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.