IRS Delays Reporting Requirements for Venmo and Cash App Transactions: Taxpayers Get Another Year Reprieve

The IRS has announced changes impacting tax returns, with a significant adjustment focusing on the reporting of third-party platform payments through apps like Venmo and Cash App. (Photo: reddit)

IRS Extends Grace Period for Reporting on Venmo and Cash App Transactions: Commissioner Emphasizes Need for Effective Implementation

According to source, the IRS has recently announced changes impacting tax returns for the upcoming filing season. While the annual tax filing deadline may shift, tax regulations are in constant flux, requiring individuals to stay informed about evolving rules for compliance. Here are some of the notable changes introduced by the IRS.

One significant adjustment involves the reporting of third-party platform payments via apps like Venmo and Cash App. A law created two years ago established a threshold requirement for individuals conducting goods and services transactions through these platforms. Initially, anyone earning $600 or more from transactions on Venmo and Cash App was required to report it on their taxes. However, the IRS decided to delay the implementation of these reporting requirements for 2022 tax returns and is now pushing it back for another year.

In a press release on November 21, the IRS announced a second consecutive delay in the $600 reporting threshold, citing feedback from taxpayers. IRS Commissioner Danny Werfel stated that additional time is necessary for an effective implementation of the new reporting requirements for transactions on Venmo and Cash App.

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IRS Adopts Strategic Transition: Delays Reporting Requirements for Venmo and Cash App Transactions to 2023 for Smooth Implementation

The phased-in approach aims to prevent confusion and address changes to Form 1040. As a result of this delay, taxpayers will not be obligated to report third-party payments on their next tax returns unless their earnings exceeded $20,000 with more than 200 transactions for the calendar year.

The IRS considers 2023 as an additional transition year, allowing more time for the implementation of the new law governing transactions on Venmo and Cash App. This decision aims to avoid complications for taxpayers, tax professionals, and others involved in this area. It is a strategic move to ensure a smooth transition and minimize potential issues related to the changes in reporting requirements for transactions on Venmo and Cash App.

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