Washington — Venmo, Cash App, and other payment app users will be tax-exempt this year. Tuesday, the IRS postponed new reporting requirements for the next tax season.
The March 2021 American Rescue Plan required app users who made $600 or more selling goods and services to disclose those transactions to the IRS. Instead, payment applications and online marketplaces will send 1099-K tax forms to people who earn over $20,000 and make over 200 sales.
The IRS will raise the basic reporting threshold from $600 to $5,000 in 2024. IRS officials blame taxpayer uncertainty over reportable transactions for the delay. Selling a couch or car, paying rent to a roommate, and buying concert tickets are not reportable, but other purchases are.
“Taking this phased-in approach is the right thing to do for tax administration, and it prevents unnecessary confusion,” IRS Commissioner Danny Werfel said. It's evident that delaying tax year 2023 will help taxpayers, tax experts, and others.”
Werfel stated, “We spent many months gathering feedback from third-party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements.
The American Rescue Plan mandates Venmo, Cash App, and other payment app users to record transactions above $600 in a year. Before that provision and this year, only taxpayers who receive over $20,000 and have over 200 transactions had to declare sales. Lawmakers from both parties applauded the postponement.
Democratic Sen. Jon Tester of Montana wrote to the IRS this week to delay the reporting requirement, saying, “I'm glad to see the IRS heard my concerns and I'll continue to fight back against burdensome bureaucratic policies.”
Missouri Republican Rep. Jason Smith said the delay shows a fault in the American Rescue Plan, which passed near party lines. “Since even Democrats admit this law is unworkable and are trying to rewrite a key provision, it's time to scrap it and start over,” Smith said.