BOCA RATON, Fla. — Finance experts and the IRS are reminding business owners about a new tax rule that will change how they report business transactions received through apps like Venmo, Zelle and PayPal this spring.
"Over the past few years, a lot more people are asking for electronic payments and do we accept electronic payments, and it's funny because now we've converted most of our payments to only electronic," Marshall Sklar, owner of Mizner Storall, told WPTV.
At one of his other storage locations, Sklar told WPTV, he's started accepting payments from tenants through apps like Venmo and Zelle.
"I love it because it's quick," Sklar said. "It's literally instantaneous and then I can initiate 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 Plan Act went into effect requiring anyone who receives more than $600 of income in goods and services through one of these apps to report it to the IRS.
"There will be tax documents sent out or filed with the IRS when you have goods and services income over $600," Noah Rubin, managing director of investments at Wells Fargo in Boca Raton, said.
Rubin said that, previously, the reporting requirement only applied to payments of more than $20,000.
"So, really, what they're doing is they're just bringing it down to a lower level to be able to collect more revenue," Rubin said. "So really what's going on here is the IRS is catching up with new technologies."
The change only applies to sellers of goods and services, not to personal transactions.
"I'll just highlight which transfers were over or under a certain amount and then, I'm guessing, my accountant and I will go through each transfer and figure out which one was for business, which one was personal," Sklar said.
It's a little extra work, but Sklar told WPTV it's worth it because these apps have transformed on how he does.
"The 3% transaction fee that I'm saving on credit card processing probably pays for the few hours it's going to take me to figure out what was what," Sklar said.