Just a week after Florida’s top official over Florida finances called for a pause in a new IRS reporting rule, the agency announced it would delay a tax requirement imposed by President Joe Biden and Democrats in Congress.
On Tuesday, the Internal Revenue Service announced that it would hold off on forcing third-party platforms — such as Venmo, PayPal, Zelle, and Cash App — to report customers’ transactions of at least $600 for tax purposes.
The agency said it was delaying the requirement for another year — which provides Biden cover for the 2024 election for possibly raising taxes on workers who make less than $400,000 a year, one of main campaign promises in 2020.
Related: Florida CFO Jimmy Patronis Urges U.S. House Speaker To Force IRS To Delay Cash App Taxes
The $600 mandate was part of the 2021 American Rescue Plan Act, enacted by Biden and the Democratic majorities in both houses of Congress.
The IRS had delayed the provision a year ago after public sentiment rose against it. Critics complained at the time that just receiving a Form 1099 from the IRS may cause taxpayers to believe they have incurred a tax liability that had to be reported to the IRS. That would have applied even to personal transactions among friends or family members.
In its statement, the IRS indicated 2023 would be another “transition” year for the policy because of “feedback from taxpayers, tax professionals and payment processors” as well as “to reduce taxpayer confusion.”
“As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation,” the IRS said in a press release.
In a statement in that release, IRS Commissioner Danny Werfel said, “We spent many months gathering feedback from third party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements.”
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“Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040. It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area,” he added.
The IRS said taxpayers do not need to report such transactions unless they received more than $20,000 and had more than 200 transactions in 2023. That was the legal standard for cash-sharing platforms before Biden’s American Rescue Plan.
The agency also noted that it was planning for a reporting threshold of $5,000 for tax year 2024 instead of $600 as part of a “phase-in” step toward the $600 reporting requirement.
The IRS’s announcement came about a week after Florida Chief Financial Officer Jimmy Patronis urged new Republican House Speaker Mike Johnson to work on delaying the $600 rule.
In a letter to Johnson, as reported by the Tampa Free Press on Nov. 15, Patronis, a Republican, argued the regulation would punish “small businesses, parents selling kid’s clothing, church bake sales.”
“Moreover, the IRS has told these Big Tech companies to overreport as to avoid penalties. This is going to be a total disaster, and no one is ready for it,” Patronis continued.
“We have to buy time to undo this travesty. Let’s also keep in mind, these tax forms will hit Florida families while everything is more expensive due to inflation. Bidenomics has drained the bank accounts of hardworking Floridians, as well as retirees on fixed incomes, and the IRS is getting ready to kick people while they’re down.”
Patronis has battled Biden’s IRS for much of the president’s term, especially warning about the overreach of hiring 87,000 new IRS agents.
In one move, Patronis created Florida’s new “IRS Transparency Portal,” through which state residents could “identify patterns of discrimination where specific IRS agents are targeting certain political causes, practices or beliefs.”
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