It makes sense that Congress and the IRS would scrutinize gig labor and other forms of self-employment given the federal government’s ongoing financial requirements.
As a result, millions of taxpayers may be subject to stricter income-reporting requirements on payments made via third-party platforms like Venmo, PayPal, or Cash App.
IRS Measures And Congressional Actions
If Congress or the IRS don’t make any other changes, the new rules, which were postponed for the 2022 tax year, will go into effect again.
The regulations aim to ensure that employment income is disclosed in full, but they may also catch those who utilize third-party payment networks to move money for private purposes.
The government has been running deficits for years, and the deficit is expected to widen.
The tax gap refers to the fact that households and corporations only pay roughly 85% of the taxes they due as a whole.
It is required of independent contractors, gig workers, and self-employed individuals to declare all of their earnings and pay taxes on them, but noncompliance is a problem.
The IRS and Congress chose to tighten the laws with a greater emphasis on transactions done through third-party payment systems because this income is required to be reported on 1099-K forms.
Read more: DOJ’s Warning To IRS: Hands-Off Approach To Joe Biden’s Grandchildren In Hunter Investigation
Delay And Backlog In Processing Returns
Prior to 2022, taxpayers were only required to receive the paperwork if their recipient’s total annual payments surpassed $20,000 and their total number of transactions reached 200.
The American Rescue Plan Act of 2021, however, decreased the barrier to sums over $600 and applied it to any number of transactions, which means that a lot more people are impacted.
According to the office of the Taxpayer Advocate Service, a watchdog organization within the IRS, the delay was a result of taxpayer misunderstanding, a lack of clear IRS advice, and worries about the backlog of processing tax returns.
Read more: IRS Agent Reveals In Hunter Biden Case To House Committee