IRS reminds all third-party payment platform users to report earnings of at least $600 regardless of the number of transactions made. This new rule applies to individuals who receive their job and business earnings through payment platforms.
At Least $600 Taxable
This rule applies to third-party payment apps such as PayPal, Venmo, and Cash App. It applies to those who receive payment for a part-time job or a small business but not to those who send payment to someone to pay for someone or make a one-time payment to buy something.
Because these earnings were already taxable, this is merely a reporting transition rather than a change in tax law.
Tech Companies Not Happy
Before 2022, business owners and part-timers must report gross payments over $20,000 and earnings if they have more than 200 such transactions. The American Rescue Plan Act plays a significant role in changing this rule; any transactions that exceed $6,00 after March 11, 2021 must be disclosed to the IRS, regardless of the number of transactions made.
Tech companies that power payment apps and transaction sites disagree with the rules. They are protesting the possibility of collecting tax ID numbers for millions of clients and acting as enforcers against non-compliant customers.
Etsy, eBay, and five other companies have formed the Coalition for 1099-K Fairness to fight these new rules and help defend online sellers and small businesses from additional tax and privacy pressures they were not initially tasked with having to handle in a business capacity.
Zelle, one of the more popular money transfer services in recent years, is unaffected by the new tax law because it does not manage accounts or fund settlement, and they do not hold SSNs and Employer Identification Numbers.
