E-Commerce platforms petition to increase the business transaction threshold under the new tax reporting rules. These companies, including Uber and eBay, are finding support from both Democratic and Republican legislators. In 2021, new legislation was introduced requiring companies that employ contract workers to provide 1099-K forms to help these gig workers accurately report their earnings. Starting in 2022, taxpayers with more than $600 in business transactions would have to report that income, regardless of the number of transactions.

Lobbyists are hoping to stop the implementation of this new rule in the current lame-duck session. Advocates for this law argue that gig workers were previously at greater risk of being audited and getting hit with back taxes they were not expecting to pay, since they were not receiving income tax forms unless their transactions exceeded $20,000 over at least 200 transactions. Republican opponents to the new third-party transaction rules are pushing to return to these higher thresholds, while some Democrats are instead suggesting a $5,000 minimum. Only 30% of those earning income through third-party platforms made more than $5,000 in 2016, according to a 2020 report.

Sales tax varies widely by state, introducing complications for small businesses 

On top of the many tasks, they juggle from week-to-week, small business owners need to acquaint themselves with the specific sales tax rules in their state. The particulars can be very different in each region, from the rate to the due date to what is considered taxable. For instance, certain states tax both the product and service a business provides, while other states will only tax the products. New business owners may also be unaware that basic client fees—say the design fees charged by an interior designer—are subject to sales tax. Some states also tax real estate construction if the changes don’t amount to capital improvement (changes that increase the value of a property).

The law levies sales tax on the buyer of a product or service, which means customers are technically liable. The vendor must charge the tax and remit it to the IRS—which typically means they will slightly increase the price paid by the customer. In most states, sales tax is due every month, although if your sales fall below a certain threshold, you may only have to file quarterly or yearly. Taxes are due in the month immediately following the month when the sales occurred and can usually be remitted through your state’s website.