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IRS issues tax documents for transactions over $600


Starting this month, online business owners who sell their goods and services through sites like Venmo, Etsy and Airbnb will receive tax forms if they received payments over $600. Recently, tech companies notified users of the impending changes and asked them to submit tax information, reports The Washington Post.

“Until this year, the threshold was much higher ($20,000 and 200 transactions), so it didn’t affect as many people,” Venmo said in a message to its users. “This requirement only applies to payments received for the sale of goods and services and does not apply to payments from friends and family.”

The new changes to doing business online have sparked a collective outcry on social media. The once-low threshold allowed Americans to venture into entrepreneurship; 5.4 million people started their businesses last year, according to data reported by the US Census Bureau last week, reports the Washington Post.

The changes directly conflict with President Joe Biden’s promise to tax the wealthiest Americans.

“It may be a boon for the IRS, but it’s not coming from billionaires – it’s coming from small businesses,” Sandra O’Neill, tax attorney and partner at Bowditch & Dewey, said in an interview with Bloomberg. . “Billionaires are much more difficult to prosecute. It’s much harder to go after Amazon. If you have someone making a mistake — a small business — it’s very easy to blame them.

Apps, marketplaces, and payment providers reported payments to the IRS for users who received more than 200 transactions, totaling more than $20,000 in a given year. The new $600 baseline that transpired last year is part of the US bailout the White House announced to provide relief to small businesses affected by the pandemic.

In the wake of COVID-19, service providers like hairstylists have become self-employed rather than working for commissions at established salons. They relied on PayPal Holdings Inc.’s Venmo and Block Inc.’s Cash App to accept payments, said Mary Rector, general manager of the barber community Behind the Chair.

“It adds insult to injury, knowing how long they’ve been closed and how much revenue they’ve lost,” said Rector, whose group says it includes 10 million hairdressers around the world. “These people went out on their own, they started doing house calls, they started renting chairs – that’s why Venmo became so big.”