Third-party payment apps must report goods and services payments of $600 or above to Internal Revenue Service (IRS) starting from Jan. 1.
The new rule will affect all main payment apps including PayPal, Venmo, Cash App, Zelle, Google Pay, etc.
The amended reporting threshold is part of the American Rescue Plan (pdf) which was passed by the Democrats without a single Republican vote in March 2021.
The third-party payment platforms need to report certain transactions on 1099-K forms.
Before the amendment, the apps were required to report to the IRS if the users’ gross income from goods and service transactions were over $20,000 or they had more than 200 such transactions in a calendar year.
With the new lower threshold, users of the payment apps may be required to provide additional information. Users may also be asked to provide their Employer Identification Number (EIN), Individual Tax Identification Number (ITIN), or Social Security Number (SSN) if it’s not already on file.
Payments among family or friends are not subject to the rule.
“This new Threshold Change is currently only for payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal or Venmo for dinner, gifts, shared trips, etc,” PayPal said in a statement back in November 2021.