Roll Call: Gig workers would pay higher taxes under coronavirus aid bill
Democrats just added a gig workers tax hike to their $1.9 trillion corrupt COVID boondoggle.
Democrats aren’t helping people with their socialist wish list disguised as COVID relief, they’re raising taxes on the American people in the middle of a pandemic.
Gig workers would pay higher taxes under coronavirus aid bill
Doug Sword
Roll Call
March 5, 2021
https://www.rollcall.com/2021/03/05/gig-workers-would-pay-higher-taxes-under-coronavirus-aid-bill/
A last-minute insert by Democrats looking to offset the cost of their coronavirus aid package would send tax collectors into the gig economy, eventually costing Uber and DoorDash drivers, Airbnb hosts and others about $1 billion annually.
Under current law, such online platforms only have to report to the IRS when they pay individuals at least 200 times a year, for a minimum $20,000. The change inserted into a managers’ amendment just before House floor debate on the $1.9 trillion measure would cut that threshold to $600, regardless of how many transactions, generating an estimated $8.4 billion in extra tax revenue through fiscal 2031.
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Now, the stiffer tax burden would be imposed while 10 million Americans are unemployed and more and more have turned to freelance and gig economy work to make ends meet. Cutting the reporting threshold “adds a significant burden to gig economy and small business workers at the worst possible time,” TechNet spokesman Steve Kidera said in an email.
‘Destroy a person’s life’
Unlike the 2008 change, which delayed implementation until 2012 to give businesses time to adjust, the new lower reporting threshold would take effect starting in 2022.
Nina Olson, who ran the IRS’s taxpayer advocate services for 18 years, predicted the estimated tax revenue will prove elusive because many gig workers who are paid by Uber, Lyft, DoorDash, Grubhub, TaskRabbit and the like are living paycheck to paycheck and won’t be able to pay the bill.
“Workers who are underreporting their income now will become guilty of nonpayment next year and subject to penalties and actions by the agency,” Olson said.
Olson added that an IRS collection action “can destroy a person’s life,” as employers can be hesitant to hire someone with a federal tax lien and lenders won’t make loans without charging the highest interest rates.
Etsy, the online marketplace that caters to one-person shops making handmade items like clothing and jewelry, is also lobbying against the proposal. The company was among the signatories on a letter last week to congressional leaders opposing the change, arguing it “will create unexpected challenges for small business owners and entrepreneurs across the Main Street ecosystem.”
An Etsy spokesperson, who didn’t want to be identified in order to speak candidly, said one concern was that in order to supply the necessary tax forms, they’d need to obtain a seller’s Social Security number up front. That could turn away entrepreneurs from using the Etsy platform before they have a chance to grow their business, the spokesperson said.
The new $600 income-reporting threshold for gig workers is also included in the Senate’s substitute amendment to the House-passed relief bill, making it all but certain to become law.
During the late-night debate on the House floor, Rep. Adrian Smith, R-Neb., said Democrats had delayed the vote in part because they “were adding a new cash grab, drastically lowering the threshold at which gig workers” have to report income to the IRS.
“It is like the majority learned nothing from the debacle they created when they shoehorned new [reporting] rules into Obamacare,” Smith said, referring to a $19 billion offset for the 2010 health care law.
That law expanded the $600 reporting requirement for services payments so that goods purchases above that threshold also needed to be reported, such as a business buying lunch for its workers at a local carryout. But after an outcry that requirement was repealed a year later.
Dylan Opalich, a spokeswoman for House Ways and Means Chairman Richard E. Neal, D-Mass., said the new reporting threshold was added to keep the coronavirus relief bill in line with the budget resolution’s deficit ceiling. But she said it was also an overdue policy change.
“Under the present law rules, significant amounts of income goes unreported both to taxpayers and the IRS, and this provision is bringing reporting requirements applicable to large internet platforms in line with the same requirements that apply to main street businesses,” Opalich wrote in an email.
The provision would exempt transactions between individuals using online payment platforms like Venmo or PayPal, or when an individual occasionally sells used items and uses such payment networks.
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Read the full article from Roll Call, here.