IRS Commissioner Admits 1099-K Threshold Should Change Back to $20,000

WASHINGTON, D.C. - Today, Congresswoman Carol Miller (R-WV) questioned the Internal Revenue Service (IRS) Commissioner Daniel L. Werfel at a Ways and Means Committee hearing on her 1099-K bill, Saving Gig Economy Taxpayers Act. During the hearing, Commissioner Werfel admitted that Congress should raise the 1099-K threshold to its original standard of $20,000 instead of the Biden Administration's policy of $600. This threshold would effectively raise taxes on everyone who uses venmo, paypal, or any e-commerce transaction that costs more than $600.

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Congresswoman Miller began her questioning by asking Commissioner Werfel on whether the IRS will welcome Congress raising the 1099-K threshold back to its original standard - $20,000 and 200 separate transactions.

"If this policy was too difficult for the IRS to get right after a year of work with your 87,000 new employees - not all of which are even back in the office - how do expect an individual selling some old furniture or a bicycle to handle the cost and compliance burden?" asked Congresswoman Miller.

"I think one of the most important principles of tax administration is that taxpayers have clarity on what is expected of them. And sometimes a law change in the internal revenue code, sometimes we can administer it fluently without any impact on the clarity and sometimes the change is complex to administer. In this case, we are not ready to administer in a way that provides taxpayers the clarity they need, so we paused it. This was before I got there, but it was the right decision. Now we have work to do, and we're working very closely and engaging all the stakeholders to figure it out, because the law hasn't changed yet, it's still the same law. How do we when we resume next year, doing a much better job and providing the type of clarity. What are the questions we need to answer? What flexibilities do we need to explore? We're asking all those questions of your constituents and stakeholders around the country. I'm hopeful that we're going to get it right this time. It is complicated to administer," said Commissioner Werfel.

"Would the IRS welcome Congress raising the threshold back to the time tested standard of $20,000 and 200 separate transactions?" asked Congresswoman Miller.

"Again, as I said earlier, I cannot opine on the wisdom or the preference of a particular policy outcome, but I will share that a change in the threshold would be easier to administer and so at my seat of the table I'd say the IRS would have an easier time of administering it," said Commissioner Werfel.


Background:

Congresswoman Miller reintroduced the Saving Gig Economy Taxpayers Actwhich repeals an unwarranted tax hike in the American Rescue Plan.

Before the Washington Democrats law change, to qualify for a 1099-K form, a taxpayer would have to earn at least $20,000 and have at least 200 transactions through an e-commerce platform. The American Rescue Plan lowered the threshold to $600 a year with no minimum on the number of transactions.

When Democrats made the threshold $600, the reporting required drastically increased. So much so that the IRS delayed implementation for a year because it was too burdensome on them.

The bill has the support of 13 Republican Members of Congress.