The $1.7 billion funding package has been amended by Sens. Joe Manchin and Bill Hagerty to increase the $600 reporting threshold for third-party payment networks like Venmo and PayPal to $10,000.
Early this year, President Joe Biden's administration changed the tax code in a way that has an effect on people who collect money using platforms like Airbnb, Etsy, Venmo, and StubHub.
The Tax Change Will Potentially Make Citizens Pay Higher Taxes
The tax modification was implemented to guarantee that individuals report all of their income to the Internal Revenue Service, according to Gizmodo.
Payment app providers will soon be required to provide users with a 1099-K form for all business transactions if they total more than $600 annually.
Before the revision, the app was only required to provide the form if a user had more than 200 business transactions with a minimum annual value of $20,000.
It is important to note that this change does not apply, for instance, to payments made to friends and family, but only to payments received for sales of goods and services, Yahoo Finance says.
The new requirement means that millions of Americans who run small businesses or side gigs will have to fill out more tax forms and may end up paying more in taxes.
As part of the American Rescue Plan, the IRS implemented a new tax policy that is expected to generate an additional $8 billion in tax revenue over the course of ten years.
However, the plan has drawn criticism from those who claim that Biden betrayed his pledge to cut taxes for people earning less than $400,000 per year.
Read More: All You Need To Know About The "Instagram Tax" In 2022
Aside From Payment App Providers, Citizens Are Also Feeling The Impact Of The Tax Change
Small business owners who mix personal and business transactions on payment apps may be confused by the changes, which could cause their 1099-K forms to overstate their actual income for the year.
If used item sellers cannot find old receipts indicating how much the item has depreciated since they bought it, they may be subject to higher taxes.
Additionally, the Biden administration is changing I.R.S. regulations in order to start monitoring every financial transaction made by Americans over $600, including those made on CashApp, Venmo, and PayPal.
The IRS may experience additional difficulties as a result of the requirement as it continues to experience difficulties in its efforts to process millions of old tax returns.
This is because numerous taxpayers are still awaiting pandemic relief benefits while the I.R.S. continues to examine and handle corrections to unemployment compensation exclusions.
Another reason is that the IRS has yet to consistently send taxpayers the appropriate refunds and notices for tax year 2020 returns, Gizmodo writes.
Despite current delays, the I.R.S. issued a warning to taxpayers last month to make sure they are prepared with their financial records before filing their tax returns the following year.
Related Article: Things One Should Know About Late Filing And Late Tax Penalties
