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What I think is surprising about this legislation is apparently Zelle is not required to do the same reporting threshold. https://www.zellepay.com/faq/does-zell
by bcx 4y ago
What I think is surprising about this legislation is apparently Zelle is not required to do the same reporting threshold.
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...
So IMO, this set up is almost entirely an anti-fintech play by big banks.
It does seem like there is a way to flag personal verses business transactions as in the FAQ, https://www.irs.gov/payments/form-1099-k-frequently-asked-questions-individuals https://www.irs.gov/payments/form-1099-k-frequently-asked-qu... -- gifts and splitting meals should not be classified as 1099-k income.
I imagine the net impact is more folks will want to get paid via Zelle, to avoid the hassle.
Academically, It would be interesting to know who decided Zelle didn't need to be reported, while Venmo/Paypal did need to start reporting everything.
- Kye 4y agoMy uninformed speculation is that Zell wasn't affected because it's first-party (run by the banks themselves) and not affected by a reporting requirement for third-party payment processors. It's probably not much more than a front-end for ACH.
- bcx 4y agoI thought by this point PayPal would be "a bank", however (https://www.paypal.com/us/digital-wallet/manage-money/start-saving#:~:text=PayPal%20is%20a%20financial%20technology,required%20to%20use%20PayPal%20Savings https://www.paypal.com/us/digital-wallet/manage-money/start-....) Clearly states "PayPal is a financial technology company, not a bank. Banking services provided by Synchrony Bank, Member FDIC. PayPal Balance account is required to use PayPal Savings." So maybe part of this legislation is some sort of attempt to have these payment processor "pseudo banks" have to be more like real banks and deal with banking regulation.