IRS delays Venmo, Cash App, and other payment app reporting standards

This year, users of payment applications like Venmo, Cash App, and others will receive a tax break. On Tuesday, the IRS said that it would postpone enforcing new reporting rules that were scheduled to go into force for the upcoming tax filing season.

The American Rescue Plan, which was passed in March 2021, set a new threshold that required app users who generated $600 or more selling goods and services to record those transactions to the IRS.

Instead, taxpayers who acquire more than $20,000 and complete more than 200 transactions selling goods or services would obtain separate tax forms called 1099-K paperwork from payment applications and online marketplaces.

According to the IRS, the basic reporting level will rise from $600 to $5,000 in 2024.

IRS officials said that taxpayer misunderstanding about what kinds of transactions are reportable is one factor contributing to the delay.

Peer-to-peer transactions, such as buying concert tickets, renting out a couch or car, and sending rent to a roommate, would fall under this category and not be subject to reporting requirements.

“Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion,” IRS Commissioner Danny Werfel said. “It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area.”