October 14, 2021

Since 2009, apps such as Venmo have been evolving into common payment methods for businesses and individuals. Now, peer-to-peer payment apps are gaining the government’s attention regarding unreported income. To remain compliant with the IRS, there are some things to consider if you utilize these apps for business.

Report your payment app income

Sending money to friends and family isn’t exactly what the IRS is looking for. However, if you’re a business that accepts payment through Paypal, Venmo, or the likes, you are responsible for reporting your income. P2P platforms are expected to report business transactions receiving over $20,000 in gross payment volume and over 200 separate payments. The platform will send you a copy of Form 1099-K, which is also sent to the IRS. Even if you don’t receive the form, you are still required to report taxable income.

Does your transaction raise any flags?

Generally, small transactions aren’t on the IRS radar. Splitting the bill at dinner, for instance, is not a taxable transaction. The IRS is looking for potential noncompliant cases to crack down on unreported income.

Businesses that report less income, but have large transaction records reported by P2P apps, may be at risk of being audited.

What to do if you are found noncompliant

Owing back taxes to the IRS can be a scary time for any business owner. There are options available to help your business get back into compliance and avoid future mistakes with tax returns. At Optima, we amend tax returns and help our clients stay on track with our Optima Protection Plan. You can learn more about our process for resolving tax debt here.

Contacting Optima

Contact us at 800-536-0734 for a no-obligation consultation today. Optima Tax Relief aids individuals and businesses struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.