IRS CRACKS DOWN ON SMALL BUSINESS OWNERS WHO USE CASH APPS
President Biden implemented a new American Rescue Plan that’s going to take effect on 1st January 2022. It enables the IRS to gain more insight into more than $600 cash transactions on money transferring apps such as Pay Pal, Zelle, Cash App, and Venmo. The previous threshold was $20,000.
Those who use cash apps for personal use won’t be impacted. It’s no secret that many self-employed workers use the same cash app account for both personal and business transactions and that’s where things can get a little tricky.
“From $20,000 to $600 — I’m just trying to figure out what kind of consumers they are trying to sort of catch,” said Sofia Johan, an associate professor of finance at Florida Atlantic University.
The plan is in compliance with Joe Biden administration’s Treasury Proposal, which came out in May, and is aimed to find out information against tax cheats.
The new rule only regulates the reporting system against those who do not pay taxes on their commercial transactions. According to Dr. Robert Tiller of Raymond James Financial and director of the personal-finance planning program at USF, any business owner should report IRS their income that goes above $600, regardless of getting 1099 form.
The rule has always been there; just the method of implementation is now being enforced.
