Cash app users who rely on digital payment platforms can breathe a sigh of relief. According to a Friday news release, the IRS has delayed the implementation of a tax code change that would have mandated declaration of any exchanges over $600.
If a business user accrues at least 200 transactions totaling $20,000 or more over the course of a year, they will be required to file a tax return. The threshold was lowered as part of the American Rescue Plan.
The shift was supposed to take effect this year. Business that might have to pay quarterly taxes on digital payments this January won't have to because of the delay.
According to a report from The New York Times, the IRS announcement followed public and political opposition from lawmakers, business associations, online commerce platforms, and anti-tax advocates who argued the shift would punish low income people the most.
Republican Senator Rick Scott compared the policy to Communism China and said it would amount to wholesale tracking of Americans' financial activity. More likely than that, people were going to get a lot of paperwork with no idea of how to complete it. Democratic Senator Ron Wyden said that the I.R.S. needs to give greater clarity to taxpayers as soon as possible.
The IRS seems to agree with Wyden. Doug O'Donnell, acting IRS commissioner, said in a statement that the agency heard a number of concerns about the timelines of the changes. The IRS will delay implementation to help smooth the transition and ensure clarity.
Businesses reliant on digital transactions need to be aware of payments and keep thorough records. Transactions greater than $600 will be subject to the tax code change. The policy is expected to raise about $8 billion in tax revenue over the next ten years.
All Rights Reserved © 2024
