(RoyalPatriot.com )- The IRS is gearing up to crack down on money earned through third parties, according to ABC-7. The federal agency declared earlier this year that tax season 2022 will be a grace period for transitioning into the new system, meaning that tax filers did not have to report transactions worth $600 or more made on third-party payment processors.
The previous system required taxpayers to file their taxes on their own if their income exceeded $20,000 in sales. But that system is now gone with the agency’s push to try and catch more and more people allegedly committing fraud. Now, individuals who have over $600 in transactions over processors like eBay, Cashapp, Amazon, or Etsy, are required to report income on a 1099-K generated by the company.
Jennifer Chiou, an agent at the IRS’ criminal investigations unit, said that the IRS is expecting these 1099s to be sent in by these companies by January 31. Not reporting these transactions may cause taxpayers an unneeded headache.
Terry Fischer of Novato, California, allegedly owes the IRS $14,000 as they say he neglected to report $40,000 in sales on Amazon in 2020. But he claims he never received that income or sold anything on Amazon. Fischer says that neither Amazon nor the IRS was initially of any help but added that the IRS is now investigating the matter.
After the passage of the Inflation Reduction Act, a $740 billion package for tax reform, healthcare, and climate programs, the IRS is expected to inherit $80 billion by 2031 which will go toward 87,000 new agents and other enforcement-related funds, according to American Pigeon.
The new tax plan is reportedly a way to pay for Biden’s $3.5 trillion social spending bill.
To deal with these new changes, the agency reportedly signed two contracts, one dealing with recruitment, and another with background investigations.