BOCA RATON, Fla. — Financial experts and the IRS are alerting business owners to a new tax rule that will change how they report business transactions received this spring through apps like Venmo, Zelle and PayPal.
“In the past few years, more and more people have asked for electronic payments, and it will be interesting whether we accept electronic payments, because now we have converted most of our payments to electronic payments,” Marshall Sklar, owner of Mizner Storall, told WPTV.
At one of his other storage locations, Sklar told WPTV, he started accepting payments from tenants through apps like Venmo and Zelle.
“I like it because it’s fast,” Sklar said. “It’s practically instant, and then I can start the transfer. If it’s through Venmo, it’s in my account within three days, and Zelle is instant.”
Back in January, a new provision in the American Rescue Package Act went into effect requiring anyone who received more than $600 in goods and services through one of the apps to report it to the IRS.
“When you get more than $600 in goods and services, tax papers are sent or filed with the IRS,” said Noah Rubin, managing director of investments at Wells Fargo Bank in Boca Raton.
Previously, the reporting requirement only applied to payments over $20,000, Rubin said.
“So, really, what they’ve done is bring it down to a lower level to be able to collect more revenue,” Rubin said. “So what’s really happening here is that the IRS is catching up to the new technology.”
The change applies only to sellers of goods and services, not to individual transactions.
“I would just highlight which transfers were above or below a certain amount, and then, I guess, my accountant and I would go over each transfer and figure out which one was for business and which was personal,” Sklar said.
It’s a bit of extra work, but Sklar told WPTV it’s worth it because the apps have changed the way he does things.
“The 3% transaction fees I save on credit card processing are probably more than enough to cover the hours it takes me to figure out what,” Sklar said.