Electronic income

eBay, Venmo and Airbnb will report income over $600 under new IRS rule

eBay, Venmo and Airbnb must report any income over $600 under the new IRS rule.
Source: Alpha Research

Small business owners and entrepreneurs face a new round of checks on their income and payments from the Internal Revenue Service. Apparently, a new IRS rule would make it necessary to report any income over $600 for secondary scammers who use services like eBay, Venmo, Airbnb, and Paypal.

Effective from the 2022 tax year, the new law says payment processors must start tracking users who receive more than $600 for payments and services. In turn, submit the surveillance information to the Internal Revenue Service. Clearly, this is a huge leap from annual payments exceeding $20,000 to ensure construction workers face 1099-K, the tax form for payment service transactions.

Apparently, this is already causing a series of problems for various people who run businesses or work on the side. One educator said she liked being self-employed because she could earn a little extra money when she decided to “work overtime”. However, it would be like “lost work” if they had to pay taxes on it.

Federal analyst Alex Muresianu pointed out how people may decide it’s not worth the “pain” of the “administrative burden” of determining taxes in such cases. He went on to say that the IRS wouldn’t end up generating much revenue by taxing people’s “secondary $10,000 hustle.”

The group argues that the new law means that “Americans who only sell used goods and owe no taxes will now receive confusing IRS forms.”

Apparently, Etsy and eBay have collaborated with small business owners to form the “Coalition for 1099-K Fairness”. This is to protect “casual online sellers and micro businesses” from privacy burdens and unfair taxes. The group also noted that the law paves the way for an invasion of privacy, as companies would have to collect users’ social security numbers.

However, this rule would not apply to people who refund their friends for various reasons. It is therefore necessary for users to indicate the purpose of the payment. On the other hand, it is still unclear whether one should pay a tax to resell second-hand items or sell an item at a loss.

Muresianu said it was common ground on enforcement and the imposition of compliance burdens, questioning whether it was worth the effort of the IRS to continue its marginal revenue even if it makes a profit. With the IRS seriously understaffed, this new law could add to the burden on the agency.