6 ms·

From a code/business standpoint this absolutely makes things easier to report on personal transactions. My point was the thing stopping Venmo from reporting on

From a code/business standpoint this absolutely makes things easier to report on personal transactions. My point was the thing stopping Venmo from reporting on your personal transactions is not technical. As soon as the government tells them they need to report, they will comply. Your second point is possible, but I don't see how this move really gets us closer to that, other than providing data that could be used to make the argument. How is this different than the transition to requiring online transactions to charge sales tax?

BitwiseFool 5y ago
>"How is this different than the transition to requiring online transactions to charge sales tax?" The biggest difference is that we are dealing with a federal entity. When it comes to state sales taxes, that payment is handled by the merchant and I personally don't need to file a return with the City/State/County documenting my transactions and sending a payment or asking for a refund. The businesses themselves need to do this, and that is not unreasonable for a business. The other difference is that the IRS' system of voluntary compliance is essentially a reconciliation of our own record book and the records that have been submitted to them. They usually match because the average person just pays income tax and that is handled by W-2's and employer withholding. When Venmo, Paypal, and Zelle report that you've done over $600 in transactions, they now have cause to ask you if you should have been paying any capital gains on those transactions. That also requires bookkeeping that you have probably never kept track of. As you probably never bothered to save the receipt on that couch you bought 10 years ago and just sold. Here is one other scenario, let's say I loan a friend $600 through Venmo. The IRS will only know the amount of the transaction, not the context. If I get audited and tell them it was a loan with no contract, will the IRS accept that as proof it was a temporary loan and not a gift? Will they suspect I actually bought drugs? And so on. While the IRS has a record of all transactions, they will want to know what kind of transactions were occurring and will want to know why the numbers in your 1040 don't match what they are expecting from you.

BitwiseFool 5y ago

>"How is this different than the transition to requiring online transactions to charge sales tax?" The biggest difference is that we are dealing with a federal entity. When it comes to state sales taxes, that payment is handled by the merchant and I personally don't need to file a return with the City/State/County documenting my transactions and sending a payment or asking for a refund. The businesses themselves need to do this, and that is not unreasonable for a business. The other difference is that the IRS' system of voluntary compliance is essentially a reconciliation of our own record book and the records that have been submitted to them. They usually match because the average person just pays income tax and that is handled by W-2's and employer withholding. When Venmo, Paypal, and Zelle report that you've done over $600 in transactions, they now have cause to ask you if you should have been paying any capital gains on those transactions. That also requires bookkeeping that you have probably never kept track of. As you probably never bothered to save the receipt on that couch you bought 10 years ago and just sold. Here is one other scenario, let's say I loan a friend $600 through Venmo. The IRS will only know the amount of the transaction, not the context. If I get audited and tell them it was a loan with no contract, will the IRS accept that as proof it was a temporary loan and not a gift? Will they suspect I actually bought drugs? And so on. While the IRS has a record of all transactions, they will want to know what kind of transactions were occurring and will want to know why the numbers in your 1040 don't match what they are expecting from you.