IRS' Venmo crackdown delayed but not dead this holiday season

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Rep. Andy Biggs, R-Ariz., weighs in as GOP lawmakers slam IRS dysfunction despite $60B more in funding over 10 years on 'The Evening Edit.'

The IRS just announced a regulatory rule delay that will provide stay-at-home moms and middle-class Americans a little relief this holiday season. Online transactions totaling $600 or more will not trigger tax reporting on Form 1099-K, for now. This issue is not dead though.

This year, selling items through popular apps like eBay, Etsy, Poshmark and Facebook Marketplace; sending money online through Venmo, CashApp and Apple Pay; and conducting online transactions would have triggered an unwanted gift: new income reporting to Uncle Sam. 

In 2021, congressional Democrats lowered the reporting threshold for online transactions to an unreasonably low level of $600 or more – and Congress had until Dec. 31 to fix this error. If not, taxpayers and the Internal Revenue Service would have faced a rocky tax filing season in 2024. Millions of unwitting Americans were set to receive one (or multiple) 1099-K forms from the various platforms they used and expected to report that income to the IRS. 

Online transactions totaling $600 or more will not trigger tax reporting on Form 1099-K, for now. This issue is not dead though. (istock / iStock)

Unfortunately, the $600 threshold is so low that it will capture transactions that would normally not be reported and likely would not create any tax liability. For example, a woman who used online platforms to sell a used sofa, split the check for dinner and drinks with friends a few times, and consign a few old dresses, could easily surpass this limit. 

IRS SETS NEW TAX BRACKETS, STANDARD DEDUCTIONS FOR 2024

Many taxpayers who never previously received a