Expect to Pay More in Taxes Thanks to This Sneaky Rule Change

Andy Snyder|February 3, 2022

We hit the airwaves again this week.

We got a big drive-time spot with a long-standing radio icon in Boston.

It was a big platform, suitable for a big mission. The spot has been filled by some of the most controversial names on the planet… including former President Trump and many of his beleaguered colleagues.

It seemed like a fitting place for our outcast ideas and ever-prodding thoughts.

The host went right for it. He wanted an update on our research on the death of cash.

“They’re tightening the noose,” we said. “They’re coming after our money more than ever.”

The conversation was off and running.

No Such Thing as Free

Despite the popular campaign-trail rhetoric, we said, nothing from Washington is ever free. Even the money they print out of nowhere comes with a cost. Just ask the inflation hounds.

In the latest case of “getting their money back,” the folks in D.C. are shortening the rope around taxpayers’ necks.

And they’re using the electronic payment system to do it.

It used to be that a payment transfer company – like PayPal, Zelle or Venmo – would have to report you to the IRS only if you racked up a total of 200 or more commercial payments or $20,000 in transactions in a year.

That meant the little guy – still obligated to pay taxes on his income – often didn’t report small sales. Uncle Sam doesn’t like that.

He’s a greedy bugger.

So as part of one of the largest free-money giveaways in history – the 2021 American Rescue Plan – the government quietly changed the rules.

We bet you didn’t hear about it.

Tucked in with all the freebies and handouts was a rule that forces companies like those mentioned above to submit a 1099-K to the IRS for every customer that transfers more than $600 in “commercial money” each year.

It’s a big payday for the tax man.

Estimates put the tax gap between what the law says sellers owe and what the IRS actually receives at some $380 billion.

The current administration is looking to close that gap… quickly. And regardless of the economic cost.

That money, after all, is likely earmarked for other things.

But here’s the kicker. It’s why the government loves the death of cash so darned much.

This isn’t just about small business owners. It’s about you too.

One Man’s Junk… Is the IRS’ Treasure

Let’s say you’re cleaning out your garage. Since the local town ordinance calls for a $50 yard sale permit, you save the cash and post your items online for free.

It all sells for $1,250. And since the millennial down the block doesn’t have any cash, some $900 of your sales come via PayPal.

It happens every day.

Last year, the government would likely never have known about those sales. After all, you don’t have to pay taxes on items that went down in value.

But come this time next year, the IRS will be sitting on a 1099-K from PayPal stating the income you derived.

It will now be your job to prove that you don’t owe taxes on the yard sale cash.

It puts a huge burden on the payment portals (who now have to track and mail out millions of these forms each January), and it dramatically complicates the tax filings for countless Americans, who will now look like small business owners who are cheating on their taxes in the eyes of the IRS.

One of the companies affected most by this rule change is eBay. It doesn’t like the idea. It’s been quite public about showing its disdain…

“EBay believes in following the law and proper tax accounting,” it said. “Sending confusing 1099-Ks to nearly every occasional or casual seller that uses an online platform to earn extra income, however, is not the right approach.”

Oh… and don’t forget, in order to send you a 1099, eBay and its industry brethren will all need your Social Security number. It will become a permanent part of your account.

Hackers will have a field day.

That isn’t good.

Yes, it’s true that the IRS is just working to enforce the laws that are in place. We applaud it for that (unenforced laws are dangerous). But the ramifications of this move are going to be very costly for the average American citizen.

It spells a loss of privacy. It creates a security risk. And it put you at greater risk of scrutiny if you happen to do something the government doesn’t like… say, donating to the wrong party, perhaps. (Remember in 2017 when the IRS apologized for illegally targeting conservative groups?)

Get ready for more.

Bottom line… use cash while you still can.

It’ll be going away soon enough.

Note: A big date for the death of cash could be just around the corner. We’ve been warning everybody we can about a secretive meeting scheduled for March 16. Click here to see what has us so worried.