Beginning on January 1, third-party payment applications that receive payments for goods and services totaling $600 or more must record such payments to the Internal Revenue Service (IRS).
In addition to PayPal, Venmo, Cash App, Zelle, Google Pay and other popular payment applications, the new law will impact all other major payment apps as well.
Starting today the IRS will require Venmo, PayPal and Cash App to report ALL transactions of $600 or more. You thought this was squashed, NOPE. https://t.co/EHcDWawng3
— K Scott (@KScott21623546) January 5, 2022
When the American Rescue Plan (pdf) was enacted by the Democrats without a single Republican vote in March 2021, the modified reporting criteria was included.
Certain transactions involving third-party payment platforms must be reported on 1099-K forms by the third-party payment platforms.
In prior years, if the users’ gross revenue from goods and service transactions exceeded $20,000 or if they had more than 200 such transactions in a calendar year, the applications were obliged to report to the Internal Revenue Service (IRS).
Users of payment applications may be forced to supply extra information as a result of the lower threshold being implemented. If the user’s Employer Identification Number (EIN), Individual Tax Identification Number (ITIN), or Social Security Number (SSN) is not already on file, the user may be prompted to give it.
Payments made between members of the same family or group of friends are exempt from the restriction.
According to a statement released by PayPal in November 2021, “This new Threshold Change is currently only for payments received for goods and services transactions, so this does not include things like paying your family or friends back using PayPal or Venmo for dinner, gifts, shared trips, or other similar transactions.”
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