New IRS Rules Could Affect Venmo, Zelle and CashApp Users

Users of digital wallets and e-commerce platforms must start reporting small transactions, sowing fears among small-business owners. From a report: A tweak to the tax code enacted last year was intended to ensure that those who use services such as Venmo, CashApp, Etsy, StubHub and Airbnb to collect money are reporting all their income to the I.R.S. The change was part of the Biden administration's efforts to narrow the $7 trillion 'tax gap' between revenue that is owed but not collected. But for millions of Americans, the new requirement means they will be faced with additional tax forms, potentially higher tax bills and a lot of confusion. That is stirring anxiety among some of the middle-class taxpayers and independent business owners President Biden promised would spared from greater tax scrutiny.

The new tax policy was tucked into the stimulus package known as the American Rescue Plan that Democrats passed in 2021. It has gone largely unnoticed because it applies to income earned this year and affects taxes that most Americans will pay in 2023. It is projected to raise about $8 billion in additional tax revenue over a decade. But as the impact of the rule and the prospect of surprise tax bills becomes clear, it is drawing pushback from business groups, lawmakers and others, prompting a scramble within the Biden administration to come up with a solution to avoid another chaotic tax season next year.

Read more of this story at Slashdot.