During the Democrat presidential primaries in May 2020, Joe Biden vowed not to raise incomes taxes on anyone making under $400,000 per year — a description of most entrepreneurs and small-business owners — but under a series of IRS rule changes made by his administration, people making as little as $600 per year will see an increase in the amount of taxes they pay.
Entrepreneurs and small-business owners who use services such as Venmo, PayPal, EBay, and Airbnb are in for a rude awakening when it comes time to settle their income tax bill with the IRS (via Bloomberg.com):
Small-business owners, prepare yourselves for the era of the 1099-K. That’s the tax form for disclosing transactions with services such as PayPal, Venmo, and Airbnb. Until this year, anyone with less than $20,000 in total payments typically didn’t get a 1099-K—and thus, in theory, could avoid paying taxes on money earned on such platforms. But since Jan. 1 those companies have been required to report gross payments of more than $600 directly to the Internal Revenue Service. That means small-business owners—as well as people who periodically empty their closets on EBay—will receive a 1099-K from any service provider where their income exceeds that amount.
Tech companies are coming out in force against the rule, aghast at the prospect of collecting tax ID numbers for millions of clients and serving as enforcers against noncompliant customers. EBay Inc., Etsy Inc., and five other players have created what they call the Coalition for 1099-K Fairness to combat the new rules, saying they want to protect “casual online sellers and microbusinesses from unfair tax and privacy burdens.” If the rule remains in place, Stephens suggests entrepreneurs acquire an employer identification number to avoid having to disclose their Social Security number to every new platform they use.
Still, even some big vendors say the shift is mostly going to make life difficult for tiny independents—without doing much to raise tax revenue. “This rule is clearly going after easy targets,” says John Frigo, e-commerce manager at Best Price Nutrition, an international seller of bodybuilding supplements. “Neither billionaires nor millionaires are cheating on taxes $600 at a time.” (Emphasis mine)
If you’re surprised by this news, then you haven’t been paying attention. Either that, or you’re not a regular reader and therefor missed an article I wrote over a year ago (May 2021) warning that this day would come.
In that piece, I documented Joe Biden’s tyrannical plan to give the IRS the power to spy on your bank account using an often-overlooked provision in the PATRIOT Act that changed the 1970 Bank Secrecy Act. Under the change, new standards were established for banks to identify customers, maintain records, requiring them to report cash transactions over $10,000.
Allegedly, this change was intended to prevent the funding of terrorist activities. In reality, it has resulted in numerous violations of the Fourth Amendment’s protection against unreasonable search and seizure and the Fifth Amendment’s guarantee of due process.
In a November 2020 article, I covered a Federal Reserve and Treasury Department plan to expand government’s power to spy on the international financial transactions of everyday Americans by essentially “deputizing” banks to act on behalf of the government and gather private information on people without due process.
These surveilled people are suspected of no crime, nor are they given any opportunity to opt out of this data collection. Still, the government preemptively required their transactions be tagged and tracked as if they had done something wrong.
In addition to the liberty-killing consequences, giving the IRS new power to spy on bank accounts created a serious threat to our personal privacy while the compliance and hacking risks for institutions required to store this data are increased. Criminals easily get the finance information they seek while people end up having trouble conducting transactions.
Still, government’s overall power to spy on our bank accounts was “limited” under the PATRIOT Act until Joe Biden launched his plan to expand that power and make it easier for the IRS to track every dollar made by every entrepreneur and small-business owner to ensure full compliance with tax laws, regardless of how little money they made (via Reason.com):
Biden’s tax plan would cull financial data on masses of law-abiding, tax-compliant Americans. In the name of catching tax dodgers, the Biden administration is seeking serious snooping rights to oversee all American bank accounts and payment apps. “Instead of promising a chicken in every pot, Biden’s plan promises an auditor at every kitchen table,” commented Sen. Chuck Grassley (R–Iowa).
Under President Joe Biden’s proposal, 87,000 new IRS employees would be hired, and everyone could expect more scrutiny of the flow of money to and from their financial accounts.
Biden would [put] thousands of new IRS agents in charge of monitoring how much money goes into and out of individual bank accounts and payment service providers (like PayPal and Venmo) each year and investigating people whose cash flow doesn’t match what they report as income. (Emphasis mine)
Joe Biden claimed giving the IRS this new power would only affect the rich, but it will ultimately give the agency the financial data on nearly every law-abiding, tax-compliant entrepreneur and small-business owner because every bank and financial institution is required to participate.
“Third party information reporting is already provided on…wage, pension, and unemployment income,” states the American Families Plan Tax Compliance Agenda. “The President’s proposal would help make tax administration more equitable by subjecting financial flows…to third-party reporting as well.”
“The President’s proposal leverages the information that financial institutions already know about the accounts that they house,” the report states. “Financial institutions would add information about total account outflows and inflows to existing reporting on bank accounts,” giving the IRS “an additional lens into previously unreported income streams.”
All banks, brokerages, and other financial institutions would be required to report “gross inflows and outflows on all business and personal accounts from financial institutions, including bank, loan, and investment accounts.” The regime “would also cover foreign financial institutions and crypto asset exchanges and custodians,” and “reports would also be required from payment services providers so that businesses cannot shift out of traditional financial institutions to other kinds of platforms and avoid making their income visible to the IRS,” it says. (Emphasis mine)
From our computers and cell phones to our bank accounts, nothing has been off limits when it comes to Washington’s unquenchable thirst for more power over our daily lives — a reality made even worse in the Age of Coronavirus. The liberty-killing laws and policies created post-9/11 have continue to create new ways for government to expand its control over our lives and advance its tyrannical agenda.
Joe Biden has expanded the power of the IRS to spy on the bank accounts of entrepreneurs and small-business owners and raise their income taxes, which should serve as another reminder of the lengths Democrats AND Republicans are willing go to protect the interests of the two-party system and those of the state.
David Leach is the owner of the Strident Conservative. He holds people of every political stripe accountable for their failure to uphold conservative values, and he promotes those values instead of political parties.