Payments via PayPal, Venmo and Zelle

[Lee DeRaud]

But the middle class guys (note plural) will be audited more frequently because those audits are easy to do, and there are a lot more middle class people in the US than there are Elon Musks.
Easy cheap audits (by those newly minted 78000 agents) will yield a lot of revenue...positive ROI for the IRS.
So the little guy is now at greater risk of being audited.

Seriously?!? The tax on that $600 1099K for a middle-class taxpayer is ~$150. Doing anything beyond an automated "you owe more money" letter is a net loss for the IRS. It's going to take something with several more zeros to get a live human involved.

[Patty Hann]

https://waysandmeans.house.gov/even-treasury-admits-potential-for-new-irs-audits-of-middle-class/

https://waysandmeans.house.gov/wsj-i...-class-audits/

[John Goodin]

I understand the different transaction process with Zelle and since most of my fees are collected through electronic payments I may encourage my clients to pay via that method. Not implying cooking the books, we have too many red flags for an audit and I can only sleep with a clean conscience, just don’t want more tax forms. I am just happy no one wants to pay me with credit cards.

[Brian Elfert]

The odds of one of us being audited is slim with so many unfilled irs positions. They are required, by law, to audit the presidents returns every year and have not done so for at least two years.

The information I found is that Biden's 2020 and 2021 returns were audited by the IRS. The Bidens were paid an additional refund for 2020 of an unspecified amount and owed an additional $13 for 2021. The presidential audit program is merely an IRS policy and not required by law. Congress wants to make a law that a presidential audit happens yearly.

It seems like a bunch of wasted IRS auditor time. What US president is going to be stupid enough to cheat on his/her taxes while president?

[Tom M King]

I can think of one.

[Bill George]

The information I found is that Biden's 2020 and 2021 returns were audited by the IRS. The Bidens were paid an additional refund for 2020 of an unspecified amount and owed an additional $13 for 2021. The presidential audit program is merely an IRS policy and not required by law. Congress wants to make a law that a presidential audit happens yearly.

It seems like a bunch of wasted IRS auditor time. What US president is going to be stupid enough to cheat on his/her taxes while president?

I can think of one right off hand.

[Michael Weber]

I can also think of one.

[Alex Zeller]

Unless the IRS gets a new state of the art computer system the number of 1099K forms will flood them with too much information. Almost everyone who is not a business will just identify the sale as a loss. I think the IRS only requires you to keep sales receipts for 3 years so unless it can be proved that you owned it less than 3 years it'll be very hard for the IRS to come after people so they most likely aren't going to try. It'll still be a pain but hopefully one of the compromises that can be made in the federal government will be to scale it back to $10k.

[Ronald Blue]

Nothing changes with respect to the amount of tax you owe as a result of this change. The added burden on paypal will be pretty minimal, they already have the data.

I don't pretend to understand it all but it can absolutely change what you owe. If you bought that new planer for $2,000 back in 2000 and sell it today for 1500 and the buyer pays through one of the aforementioned apps if you can't prove you lost money on it you are going to be taxed. The app used is going to turn in a 1099 for the 1500 and you will have to prove you paid more. It's going to be a nightmare. Cash will be king for me but it usually is anyway.

[Lee DeRaud]

I don't pretend to understand it all but it can absolutely change what you owe. If you bought that new planer for $2,000 back in 2000 and sell it today for 1500 and the buyer pays through one of the aforementioned apps if you can't prove you lost money on it you are going to be taxed. The app used is going to turn in a 1099 for the 1500 and you will have to prove you paid more.

How hard is that to "prove", really? I suspect there will be (or already is) an IRS form you can fill out to attest to the price you paid. Unless you're actually in the business of selling equipment, it's pretty the same as stating a valuation for tangible-item charitable contributions.

[Ronald Blue]

How hard is that to "prove", really? I suspect there will be (or already is) an IRS form you can fill out to attest to the price you paid. Unless you're actually in the business of selling equipment, it's pretty the same as stating a valuation for tangible-item charitable contributions.

Pointless to debate something not in evidence at this time. I hope it's as easy as you think it will be. There are more unknowns than knowns at this point. We will see how the script unfolds. I just know I will deal with cash as I always have.

[Jim Becker]

Folks....stay away from the politics, please.

Jim
Forum Moderator

[Ken Combs]

Pointless to debate something not in evidence at this time. I hope it's as easy as you think it will be. There are more unknowns than knowns at this point. We will see how the script unfolds. I just know I will deal with cash as I always have.

I'll probably be dealing with this next year. But, IMHO it's not going to be a big deal. As stated earlier, receipts and other records are not mandated further than 3 years back. And the process to determine how to value items older than that is covered in this IRS pub: https://www.irs.gov/forms-pubs/about-publication-551

My plan is to record each sale in a little spreadsheet with the date of approximate date of purchase, the fair market value of the item as of that date and its selling price. The last info is the profit or loss. Too bad losses aren't allowed on personal property sales!

Probably won't ever need the info as the chances of audit on small potatoes is slim, if there are no items in the return that will cause a red flag by the processing program.

I've had to do a schedule C for years until recently so this is not a big deal.

What I don't understand about the 'new' IRS money is this: If most is to replace retiring employees why is any new/additional money required or spoken of as additional agents? Not a political question, just genuinely curious as the terms being used seem to be at odds with 'normal' budgeting terminology. I suspect the pro and con sides just bend the words to reflect favorably on their view.

Edit to add: I'll be reporting these items a Capital sales using form 8949 under the rules here: https://www.irs.gov/taxtopics/tc409

[Lee DeRaud]

What I don't understand about the 'new' IRS money is this: If most is to replace retiring employees why is any new/additional money required or spoken of as additional agents? Not a political question, just genuinely curious as the terms being used seem to be at odds with 'normal' budgeting terminology. I suspect the pro and con sides just bend the words to reflect favorably on their view.

My understanding is that it isn't just a question replacing retiring employees going forward, but also replacing the ones that quit/retired/whatever in recent decades and were never replaced. (Google "IRS staffing history"...I'm not going to post any links, as most of the hits seem to have heavy doses of political spin one way or the other.)

[Jim Becker]

That's correct, Lee. The agency was underfunded for a very long time and was unable to replace people and systems accordingly. That's what's important about the approved funding as it will help to get things back to what is supposed to be effective and normal functionality including for customer service. (disclosure...they were a customer of mine for about 9 years so I saw first hand just how things were internally, but cannot go into details for obvious reasons)