IRS Delays Venmo and PayPal Tax Increase by One Year
The Internal Revenue Service has announced that it will delay the new tax reporting requirement for payment apps such as Venmo and PayPal. This has been a controversial change which has been criticized by a number of organizations, including small business owners.
The new rule was originally set to take effect during the 2022 tax filing season. It is estimated to raise $8 billion over the next ten years. However, the IRS has delayed the implementation of the law to give Americans more time to prepare.
In addition to the delay, the IRS has also decided to provide taxpayers with a transition period. This will allow them to properly identify personal and business payments. That will help them avoid the IRS from getting confused.
Previously, only payments over $20k were required to be reported. The new rule has been designed to make sure that small businesses and individual payees are on top of their taxes.
The IRS has stated that it is working to provide clear instructions to taxpayers who will receive 1099-K forms. However, it is a challenge to delineate business and personal transactions in an effective manner.
To prevent confusion, the IRS has decided to postpone the new tax reporting requirements for one year. The delay will give taxpayers more time to prepare for the change, while giving the Internal Revenue Service an opportunity to clarify the new rule.
In the meantime, payment apps such as Venmo and PayPal will continue to report the same amount to the IRS. Users who transfer more than $200 will still receive a tax form.