The P2P Tax or Peer-to-Peer Payment App Tax proposed by Democrats is still a serious concern. The clause became law on January 1 after being approved as part of the American Rescue Plan, a $1.7 trillion spending spree. After Democrats failed to address the issue in a year-end omnibus bill in 2022, the IRS took a legally questionable move and proclaimed 2023 a “transition year.” However, unless Congress acts to repeal it, the P2P tax will begin to be levied in 2024.
To be clear that this is not a brand-new tax. Instead, it’s an intrusive set of regulations and administrative demands that will place an unjust burden on working families and lead to audits by the Internal Revenue Service. Millions of Americans will give up and pay taxes they do not owe rather than spend hundreds or thousands of dollars on a tax expert to get the IRS off their back.
There was a much more reasonable and realistic threshold for sending a 1099-K form in the past. At least $20,000 had to change hands, and 200 separate deals had to be made. The harsh new regulation lowers the barrier to $600, with no minimum number of transactions.
On December 6, 2022, the Internal Revenue Service released a “Get Ready” notification in preparation for the P2P tax. On December 23, it abruptly reversed course and said the “transition” would be delayed until January.
The Internal Revenue Service (IRS) cannot change the tax code without congressional approval. What’s to stop these unelected bureaucrats from funneling even more of your money into the federal government’s sludge next time, even though their actions helped taxpayers this time? An act of Congress can legally and permanently repeal the P2P tax.
The Saving Gig Economy Taxpayers Act, proposed by Republican West Virginia representative Carol Miller, would accomplish precisely that. It’ll eliminate the tax on using Apps like Venmo, Zelle, Cash App, and Paypal.
Rep. Miller’s introduction of SGETA noted that an American selling used exercise equipment from his garage online now qualifies as a salesman of workout equipment, a teen babysitting the neighbors’ kids is in the childcare business, and roommates who split rent are now property managers and are all eligible to be taxed by the IRS. In addition, she said, the Republican-led House would restore the 1099-K from the threshold to levels that were operating properly before Democrats muddled the system.
Less than 20% of all IRS calls are answered without the P2P tax and its convoluted new regulatory incursion, which is virtually probably because the IRS allows more than 50% of its workers to work from home. If the IRS’s phone lines are busy and its personnel isn’t in the office, it will be unable to process tens of millions more forms.
It would also be natural to question the safety of these novel formats.
More than thirty million taxpayer files have been destroyed in the previous several years, and this would not have been found if not for a random audit by the inspector general. Workers there gave the left-leaning ProPublica access to thousands of sensitive information on high-income individuals. The section responsible for criminal investigations has been found concealing evidence in the break rooms. You shouldn’t entrust this organization with tens of millions of new forms containing sensitive information.
The Biden administration and the Democratic Party have demonstrated that they are still committed to squeezing ever more money out of hardworking Americans to enrich themselves and their funders, pet causes, labor union bosses, and other special interests. If the Republicans can come together on the Saving Gig Economy Taxpayers Act, they can get something done to help the American people.
The Internal Revenue Service does not need more work but rather less. The 118th Congress has a political and moral obligation to ensure that a stupid, punishing P2P tax never becomes law.