Gig workers will see a tax-related change due to the Democratic Party’s $ 1.9 trillion COVID-19 aid package, with critics of the change describing it as the burden or “a” cash hog “.
The change is that starting next year, contract economy firms will be required to submit a 1099-K form to workers who make more than $ 600 in a year, down from the previous threshold of $ 20,000. a year and 200 transactions.
Proponents of the change say it’s about helping workers record their earnings so they can later receive Social Security and other benefits.
“This is making the rules fair for large, large, online platforms,” said Caroline Bruckner, a contract economist and chief executive officer at American University’s Kogod Tax. This giant, compared to what small businesses have been doing at the $ 600 threshold. Policy Center. She testified on the matter at Congressional hearings.
Bruckner criticized those who drew the change as a new tax on contract workers.
“These are existing taxes that people don’t comply with because they don’t receive them,” she told MarketWatch. “Tax research consistently shows that when taxpayers don’t receive a report form, they don’t report their income correctly.”
Rep. Adrian Smith, a Nebraska Republican, is one of those opposing the change, expected to raise $ 8.4 billion in 10 years. He blew it in a speech on the floor last month, when the House and Senate, run by Democrats, worked to pass the US Rescue Planning Act.
“We now know that the rollout has actually been delayed because Democrats are adding a new round of collection – dramatically reducing the threshold that contract workers are getting,” Smith said. 1099-K, ”said Smith.
Etsy Inc. online platform. ETSY and the US Chamber of Commerce was among the organizations critical of the development in a letter last month to top US lawmakers.
“This change will put a heavy burden on small business owners and entrepreneurs,” the letter said.
“We believe there is a time and place to have a strong policy conversation regarding the 1099k report threshold, however, we encourage Congress to continue to focus on supporting business owners. SMEs and entrepreneurs in recovering from the devastating impact of the COVID-19 pandemic. ”
The change will help the government better grasp the size of the gig economy, according to Bruckner of the American University, who previously worked for Democratic party lawmakers.
“There isn’t a single, reliable, regular metric of contract work and contract workforce, and this should help start to develop that understanding,” she said.