tax evader.
Call them what they really are – freeloaders, parasites.
You intentionally – not accidentally or accidentally – do not report taxable income.
It’s an illegal activity.
And just like shoplifters, whose illegal activities drive up the price of goods for law-abiding citizens, so do those who evade taxes.
Of course, situational ethnicities come into play – the self-deceiving practice of essentially justifying robbing neighbors and the rest of the community.
And while we may have our finger on the proverbial moral compass to keep it from pointing at ourselves for failure, the real problem is the enablers we send to Sacramento and Washington, DC.
Nobody likes taxes
That’s a given.
But here’s a dirty little inconvenient truth – government needs money to function.
And we’re not just talking about the bureaucracy.
We’re talking about putting fighter jets in the air, paving and maintaining highways, paying public safety salaries, maintaining national parks, jailing killers, healthcare for those who can’t afford it, and a long time lost things. t per se free.
The biggest discrepancy is with those who think “disruptive technology” somehow alters a taxable transaction.
The 1099-K debate is ground zero for bullying sold by politicians who are both red and blue to sell delusional fairy tales and essentially buy votes.
The problem of 1099-K reporting arose when the American Rescue Plan Act of 2021 passed, breaking the $1.9 trillion budget.
It may surprise you that there is an estimated $1 trillion gap between what the IRS believes Americans owe in taxes and what they actually pay. Most of this isn’t tied to paychecks and those that have paper trails.
And while there are big fish out there that will break the rules to the point of breaking them, there are far more small fish doing the same.
The 1099-K reporting rule for revenue of $600 or more generated via revenue transactions on e-commerce platforms was implemented to cover part of the $1.9 trillion bill prepared by Congress.
It was projected that over a decade, $8.4 billion would be raised from people using e-commerce platforms to rent their homes and market homemade items.
You are essentially avoiding paying taxes that everyone else is paying.
The screeching was about how those who don’t owe money get caught in the IRS trawl.
It’s a shame that those riding this high horse have ignored the 1099 standard for independent contractors that has been in place for decades.
Up to 1099 independent contractors have been tasked with keeping track of costs and revenues for years.
If you recall, a few years ago the “contractors” of Uber and Lyft screamed bloody murder when it was discovered that their income was just as taxable as that of their old-fashioned kissing cousins known as independent taxi drivers.
Income is income, whether it is additional income or freelance income.
If you run a business — which is exactly what someone who rents their home through Airbnb does and uses e-commerce platforms and not credit cards or checks to process payments — you generate taxable transactions.
That’s $300 a night you’re getting if you run a hotel in a residential area or use your garage as a mini-factory to make handcrafted jewelry for $50 apiece, which is a business.
And just like a business, reportable income is taxable.
That doesn’t mean the entire $300 or the entire $50 is taxable.
Just like a business, you can use the IRS to cover expenses. What it doesn’t allow you to do is get away scot-free without paying taxes on that part of your earnings better known as profits.
It’s what those who are part of the 1099 economy need to do. You must track expenses to determine reportable income. It’s what every company does. Just because someone uses technology the world calls “disruptive” doesn’t change the fundamental fact that you’re running a business that generates taxable income.
With taxable revenue, the government pays for the highways that trucks roll down to make commerce work, including whatever business you do, whether you’re from home or from a shop.
The IRS last week delayed requiring those who process transactions to submit 1099-K tax forms to platform sellers or the IRS. That means sales in 2022 won’t be subject to IRS audit.
And while it’s clear that there are those in the gig economy who pay taxes they owe on such transactions, based on the IRS’s own estimated $800 million in annual taxes owed annually, will remain unpaid in 2023 and forever being lost.
To make this even richer – Democratic and Republican politicians, who have promoted 1099-K reporting as a way to enforce tax compliance without creating new taxes, are working towards the $1.9 trillion COVID relief spending package -dollars to finance – working on raising the threshold.
Before Congress changed the rules, the reporting threshold was $20,000 if someone had more than 200 transactions.
Rep. Carol Miller, a West Virginia Republican, on record supported the IRS’s decision, as did almost everyone else in Congress.
But she also asks a question no one else in DC seems to be asking these days: She wonders if the government has the legal authority to defer the 1099-K requirement since it’s explicitly spelled out in American Recovery Act language , which she has to be in place to collect taxes for 2022.
The short answer, of course, is that unlike working stars, tech disruptors and their darlings have friends in high places in both Sacramento and Washington.
This column represents the opinion of the editor, Dennis Wyatt, and does not necessarily reflect the opinion of The Bulletin or 209 Multimedia. He can be reached at dwyatt@mantecabulletin.com
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