Home topics news Image Credit: Kelly Sikkema News Small Business News US Internal Revenue Service tweaks tax reporting requirements. How will it impact SMEs? Yajush Gupta January 4, 2022 The Internal Revenue Service, the federal agency in the United States in charge of tax collection, will now directly look into the digital payment service accounts of American small businesses. This policy change will primarily affect business owners who use third-party payment network providers. Under the new rule, payments of $600 or more made through third-party payment networks must now be reported to the IRS. “The change broadens the scope of reporting such that all TPSOs need to collect tax information once you near or reach $600 in goods and services transactions instead of the prior threshold of $20,000 and 200 transactions,” PayPal said in a blog post. “This change impacts every financial institution and TPSO that you might use to transact for goods and services, not just PayPal and Venmo. This includes your bank accounts and other ways you send and receive money.” The move is aimed at cracking down on payments made through third-party apps like Venmo, Cash App, Zelle, or Paypal and ensuring that those who use the third-party payment networks pay their fair share of taxes. The new tax reporting requirement will apply to tax returns filed in 2022, as well as those filed in 2023. Beginning Jan. 1, 2022, third-party payment networks are required to send users Form 1099-K for transactions made by mail or electronically.