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OPINION

Biden’s Venmo Tax is Still a Threat

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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The Democrats’ “Venmo Tax” is still very much a threat. After its passage as part of $1.7 trillion spending bonanza known as the American Rescue Plan, the provision formally took effect Jan. 1. But after Democrats failed to fix the problem in the end-of-year 2022 omnibus package, the IRS took a legally dubious step: the agency waved a magic wand and declared 2023 to be a “transition year.” But the Venmo tax is still in effect and will hit taxpayers starting in 2024 unless congress repeals it. 

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To be clear, this is not a new tax, per se. Rather, it is an invasive set of rules and paperwork demands which will burden working households and subject them to unfair IRS audits. Instead of spending hundreds or even thousands of dollars to retain a tax professional to get the IRS off their back, millions of Americans will just cry uncle and pay taxes which they do not actually owe. Thus the term Venmo Tax.

The previous threshold to trigger a 1099-K form being sent was much more reasonable and realistic. There had to be $20,000 exchanged and at least 200 transactions. The punitive change in policy decreases the monetary threshold to just $600 with no minimum number of transactions.

In anticipation of the Venmo tax’s scheduled implementation, the IRS issued a “Get Ready” notice on December 6, 2022. Seventeen days later, on December 23, it did a complete 180 in announcing the “transition.”   

The IRS does not have the authority to unilaterally change the tax code. Even though their actions benefited the taxpayer this time, what is to stop these unelected bureaucrats from feeding even more of your money into the morass that is the federal government next time? The only way to permanently and legally reverse the Venmo tax is through congressional action. 

Congresswoman Carol Miller (R-W. Va.), introduced the Saving Gig Economy Taxpayers Act, which will do just what is needed. It will repeal the Venmo tax.

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In introducing SGETA, Rep. Miller pointed out that “an American getting rid of old exercise equipment from his garage online now qualifies as a salesman of workout equipment, a teenager babysitting the neighbors’ kids is in the childcare business, and roommates who split rent are now property managers, and are all eligible to be taxed by the IRS.” She also noted, “The Republican led House will restore the 1099-K from threshold to levels that were working just fine before Democrats complicated the system.”

Even without implementing the Venmo Tax and its complicated new regulatory intrusion, the IRS picks up less than twenty percent of phone calls, which is almost certainly a function of the IRS allowing more than half of its employees to work from home full time. The IRS is simply not equipped to handle tens of millions of new forms when they cannot answer their existing phone calls and their employees are not physically in the office to handle the forms.  

The security of all of these new forms would also immediately come into question. Just in the past few years, the agency has destroyed more than thirty million taxpayer files, which would not have been discovered but for an inspector general’s spot check. Its employees leaked thousands of confidential files of high earners to the left-leaning ProPublica. Its criminal investigations division has been caught storing critical evidence in break rooms. This is not an agency which can handle or be trusted with tens of millions of new forms with your confidential information on them.  

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The Biden Administration and the Democratic Party have shown they are still hellbent on extracting more and more money from hardworking Americans to serve their own donors, pet causes, labor union bosses, and other special interests. The Saving Gig Economy Taxpayers Act represents a way for the Republican Party to unite behind one issue and see it through to benefit the American people.  

The IRS is an agency which needs fewer things to do, not more. Ensuring that the misguided, punitive Venmo tax never sees the light of day is a political and moral imperative for the 118th Congress.

Ben Susser is a Communications Associate at Americans for Tax Reform.

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