|
LISTEN TO THIS THE AFRICANA VOICE ARTICLE NOW
Getting your Trinity Audio player ready...
|
Starting Jan 1, 2022, the Internal Revenue Service (IRS) will all third-party payment processors such as CashApp, Venmo, and PayPal to report payments for goods and services totaling $600 or more a year.
The change will only affect those using the applications for business transactions such as self-employed gig workers and people with side hustles. Those using the platforms for personal transactions will not be affected.
While the new reporting requirement is not a tax, it drastically lowers the reporting threshold. Under old rules, only business accounts transacting more than $20,000 in goods and services or with more than 200 transactions within a calendar year were required to report.
Mobile money transfer is a popular means of transferring money in the Kenyan community and many fundraisers for projects and paying for community efforts often use CashApp, or others to collect funds.
IRS has posted an explainer document on its website to answer frequently asked questions on the subject.
Reporting is required by law and is geared toward helping the IRS increase its revenue collection.
Zelle, however, has said on its website the new law does not affect them.
“Zelle® does not report transactions made on the Zelle Network® to the IRS. The law requiring certain payment networks to provide forms 1099K for information reporting does not apply to the Zelle Network®.” Zelle posted in the FAQ area.
The popular app Remitly used by Kenyans has not posted a message telling their customers if the new IRS reporting rule affects them.
Send Wave has responded to our request for information with the following statement sent through its Direct Messaging Twitter account.
“Send Wave does not typically support payments to U.S. businesses for whom this requirement applies. In the event, Send Wave does facilitate such payments, and if the annual activity exceeds $600, we are obligated to file a 1099 on the activity.”
For people doing business abroad, the IRS has a comprehensive guideline for reporting foreign financial accounts.
Remittance is a major source of foreign exchange for many developing nations, who rely on their diaspora to support their loved ones and invest in their home countries. Mobile money transfer has made it easier to move cash around and facilitate such transactions.
STATEMENT FROM ZELLE
In the FAQ section on its website, Zelle posted the following message:
Will Zelle send me a 1099K form?
Zelle Network®.
Does Zelle® report any payments I receive over $600 to the IRS?
Zelle® does not report any transactions made on the Zelle Network® to the IRS, even if the total is more than $600. The law requiring certain payment networks to provide forms 1099K for information reporting does not apply to the Zelle Network®. If payments you receive on the Zelle Network® are taxable, it is your responsibility to report them to the IRS. If you have any questions about your tax obligations, please consult with a tax professional.
I have a small business account. Will Zelle® report how much money I receive to the IRS?
Eligible small businesses can use Zelle® to send and receive money. Zelle® does not report transactions made on the Zelle Network® to the IRS, including payments made for the sale of goods and services. The law requiring certain payment networks to provide forms 1099K for information reporting on the sale of goods and services does not apply to the Zelle Network®. If payments you receive on the Zelle Network® are taxable, it is your responsibility to report them to the IRS. If you have any questions about your tax obligations, please consult with a tax professional.
LEAVE A COMMENT
You must be logged in to post a comment.