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Zelle has determined that none of their transactions qualify under these rules: https://www.zellepay.com/faq/does-zelle-report-how-much-money-i-receive-irs http

Zelle has determined that none of their transactions qualify under these rules: https://www.zellepay.com/faq/does-zelle-report-how-much-money-i-receive-irs https://www.zellepay.com/faq/does-zelle-report-how-much-mone... For PayPal/Venmo and similar services, they are only going to report transactions classified as "goods & services."

theguyovrthere 5y ago
It took me about 3 weeks to realize that all the major banks supported Zelle... how crazy is that? And then I looked into its origins and discovered that it was all the big banks getting together to say 'hey, lets keep the money in our system' So it is not surprising to me that they probably lobbied somehow to be excluded since Zelle is a "cash replacement" sponsored by the banks.
- LorenPechtel 5y ago
  Zelle is supposed to be only a pay-your-friend system as it lacks chargeback capability and the like. Thus it's quite reasonable for it not to be involved in reporting business income--it's not supposed to be handling business income.
bmarquez 5y ago
The interesting thing is that to use Zelle, you have to have an account at a participating bank (which did stronger KYC on you when you opened your account, as opposed to Paypal/Venmo). So there wouldn't be a need to issue 1099s when authorities can contact the bank directly. Also, I would rather trust my bank than PayPal when it comes to giving out my ID or SSN. Zelle will probably become more popular in the future.
- conductr 5y ago
  > So there wouldn't be a need to issue 1099s when authorities can contact the bank directly. It's so the taxpayer is aware of what to report on their taxes and is aware of what is already being communicated. Just like a W2 employee get's a W2 so they can do their taxes. It's already been communicated to the government. As a taxpayer in our system, these documents basically serve to say "this is what the IRS knows already. When you file your taxes, you probably want to do so in a way that they can make sense of and sufficiently validates your tax payment as accurate"
- TMWNN 5y ago
  >Also, I would rather trust my bank than PayPal when it comes to giving out my ID or SSN. Zelle will probably become more popular in the future. I've switched to Zelle from Venmo for Craigslist sales, not because of this issue but because Venmo now charges a fee even when using my personal account.

theguyovrthere 5y ago

It took me about 3 weeks to realize that all the major banks supported Zelle... how crazy is that? And then I looked into its origins and discovered that it was all the big banks getting together to say 'hey, lets keep the money in our system' So it is not surprising to me that they probably lobbied somehow to be excluded since Zelle is a "cash replacement" sponsored by the banks.

LorenPechtel 5y ago
Zelle is supposed to be only a pay-your-friend system as it lacks chargeback capability and the like. Thus it's quite reasonable for it not to be involved in reporting business income--it's not supposed to be handling business income.

bmarquez 5y ago

The interesting thing is that to use Zelle, you have to have an account at a participating bank (which did stronger KYC on you when you opened your account, as opposed to Paypal/Venmo). So there wouldn't be a need to issue 1099s when authorities can contact the bank directly. Also, I would rather trust my bank than PayPal when it comes to giving out my ID or SSN. Zelle will probably become more popular in the future.

conductr 5y ago
> So there wouldn't be a need to issue 1099s when authorities can contact the bank directly. It's so the taxpayer is aware of what to report on their taxes and is aware of what is already being communicated. Just like a W2 employee get's a W2 so they can do their taxes. It's already been communicated to the government. As a taxpayer in our system, these documents basically serve to say "this is what the IRS knows already. When you file your taxes, you probably want to do so in a way that they can make sense of and sufficiently validates your tax payment as accurate"
TMWNN 5y ago
>Also, I would rather trust my bank than PayPal when it comes to giving out my ID or SSN. Zelle will probably become more popular in the future. I've switched to Zelle from Venmo for Craigslist sales, not because of this issue but because Venmo now charges a fee even when using my personal account.