The Chairman’s Report January 5, 2023

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  • Source: FAIRtax
  • 01/05/2023

ANOTHER UNNECESSARY BURDEN


We often wonder what the D.C. bureaucrats are thinking when they eagerly impose another tax filing burden on Americans.

Then you remember this story and understand.
How many D.C. bureaucrats does it take to screw in a light bulb? Two. One to assure everyone that everything possible is being done while the other screws the bulb into the water faucet.

The simple answer is that they need jobs and the more complex the rules are, the easier it is to justify their jobs.  If the rules are complex enough, they can even justify the need for more bureaucrats to be hired.

Bowing to shouts of outrage from Congress and their constituents, the IRS has delayed the implementation of the 1099-K reporting by PayPal and other online payment services until 2023.  Here is what was released by Acting IRS Commissioner Doug O'Donnell.

"The additional time will help reduce confusion during the coming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements." 
 

Control in the Name of Tax Collection


While it is delayed until 2023, the IRS wants to enforce the rule for transactions in 2023.  

Sellers of goods and services are required to report their net income, after expenses.  If they were paid through a service like Ebay, Etsy, PayPal or Venmo, current law requires these providers to send a 1099 to the seller if there were more than 200 transactions and gross payments exceeded $20,000.

The bureaucrats have decided that many of the people receiving less than $20,000 and doing fewer than 200 transactions were not reporting their net income and paying the required tax.  

So, in typical high-handed manner, they decided that the only way to catch the admittedly small number of tax cheaters was to subject all of us to these draconian reporting requirements.  When this goes into effect, if you receive just one online payment for more than $600, the payment processor will be required to send you a 1099-K for the gross amount of money you received.

Payment processors like PayPal and Venmo are understandably very concerned that if this is fully implemented, people will stop using their services to receive payments.  

PayPal issued the following statement:
 
  • This new Threshold Change is only for payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal for dinner, gifts, shared trips, etc.
  • Both PayPal and Venmo offer a way for customers to tag their peer-to-peer (P2P) transactions as either personal/friends and family or goods and services by choosing the appropriate category for each transaction. Users should select Goods and Services whenever they are sending money to another user to purchase an item, like a couch from a local ad listing or concert tickets or paying for a service.
Now, suppose you paid $1,500 for a couch and later sold it online for $700.  Your buyer rightfully checked the “goods or services” box when sending you the payment.  Since you received more than $600, you will get a 1099-K for $700.  But wait a minute.  That $700 is not net income.  You paid $1,500 for the couch, so you actually lost $800 on the deal.

In cases like this, you will have to report the sale on a separate schedule on your income tax return to show that you purchased the couch for $1,500 and sold it for $700 so there was no net gain and therefore no tax is due. Then, if you are audited either in person or by mail, you will have to show evidence of the price you paid to “prove” you had no taxable income.

Of course, there will be sellers who will ask their buyers to check the “personal/family” box when they pay for the couch.  In that case, they will not get a 1099-K, but they will have committed tax fraud because the money received was indeed payment on the sale of a good.

Because of the “efficiency” of the IRS computers, we can expect that many people who filed their tax returns correctly will still get notices demanding an additional $100 to $200 of income tax, even though they don’t owe it.  Unfortunately, many people who don’t want the aggravation of trying to convince a computer that they don’t owe the money will just go ahead and pay it.  

If they ask their tax preparer for help, they will find that having their tax preparer dispute the additional assessment will cost several times more than just paying it.  So once again, it’s cheaper and easier to just pay money you don’t owe than it is to fight the IRS.  And don’t think for a minute that the IRS isn’t aware of that.  The IRS has a long history of going after people who don’t have the resources to fight back.

In addition, many people receiving the 1099-K will honestly assume that the money received was indeed taxable income and dutifully pay the tax, even if it’s not really owed.  Of course, if they don’t add the schedule showing they incurred a loss on the transaction, the IRS computer will likely send them a notice saying they owe additional tax.
 

CONCLUSION


Yes, the income tax code requires “all income” to be reported on our income tax returns.  

However, does it make sense if you are selling a used couch or used jet ski for less than you paid for it to have to file an additional schedule on your tax return just for this one item?

The bureaucrats believe we really work for them. They seek ways to use their “superior” intellect to ensure that we do what they determine is best for us.  That’s a big reason why the D.C. bureaucrats so love the present income tax system.  They can create forms and rules that make all of us dance to the tunes they so love to create.  As long as they can control us, they don’t really care what kind of problems they create for us.   

There’s a much fairer, much simpler and much more efficient way to do it—THE FAIRTAX!

The FAIRtax collects the revenue that the federal government needs to operate, but does it in a way that has the least impact on our individual freedom and the least impact on our economic prosperity.  

There are no tax returns to file and no records to keep.  We pay our federal taxes when we make retail purchases of new goods and services, and there is no need for the IRS.  If you sell a used couch or used jet ski online, there is no FAIRtax due on that transaction.

The D.C. bureaucrats don’t want the FAIRtax passed because much of their reason for being employed disappears.  They will no longer be able to create problems for the rest of us through their complex new tax forms and regulations.

The FAIRtax will allow us to TAKE BACK CONTROL.

The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
 
Join us and TAKE BACK CONTROL OF OUR COUNTRY AND OUR LIVES—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
 
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL,
 
“Nobody made a greater mistake than he who did nothing because he could do only a little.”
 
We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
 
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
 
WHAT CAN EACH OF US DO? 
 
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!
 
TAKE BACK CONTROL!   Help us PASS THE FAIRTAX!
 
The IRS will be gone and we will pay our taxes when we make purchases.  
 
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
 
WE will know how much tax we and everyone else are really paying because taxes will no longer be hidden from us.  It will be clearly shown on every retail receipt.
 
If you have friends who don’t know about the FAIRtax, send them to  FAIRtax.org.  Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
 
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
 
Is it hopeless?  When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?”  But I dream things that never were; and I say “Why not?”
 

Isn’t it time for us to ask, “Why not?”  
 
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