The IRS Delayed Its Payment Reporting Rule Change Again. Is That Good for Taxpayers?

Byrnes: There’s no reason that the IRS shouldn’t have this new threshold well in place by now. The infusion of an additional $80 billion in revenue was made to the IRS to avoid delays like this. In the past, when the IRS didn’t have the resources to act as efficiently and effectively as a modern agency should have, delays like this were common. 

Bloink: Taxpayers don’t yet have the clear guidance to determine which transactions are going to require Forms 1099-K and which will not. The IRS has been clear that it continues to solicit and evaluate feedback from tax professionals and third-party groups as it seeks to establish clear procedures to minimize the administrative burden for all parties who are impacted by these significant changes in reporting obligations.

Byrnes: The IRS has already taken steps to provide guidance and clarity to taxpayers by updating the FAQ on the new 1099-K reporting requirements. That guidance provides significant flexibility for taxpayers by allowing them to report information from 1099-Ks separately or combine multiple 1099-Ks. If the IRS is continuing to cite administrative burden as a rationale for delaying rules like this, we should all be questioning whether their influx of funding is being put to use effectively.

Bloink: The fact is that we’re faced with a confusing new system that is very likely to create a significant burden for both taxpayers and the IRS. Many taxpayers are encountering these rules and requirements for the first time. It makes perfect sense that we should step back and take the time to implement the system the right way to avoid bigger problems down the line.

Byrnes: The new rules were put into place for a reason, and it’s the IRS’ job to use their resources to implement them swiftly and effectively. Claiming that additional delays are necessary to avoid taxpayer confusion seems a bit like a cop-out at this point. Sure, reducing the threshold gradually can reduce the increased workload for the IRS — but it also creates additional confusion for taxpayers who now must deal with yet another set of changes due to the phase-in.

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