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VENMO, PAYPAL, CASH APP MUST REPORT $600+ IN BUSINESS TRANSACTIONS TO IRS

Starting Jan. 1, mobile money apps like Venmo, PayPal and Cash App must report
annual commercial transactions of $600 or more to the Internal Revenue Service.


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Jan. 6, 2022, 3:12 PM EST / Updated Feb. 1, 2022, 8:35 AM EST
By Tim Fitzsimons

As of Jan. 1, mobile payment apps like Venmo, PayPal and Cash App are required
to report commercial transactions totaling more than $600 per year to the
Internal Revenue Service.

The change to the tax code was signed into law as part of the American Rescue
Plan Act, the Covid-19 response bill passed in March.




Previously, these mobile payment apps only had to tell the tax authorities when
a person had over 200 commercial transactions per year that exceeded $20,000 in
total value, the IRS said.

Starting Jan. 1, the IRS said, if a person accrues more than $600 annually in
commercial payments on an app like Venmo, then Venmo “must file and furnish a
Form 1099-K” for them — reporting on all the commercial income they collected
through the app.

The tax-reporting change only applies to charges for commercial goods or
services, not personal charges to friends and family, like splitting a dinner
bill.

In an explanatory document on the new tax changes, the IRS said these changes
also apply to people who sell items on internet auction sites like eBay and
people who "have a holiday craft business" so long as they accept credit card
payments through these apps.



PayPal said both "PayPal and Venmo offer a way for customers to tag their
peer-to-peer (P2P) transactions as either personal/friends and family or goods
and services by choosing the appropriate category for each transaction."

"Users should select Goods and Services whenever they are sending money to
another user to purchase an item, like a couch from a local ad listing or
concert tickets, or paying for a service," PayPal said.

In a statement to NBC News, Early Warning Services, LLC, the network operator of
Zelle, said, "If payments received on the Zelle Network are taxable, it is the
consumer or organization's responsibility to report them to the IRS."

"The law requiring the issuance of forms 1099K applies to third party payment
networks that handle the settlement of funds. Payments between friends and
family, and eligible small businesses sent through the Zelle Network are not
subject to this law because Zelle facilitates messaging between financial
institutions, but does not hold accounts or handle settlement of funds."



CORRECTION (Jan. 19, 2021, 3:37 p.m. ET): A previous version of this article
misstated Zelle’s tax reporting requirements. Zelle clarified after publication
that it is not required to issue tax forms for transactions above $600 annually.
The article has been updated with the company’s statement.

Tim Fitzsimons

Tim Fitzsimons is a reporter for NBC News. he/him

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