New tax rule requires money apps to report transactions totaling more than $600/year

Money Matters

SHREVEPORT-BOSSIER, La. (KTAL/KMSS) – Third-party money apps like Venmo, Paypal, and Cash App are required to report business transactions of more than $600 per year to the IRS, thanks to a change in the tax code that took effect on Jan. 1, 2022.

“Well, heard about it, but basically at the same time, it’s something like a credit card swipe. Your machine is going to charge you too, so it just keeps up with the payment. I don’t have a problem with it,” said Karl Blake, who owns Homemade Meals in Bossier City.

The payments are only taxed if the money is received as a good or service. Gifts and donations are exempt.
The new rule, signed into law as part of the American Rescue Plan Act, allows the IRS to track how much money businesses actually earn through the apps regardless of what they put on the 1099-K form.

Previously, mobile payment apps only had to tell the tax authorities when a person had over 200 commercial transactions per year that exceeded $20,000 in total value, according to the IRS.

“It’s going to make people have to pay a little bit more attention to what they are putting on their taxes as well,” said Alexandra Perry, owner of The Favored Party in Shreveport. “Sometimes as small businesses, we get a lot of donations and a lot of gifts from family and friends. So we’re going to have to be more specific on that as well.”

“I do feel like other businesses are going to go around that so they don’t have to pay taxes or find different avenues to get cash versus going through Paypal or Venmo or those services,” Perry said.

“If you got Cash App or Venmo and that’s how you got to pay, we most definitely going to accept it. Simple, we’re going to accept your payment,” Blake said.

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