IRS Cancels Controversial Rule — For Now

IRS Cancels Controversial Rule --- For Now

( – President Joe Biden’s misleadingly named American Rescue Plan has a lot of worrying provisions in it, but one of the worst was a new rule that would have forced any American who earned more than a few hundred dollars online to file tax paperwork on it. Last week, the IRS announced it is going to delay that rule, but it will probably be back pretty soon.

Right now, if you earn money through an online platform like PayPal, Venmo, or Airbnb, the platform only has to send you a 1099-K tax form if you make more than $20,000 or 200 separate transactions in a year. The American Rescue Plan slashes the earnings limit to $600 and axes the transaction threshold. That left up to 50 million people facing the prospect of filing tax paperwork because they sold some craft projects on Etsy or auctioned off some old possessions through eBay.

The plan caused a lot of anxiety, especially when rumors falsely started spreading that it applied to any online transaction over $600.

On December 23, the IRS, which might have been fed up answering questions about the new rule, announced it was delaying its introduction. Acting IRS Commissioner Doug O’Donnell said that because of the confusion it’s caused, the agency is pushing it back one year to “help reduce confusion during the coming 2023 tax filing season,” but he made clear it hasn’t been abandoned. O’Donnell says the delay is just to give taxpayers time to understand what they have to do, and in a year, the rule will be back.

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