Over 75% of consumers use payment service apps. And if you’re part of the growing percentage of small businesses (23% in 2019, to be exact) that accept peer-to-peer (P2P) payments, you should know about the IRS cash app reporting rules—and how they’ve changed over the past few years.
So, what exactly is a P2P transfer? What are the current P2P reporting rules, and how do they impact your business? Read on for the scoop.
What is a P2P transfer?
The payment method game is always changing. First, there was cold hard cash. Then came plastic. Now, there are a number of digital payment options available, including peer-to-peer money transfers (also called third-party network transactions).
Consumers and businesses send these money transfers directly from their bank account, debit card, or credit card through a P2P app. P2P apps are also called payment service apps, payment apps, and cash apps.
Common P2P platforms you can use to transfer money digitally include:
- Apple Pay
- Cash App
- PayPal
- Venmo
The company (e.g., PayPal) that sends the money is known as the “third-party settlement organization.” The third-party settlement organization is responsible for reporting certain business P2P transfers to the IRS.
Zelle is another popular money transferring system. But according to their website, “Zelle® does not report any transactions made on the Zelle Network® to the IRS.”
Current cash app reporting rules
Businesses that make certain payments (e.g., nonemployee compensation) typically prepare a 1099-NEC or 1099-MISC to report the payment. Likewise, businesses, freelancers, or other self-employed individuals who receive 1099 payments receive a 1099 form. But, that’s not the case with cash app payments.
If your business sends or receives money via P2P transactions, you are not responsible for reporting the transfers to the IRS on a 1099. Instead, the responsibility goes to third-party settlement organizations.
Third-party settlement organizations report qualifying business P2P payments on Form 1099-K, Payment Card and Third Party Network Transactions. The organization sends copies of Form 1099-K to the IRS, the state tax department, and the payee and keeps a copy for their records. Form 1099-K has a deadline of January 31 each year.
Third-party settlement organizations only report payments on Form 1099-K if both of the following conditions are met:
- The gross amount of goods or services transactions exceeds $20,000
- The aggregate number of transactions exceeds 200
So if you’re on the receiving end of cash app payments, you will only get a Form 1099-K if you meet both of the above thresholds. But depending on how closely you followed tax news over the past few years, these rules may sound like déjà vu. Here’s a quick rundown of how the threshold changed—and changed back.
How the cash app reporting rules changed (and changed back)
The American Rescue Plan, which was signed into law on March 11, 2021, lowered the cash app tax reporting threshold from $20,000 to $600 and eliminated the 200-transaction minimum, beginning with tax year 2022. However, the IRS delayed the $600 threshold several times and instead phased in lower thresholds—$5,000 for tax year 2024, with $2,500 planned for 2025.
Then in July 2025, the One Big Beautiful Bill Act retroactively repealed the lower thresholds altogether. The federal threshold for P2P reporting is back to over $20,000 and more than 200 transactions—as if the $600 rule never took effect.
Keep in mind that cash app reporting rules only apply to transactions that are for goods or services. Personal transfers—like splitting dinner with friends or sending a family member a birthday gift—do not count toward the threshold.
Long story short: If your goods or services sales through a P2P platform exceed $20,000 and 200 transactions in a calendar year, you should receive Form 1099-K from the third-party settlement organization by January 31 of the following year. And heads up—platforms can voluntarily send a 1099-K even if you’re below the federal threshold, and some states have lower reporting thresholds of their own.
Why did the rules change back?
Congress originally lowered the threshold to $600 so the IRS would receive more information about income earned through cash apps. Some businesses or sellers who receive money through cash apps may not have been reporting all of their income.
But the $600 threshold drew criticism for sweeping up casual sellers and personal transactions, and the IRS delayed it multiple times before Congress repealed it in 2025. One thing hasn’t changed, though: Your business income is taxable whether or not you receive a Form 1099-K. Report all of your income on your tax return, even if a platform doesn’t send you a form.
How do these changes affect you?
Again, businesses are not responsible for reporting P2P money transfers on Form 1099-K. The platform you use to transfer money (e.g., Venmo) is responsible.
So, how exactly do the reporting rules impact you? You will receive a Form 1099-K from each cash app where your goods and services payments exceed $20,000 and 200 transactions for the year.
Let’s say you receive $25,000 across 300 goods and services transactions on Venmo and $22,000 across 250 transactions on PayPal. You would receive two separate 1099-K forms (one from each platform) reporting your annual transaction amounts.
Here are a few tips to keep in mind:
- Open separate P2P accounts for business and personal use to make reporting easier
- Be ready to provide your taxpayer identification number (e.g., Employer Identification Number) to the cash app so they can report it on Form 1099-K
- Keep detailed records of your own to compare to the information you receive on Form 1099-K
- Easily track all money going in and out of your business
- Make unlimited payments to vendors
- Generate financial reports
