IRS delays $600 reporting threshold for third-party payments

Washington Wednesday: Critics worry lower reporting requirement for banking transactions will cause tax troubles for everyday people

By James David Dickson | December 28, 2022

Just two days before Christmas, the IRS announced that its $600 reporting threshold for third-party payments has been delayed, and won’t take effect during the 2023 tax season.

The $600 reporting threshold became law in the American Rescue Plan of 2021, and has not been rescinded. Under the current system, payment processors must report to the IRS the names of individuals who have received more than 200 payments in a year, exceeding $20,000 in total. The new standard is a total of $600, with no minimum on the number of transactions. The requirement affects people who use sites like PayPal or Venmo.

While the IRS argues that “the law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill,” critics argue that the $600 threshold will do just that, bringing small, routine transactions under IRS scrutiny.

Grover Norquist, president of Americans for Tax Reform, has been a vocal critic of the new, lower threshold.

“Unless you have the receipts for all of the things that you’re selling at some point, you’re going to be hit with a note from the IRS: ‘You owe us money on this. How would you like to be audited?’" Norquist said on a Fox News appearance this month. “Tens of millions of these are going out. It’s a disaster.”

The IRS acknowledges that concern, and says the delay will help ensure the compliance forms, 1099-Ks, go to the right people, and are not blasted out widely.

“The change under the law is hugely important because tax compliance is higher when amounts are subject to information reporting, like the Form 1099-K,” the IRS wrote in a statement on the delay. “However, the IRS noted it must be managed carefully to help ensure that 1099-Ks are only issued to taxpayers who should receive them.”

When last mentioned on CapCon, the IRS was planning to hire 87,000 new agents.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

In last agenda item of year, Oakland County Commissioners gave themselves a raise

“If you want quality, you’ve got to pay for it,” commissioner said before voting yes

By James David Dickson | December 27, 2022

Article 7, section 9 of the Michigan Constitution gives county boards the exclusive power to set compensation for county officers, unless “otherwise provided by law.”

So while it’s true that Oakland County commissioners gave themselves a $6,000 raise for the upcoming 2023-24 term, there is also no one else who could have done this. Compensation is in the purview of the county board. Whether it should or shouldn’t be, it is.

But the Michigan Constitution does not say the raise should be held for the last agenda item at the last full board meeting of the year, as it was on Dec. 8. Members of the Oakland County Commission were up for reelection in November. If voters knew their commissioners would give themselves a 17% raise, would those commissioners have been reelected?

After a brief discussion, the commission approved the raise in an 11-9 vote. The raise brings the commission’s base pay to a little over $42,000.

Several of the no votes objected to the timing of the decision.

Commissioner Michael Spisz, a Republican who chairs the minority caucus, noted that members already gave themselves a 5% raise in the 2023 budget. Another 3% raise takes effect in 2024, according to board documents.

“I bet if we went back to the agenda that's on our website, this item is not on there,” Spisz said at the meeting, challenging the transparency of the resolution. “It’s on our packet and on our tablets here, yes, but the public hasn’t even seen it yet. We don’t even have people here to make comment on it.”

“I don’t understand how anyone in this room can support this,” Spisz added.

“You’re voting yourselves a raise during lame duck?” outgoing commissioner Chuck Moss asked his colleagues, before voting no. “This seems to me a not-great way to do business, with very little transparency and very little notice.”

On the yes side, Chair Dave Woodward, a Democrat, noted that with the board shrinking in the next term, from 21 commissioners to 19, each board member will serve more people than before. He said the $6,000 raise amounted to $500 per month and is “more than reasonable.”

Commissioner Charlie Cavell, a Democrat, noted that most board members also have day jobs, and said: “If you want quality, you’ve got to pay for it.”

Oakland County Commissioners who voted yes on the raise:

Chair Dave Woodward, Democrat

Charlie Cavell, Democrat

Yolanda Smith Charles, Democrat

Marcia Gershenson, Democrat

Janet Jackson, Democrat

Penny Luebs, Democrat

Gwen Markham, Democrat

Gary McGillivray, Democrat

William Miller III, Democrat

Kristen Nelson, Democrat

Angela Powell, Democrat

Oakland County Commissioners who voted no on the raise:

Minority Caucus Chair Michael Spisz, Republican

Michael Gingell, Republican

Robert Hoffman, Republican

Karen Joliat, Republican

Adam Kochenderfer, Republican

Eileen Kowall, Republican

Christine Long, Republican

Chuck Moss, Republican

Philip Weipert, Republican