December 22, 2022
Dear Senators and Members of Congress,
Independent Women’s Voice, which fights to enhance people’s freedom, opportunities, and well-being, supports the Emergency Taxpayer Paperwork and Audit Relief Act, introduced by Senator Shelley Moore Capito and Representative Carol Miller.
The Capito and Miller bill will delay the burdensome 1099-K reporting requirements instituted by the 2021 American Rescue Plan (ARP) for at least one year. Previously, sellers were required to report third-party income transactions for sales of $20,000 in total and more than 200 transactions to the IRS. Unfortunately, in an effort to fund their inflationary nearly $2 trillion spending plan, liberals in Congress lowered the threshold to $600. Unlike the previous threshold, there is no minimum number of transactions to meet before reporting is triggered.
This will hit millions of Americans, who are not in business and may not even be generating taxable income. Casual online sellers sell pre-owned items such as furniture and clothing to earn extra income, oftentimes to help pay for necessary personal expenses such as food, shelter, and medicine. They are in for a paperwork nightmare and a possible tax bill. Sadly, the reporting changes will have a disproportionate effect on women: a recent survey from the Coalition for 1099-K Fairness found that women with children are far more likely to sell used or pre-owned items online for a gross revenue of under $5,000 in a calendar year. Increased tax complexity and compliance costs will discourage casual online selling.
If Congress fails to act, the new reporting requirements will take effect on January 1, 2023, impacting the 2023 tax filing season (for tax year 2022). Fortunately, Congress can fix this massive mistake. We thank Sen. Capito and Rep. Miller for their leadership on this important issue and urge all members of Congress to support this proposed legislation and work towards its swift passage.
Center for Economic Opportunity