The IRS delayed forcing gig workers to report payments over a $600 threshold made through third party payment apps, such as Zelle, Cash App, Venmo, and PayPal, the agency announced this week.
The postponement of the rule is a victory for gig workers who work more than one job to make ends meet in President Joe Biden’s struggling economy.
Sixteen percent of Americans are a part of the so-called “gig economy,” though not all respondents were paid through third-party apps, Pew Research found.
“It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area,” IRS Commissioner Danny Werfel explained.
The postponement could cost the Treasury about $2 billion, the Wall Street Journal reported:
For the second straight year, the IRS postponed enforcement of a law that requires those e-commerce and payment platforms to send the agency information about many users who receive more than $600 in revenue a year.
The old threshold — more than $20,000 in revenue and 200 transactions — will remain in effect for tax year 2023. The IRS will begin transitioning toward the new system in tax year 2024 and will use a $5,000 threshold that year.
The delay doesn’t change what taxes anyone owes, just what online platforms must report to the IRS. The move could prevent tax-filing headaches for many people. The IRS said Tuesday it was concerned about mass confusion if an estimated 44 million Forms 1099-K were sent in early 2024 to taxpayers and to the IRS.
The rule was the result of Biden’s American Rescue Plan Act of 2021, which intended to compel American workers to “pay your fair share,” an idea that he pushed for the wealthy and now for average Americans.
Follow Wendell Husebø on “X” @WendellHusebø. He is the author of Politics of Slave Morality.