(Daily Mail) - President Biden's IRS is cracking down on payments made through third-party apps, requiring platforms like Venmo, PayPal and Cash App to report transactions if they exceed $600 in one year.
The new reporting requirement will ensure that small businesses that receive payments through those apps are paying their fair share in taxes on them.
Beginning Jan. 1, 2022, third-party payment processors were required to report such transactions. Though businesses were always required to self-report such incomes to the IRS, many often did not keep record of their smaller transactions.
The payment apps were previously required to send users 1099-K forms if their gross income exceeded $20,000 or they had more than 200 transactions per year.
The new tax law was part of the March 2021 American Rescue Plan, which passed with no Republican votes.
The new rule is only for goods and services transactions, not personal, such as paying a roommate for rent or reimbursing a friend. It also excludes anyone selling a personal item at a loss, such as a couch bought for $700 and sold for $650.
The cash apps will now be required to send the 1099-K form to businesses with electronic transactions greater than $600. The new change will apply for the 2022 tax season.
'For the 2022 tax year, you should consider the amounts shown on your 1099-K when calculating gross receipts for your income tax return,' PayPal warned on its website. 'The IRS will be able to cross-reference both our report and yours.'
The new tax rule is separate from a proposed IRS reporting requirement that originally would have handed over transaction data on accounts with more than $600 aggregate inflow and outflow. That proposal, originally part of President Biden's Build Back Better plan, was raised to a $10,000 threshold after much pushback, and has not yet been acted on by Congress.
Republicans have said that that proposal amounts to the Biden administration peering into Americans' everyday purchases.
