IRS Gives Venmo, PayPal Users Another Year
One more year until expanded 1099-K reporting kicks in. The IRS announced last week that online platforms like eBay, Etsy, and Venmo won’t have to issue 1099-K forms to users for the 2023 tax year—unless they earn more than $20,000 and handle more than 200 transactions. Congress lowered the reporting threshold to $600 in the American Rescue Plan Act, but the IRS has now twice used its administrative authority to suspend the requirement.
Lawmakers ask IRS to crack down on wealthy Americans making use of Act 60 in Puerto Rico. The law allows Americans who relocate to Puerto Rico, and become bona fide residents, to claim a 100 percent federal tax exemption from Puerto Rico-sourced income, interest, dividends and capital gains. Last week Rep. Nydia Velazquez, (D-NY) and a dozen colleagues wrote IRS Commissioner Danny Werfel asking that the IRS enforce compliance of about 100 wealthy Americans who are claiming the exemption.
Pennsylvania Governor appeals climate initiative tax ruling. TaxNotes reports (paywall) that Democratic Gov. Josh Shapiro has appealed a court ruling that Pennsylvania’s participation in a regional climate initiative amounts to an unconstitutional tax. The Regional Greenhouse Gas Initiative requires large power plants to purchase carbon dioxide emission allowances and auction them, with proceeds going to participating states. The court ruling says that Pennsylvania’s revenue exceeds the cost of the program and amounts to a tax that only the legislature can enact.
CVS sues the United States for a $402.4 million tax refund. The health service company says that the government wrongfully denied its domestic production activities deduction made under Section 199 for tax years 2014 through 2017, reports TaxNotes (paywall). CVS claims it filed amended and timely returns with Section 199 deductions related to its photo, prescription, circular, blister pack, and computer software products. The Tax Cuts and Jobs Act repealed Section 199 for tax years after 2018, but the government’s interpretation of qualifying software has been under contention.
This week on Capitol Hill. The Senate Finance Committee will hold a hearing Tuesday to consider the nomination of former Maryland Gov. Martin O’Malley to serve as Commissioner of Social Security. The House Budget Committee will hold a hearing Wednesday to consider the need for a fiscal commission.
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