December 7, 2021

New IRS Rule Aims To Crack Down On Businesses Using Cash Apps For Payment

A brand new rule underneath The American Rescue Plan Act goals to crack down on companies that use money apps to keep away from paying taxes.

The Inner Income Service will now ship 1099-Ok types to firms that make money transactions of $600 or extra. Apps like Paypal, Venmo, and Zelle will likely be affected.

The way in which it can work is that if somebody makes a industrial transaction on the app, it can notify the IRS. A 1099-Ok will likely be generated and despatched to the enterprise proprietor.

Underneath present federal tips, a 1099-Ok is generated for digital funds totaling $20,000 or extra and has greater than 200 transactions. The brink will likely be considerably lowered in 2022.

Up to now, the brand new rule solely applies to companies and never private transactions. So if you happen to Cashapp somebody for dinner or lease, for instance, it could be topic to tax.