Beginning in January 2022, anyone who sells more than $600 worth of goods through on the online auction site or rivals like Etsy or Facebook Marketplace will receive a 1099-K form, detailing the transactions for the IRS. For now, only sellers who move $20,000 worth of goods and complete at least 200 transactions have their activity automatically reported.
I have a couple of thoughts on the above changes. The first thought is about the upcoming changes proposed by the current administration to have banks report on all accounts above 600 dollars. The changes we are seeing to Ebay and others seem to be a stepping stone to greater government oversite. I will admit a lot of the talk about the proposed changes is a little overblown. The IRS is not going to receive detailed information on everything you do over 600 dollars, but rather a yearly reporting of all accounts that accrue over 600 in a given year.
My next observation on this is that, while this seems to be a change in tax law, it is not. It is a reporting change. Anyone making any amount should pay taxes on it. While companies are required to only report earnings over 600 dollars to the IRS, Americans are supposed to report all taxable earnings, no matter what the amount. (I am not a tax attorney, but I think .49 cent or less rounds down to zero, so you may be ok on that one exception.) While I like small government and think tax rates should be as small as possible, I also think if you owe taxes, you should pay them. So, this would only help to insure that happens.
Final thought. Along with this updated reporting, the Biden administration would also like to add 80,000 IRS agents to go after people not paying their taxes. With a tax code that is over 10,000 pages long, no one can realistically know exactly what they should pay. Run your taxes through two different software applications and you will get two different numbers. Instead of adding a medium size city worth of people to the IRS (who, let’s face it, won’t really understand the crazy complicated code any better than you,) why not simplify the tax code? Even with as huge as the tax code is, we know what the average person making X amount each year pays. Just make that the rate and remove all deductions. Yes, there will be pains to make that happen. I have three kids so I would probably pay more for the next ten years, or so. I could live with that, especially if I knew everyone else was in the same boat as me, paying into the system at a set rate.
(One last note, the Biden administration thinks they are missing out on 166 billion dollars each year on unpaid taxes, while that is a lot of money, it is only a drop in the bucket when looking to pay for a 3.5 to 6 trillion dollars of additional spending. So, is adding 80,000 agents really about paying for "stuff," or is it about control?)
Yep, I'm just one more sucker throwing out an idea to completely reform the tax code. It won't ever happen, so just keep punching those numbers into Turbotax and and be glad they can import all your crypto transactions.
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