). Last edit at 11/23/2023 05:26AM by ServiceAward.

"When people do not pay their taxes, they aren't "keep[ing} their money," they are stealing it from the United States, their states, municipalities, and schools, libraries, and & etc."......tell that to corporations or the rich who move their money overseas to avoid paying taxes.

Making pay apps issue 1099's would force people to pay more Social Security and Medicare taxes. They didn't have to under the old rules. It would also create problems for many people who never had to file a Form C. Many mystery shoppers get rebates which are not taxable. The pay apps do not separate rebates from income. Go out to a dinner or a movie, if the friend pays for the outing and pays you on PayPal, now PayPal has to report it as income to you.

A friend sent me $9000 as a gift on my PayPal business account....it was a GIFT!!! If rules had changed I would now be forced to prove it was a gift. I would now have to depend on the IRS accepting my proof.

Edited 1 time(s). Last edit at 11/23/2023 05:45AM by johnb974.

encourages cash transactions, when feasible

So, um, I guess this means Brandon, under subpoena, will testify that all his family payments, in the tens of millions, via shell companies were under $600 each? Asking for a friend... ROFL

Hopefully another Turkey won't be pardoned.

Happy Thanksgiving!

Fun fact: Al Capone was found guilty of tax evasion. The gangster who had reportedly boasted, “They can’t collect legal taxes from illegal money” was sentenced to 11 years in prison for failing to file tax returns.

@johnb974 wrote:

"When people do not pay their taxes, they aren't "keep[ing} their money," they are stealing it from the United States, their states, municipalities, and schools, libraries, and & etc."......tell that to corporations or the rich who move their money overseas to avoid paying taxes.

Making pay apps issue 1099's would force people to pay more Social Security and Medicare taxes. They didn't have to under the old rules. It would also create problems for many people who never had to file a Form C. Many mystery shoppers get rebates which are not taxable. The pay apps do not separate rebates from income. Go out to a dinner or a movie, if the friend pays for the outing and pays you on PayPal, now PayPal has to report it as income to you.

A friend sent me $9000 as a gift on my PayPal business account....it was a GIFT!!! If rules had changed I would now be forced to prove it was a gift. I would now have to depend on the IRS accepting my proof.

Meanwhile the rich pay no taxes and continue to steal….

It does keep things from being double reported. Pay Pal was issuing 1099s for money that had already been reported via 1099s -- not super helpful. They don't have banks report all deposits.

@Rousseau wrote:

... The way to address those "just getting by" through tax policy is not to make it easier to cheat but to raise the income threshold at which point taxes are collected.

Have to agree here. Another thing to consider is that by keeping a tax policy that lets gig worker income avoid taxation, other taxpayers are are subsidizing the workforce of those "corporations or the rich" who use the gig workers for cheap labor.

The sad thing is having pay apps sending out 1099's hurts the gig workers. Many gig workers will just turn to cash and stop using pay apps. It's getting so bad, if you find $20 on the street the government says you have to report it as taxable income.

@jazzzyjd wrote:

It does keep things from being double reported. Pay Pal was issuing 1099s for money that had already been reported via 1099s -- not super helpful. They don't have banks report all deposits.

Imagine you go out with family or friends for dinner several times a year. You pay for all the meals and your family or friends pay you back on your pay app. The pay app sees it as income. The pay aps do not separate repayments from fees. Would you now have to keep copies of all receipts and start using a Schedule C. This would create a mess. Some people have garage sales or they mow lawns, if they accept payment on a pay app they would have to report that income. Just paying taxes would cost more.

One more thought...the more complicated it is, the more it will cost for the IRS to implement and enforce. There comes a point where some rules are simply not cost-effective. This is one of those rules, especially the way it is written. Of course, the government could impose a new regulation on services like PayPal and place the burden on them to figure it out. I'm sure that would come at a cost to the end user.

My problems with this is PayPal is reporting everything as income. So your $10 reimbursement and $20 fee are income to PayPal where when the MSP sends my business a 1099 they separate reimbursement from pay. I also accept friends splitting checks transactions and that is seen as income. I don’t mind paying what I owe, but I certainly don’t want to pay more especially since our government can’t control their spending and expect me to pay for things I don’t agree with.

@mmsackett wrote:

My problems with this is PayPal is reporting everything as income. So your $10 reimbursement and $20 fee are income to PayPal where when the MSP sends my business a 1099 they separate reimbursement from pay. I also accept friends splitting checks transactions and that is seen as income. I don’t mind paying what I owe, but I certainly don’t want to pay more especially since our government can’t control their spending and expect me to pay for things I don’t agree with.

I agree sadly many people want us to pay more and not question it. The reason for the 1099's from the pay apps, someone in government wants more power. They want to trace anyone making more than $600 a year. It would create problems with reimbursements for mystery shoppers. Some people in the IRS will accept any 1099 from the pay apps over your personal records.

Technically, the IRS will only know about your business income if it's reported on a 1099-NEC or 1099-K form. Without an information return, it's completely in the dark when it comes to your earnings......interesting thought on an article I found.

@mmsackett wrote:

My problems with this is PayPal is reporting everything as income. So your $10 reimbursement and $20 fee are income to PayPal where when the MSP sends my business a 1099 they separate reimbursement from pay. I also accept friends splitting checks transactions and that is seen as income. I don’t mind paying what I owe, but I certainly don’t want to pay more especially since our government can’t control their spending and expect me to pay for things I don’t agree with.

That shouldn't be an issue. Each of us already is - or ought be - recording each shop we complete, its fee, the expediences which were incurred, and the reimbursement received. Its simple math to show on the schedule C: Gross Receipts which includes customer reimbursements of expenses and then, under other, show "Expenses which were reimbursed by customers upon presentation of receipts and which are included above with gross income."

@johnb974 wrote:

Technically, the IRS will only know about your business income if it's reported on a 1099-NEC or 1099-K form. Without an information return, it's completely in the dark when it comes to your earnings......interesting thought on an article I found.

Nope. Big time nope. The IRS knows about business income not only from 1099s, but more importantly as each person reports on their 1040.

While the Untied States has a high rate of voluntary tax compliance, if you do know any dishonest people who are under reporting their business income, then this is for you: [www.irs.gov]

@Rousseau wrote:

@johnb974 wrote:

Technically, the IRS will only know about your business income if it's reported on a 1099-NEC or 1099-K form. Without an information return, it's completely in the dark when it comes to your earnings......interesting thought on an article I found.

Nope. Big time nope. The IRS knows about business income not only from 1099s, but more importantly as each person reports on their 1040.

While the Untied States has a high rate of voluntary tax compliance, if you do know any dishonest people who are under reporting their business income, then this is for you: [www.irs.gov]

People doing garage sales or mowing lawns, are not going to report their income. They will turn to cash if the government requires 1099's from pay apps. The pay apps will lose costumers. I've talked to people planning this move.

@johnb974 wrote:

People doing garage sales or mowing lawns, are not going to report their income. They will turn to cash if the government requires 1099's from pay apps. The pay apps will lose costumers. I've talked to people planning this move.

People having garage sales are generally selling items at a loss, things that they bought but have no longer use and have depreciated over time; there is no tax to pay.

Gardeners, plumbers, painters, pool service, house cleaners and the like are contracted workers. They are are already required to report their income regardless of payer's reporting to the IRS. There is a word for those who do not: criminals.

Ethical people do not do business with those whom they suspect to be criminals, including those who do not report their income to tax authorities. Similarly, PayPal and their competitors do not wish to do business with criminals. The only people that lower 1099-K reporting requirements will hurt are criminals. There is nothing wrong with that. That some may decide to turn their backs on crime and file honest tax returns would be a real plus - both for them and for society at large.

WOW, so if I find $20 on the street and don't report it, I'm a criminal? most of the people having garage sales, mowing lawns are just trying to get by. I have compassion on them.

@Rousseau wrote:

@johnb974 wrote:

People doing garage sales or mowing lawns, are not going to report their income. They will turn to cash if the government requires 1099's from pay apps. The pay apps will lose costumers. I've talked to people planning this move.

People having garage sales are generally selling items at a loss, things that they bought but have no longer use and have depreciated over time; there is no tax to pay.

Gardeners, plumbers, painters, pool service, house cleaners and the like are contracted workers. They are are already required to report their income regardless of payer's reporting to the IRS. There is a word for those who do not: criminals.

Ethical people do not do business with those whom they suspect to be criminals, including those who do not report their income to tax authorities. Similarly, PayPal and their competitors do not wish to do business with criminals. The only people that lower 1099-K reporting requirements will hurt are criminals. There is nothing wrong with that. That some may decide to turn their backs on crime and file honest tax returns would be a real plus - both for them and for society at large.

Please stop encouraging him.

@mmsackett wrote:

My problems with this is PayPal is reporting everything as income. So your $10 reimbursement and $20 fee are income to PayPal where when the MSP sends my business a 1099 they separate reimbursement from pay. I also accept friends splitting checks transactions and that is seen as income. I don’t mind paying what I owe, but I certainly don’t want to pay more especially since our government can’t control their spending and expect me to pay for things I don’t agree with.

The PayPal 1099 and the MSC 1099 are two different types of 1099s. The IRS isnt going to count the income twice or make you pay tax on all the money PayPal reports. In the highly unlikely event they do question you just send them your spreadsheet you should be keeping to track your income, reimbursements and expenses. IF they even end up enforcing the new requirements which is very much up in the air now. You aren’t going to have to pay taxes if you buy a group of people dinner. Please don’t feed this troll

Edited 2 time(s). Last edit at 12/01/2023 10:47PM by HowardJuice23.

With an election year, I hope this is dropped. It's like business write off's, what can you get away with? I like the Clarence Thomas defense...."my friends said it was ok"