Venmo, the US leader in P2P payments confirms itself as the payments industry leader according to the latest data.
The company gives users the ability to transfer sums of money simultaneously between two parties and track payments via the app’s social feeds.
This allows millions of people to be able to cope with small but important cash outlays such as paying a rent lease or simple tuition or even splitting a restaurant bill.
Venmo is also often used for non-major payments by small and medium-sized businesses, and this has drawn the ire of the US Dem Party.
With an ad hoc amendment, a bill passed whereby the threshold for filling out the American Form 1099-K, a kind of report of income (and money movements), is $600.
The lowering to the stated threshold that provides for the specific form to be submitted to the IRS (International Revenue Service) is targeting third-party payment solutions.
The Venmo app
In the past, a payment app such as Venmo was required to complete and submit Form 1099-K only if gross income exceeded $20,000 or if the number of individual transactions in a calendar year was greater than 200.
The battle of the US Democratic Party achieved its goal back in March last year by passing the American Rescue Plan, which passed without any Republican votes.
As of today, all those transactions exceeding $600 will trigger the completion of the form.
The vision of the new law is to fight evasion but it puts small and medium-sized businesses on the hook at a delicate time for the country’s employment future as it turns toward an albeit mild depression.
The change, however, exempts some specific cases for payment companies such as Venmo and PayPal.
Indeed, the American Rescue Plan applies only to the consideration of goods and services and exempts, for example, gifts, paying rent or repaying a friend for a loan.
Even selling at a loss escapes this law; disposing of an asset bought at a certain amount and reselling it for less than its realization will in fact be considered exempt from the Form 1099-K requirement and will not be taxable as a result.
“For tax year 2022, you should consider the amounts listed on your Form 1099-K when calculating gross receipts for your tax return. The IRS will be able to compare both our report and yours.”
PayPal specified on the topic.