IRS delays tax change for Venmo, Cash App users
Add Axios as your preferred source to
see more of our stories on Google.
Photo: Molly Riley/McClatchy DC/Tribune News Service via Getty Images
The Internal Revenue Service on Friday announced a one-year delay in the implementation of a new tax filing rule that requires more users of digital payment platforms and e-commerce sites to report their transactions.
Why it matters: The new tax filing policy had prompted confusion and opposition among users of digital wallets and payment platforms, and the delay will likely come as welcome news to the companies that had lobbied against it.
Catch up quick: The American Rescue Plan introduced a change that required companies such as Venmo, Cash App and PayPal to send out 1099-K forms for users with more than $600 in transactions for goods and services.
- Normally, companies sent that form to users with more than 200 transactions exceeding $20,000. But with the new, lower threshold, it would apply to users with smaller businesses and side hustles, Axios' Emily Peck writes.
Driving the news: The IRS said 2022 "will be a transition period" for implementing the new threshold and more details on the delay will be shared "in the near future."
- The existing 1099-K reporting threshold of $20,000 remains in effect, the IRS said.
What they're saying: "The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan," said acting IRS commissioner Doug O'Donnell in a statement.
- "To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes."
- "The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements," he said.
Of note: "The law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill," the IRS said.
- The delay will free the IRS from a whirlwind of additional paperwork and give opponents of the new rule more time to lobby for a change, the Wall Street Journal reports.
Go deeper: Millions of Americans set to get surprise tax forms in 2023
