Washington, D.C. – TechNet, the national, bipartisan network of innovation economy CEOs and senior executives, today applauded the inclusion of changes to the 1099-K reporting threshold and R&D expensing in the newly released American Families and Jobs Act by Representative Jason Smith (R-MO), Chairman of the House Committee on Ways and Means. The following statement can be attributed to TechNet President and CEO Linda Moore:

“America’s corporate tax system should strengthen innovation, encourage investment in U.S. businesses, and enhance our global competitiveness. Reinstating R&D expensing will help America compete globally and win the next era of innovation. Raising the 1099-K reporting threshold will provide relief to millions of Americans making necessary extra income by casually selling items online or working to get a business off the ground.

“Reinstating R&D expensing and raising the 1099-K reporting threshold will allow our economy to grow and American innovation to flourish, and we applaud their inclusion in the economic package released today by Chairman Smith. We look forward to working with both parties to ensure both provisions pass this year.”

Background:

R&D Expensing

  • Reinstating R&D expensing would allow companies to take advantage of the deduction in the same year the R&D expenditure was made rather than amortizing it over five years.
  • Requiring certain R&D expenditures to be amortized is estimated to reduce U.S. R&D spending by $4.1 billion annually in the first five years and $10.1 billion annually in the second five years and beyond.

1099-K Reporting Threshold

  • The American Rescue Plan Act of 2021 lowered the 1099-K reporting threshold from $20,000 and 200 transactions to $600 with no minimum for transactions. Last December, the Internal Revenue Service (IRS) delayed the reporting requirement for calendar year 2022.
  • Failing to raise the reporting threshold will impact millions of Americans, such as casual sellers who use online marketplaces to sell used goods without generating taxable income.
  • In a 2022 survey, 67 percent of online sellers said the new 1099-K reporting requirement will cause confusion as to what income from online sales should be reported to the IRS. 69 percent of respondents said they were likely to stop selling online or sell less online based on the new requirements.