![]() ![]() And although the IRS provides guidance for avoiding scams during tax season and throughout the year, the agency isn’t able to help a small business owner if they fall victim to someone who is pretending to be a payment service like PayPal, Venmo, Stripe, Square, and all the other companies that – at least as far as I can tell – aren’t doing a whole lot right now to warn their customers of these potential scams. So do PayPal, Apple, Square and Cash App.īut some people aren’t going to do this. Stripe, for example, offers detailed guidance for doing this. And if your business is set up to receive remittances from a payment service provider then it’s likely that the payment service provider has a direct portal on its website for you to update your company’s 1099 information. Hopefully, your payment vendor has received this information from your business already. Unfortunately, a scammer can also send a fake text or email – or millions of fake texts and emails – to small businesses that look genuine but surreptitiously divert you to a fake website that not only collects your most personal data but also can download malware into your network to be used for future attacks and mischief. They’ll come by email mostly, although some will be by text. Starting mid-year, I predict, millions of individuals and small businesses will be receiving requests from payment services they used asking to provide or update their personal information – including their social security and tax identification numbers – so that those services can comply with the new 1099 rules. “This helps us meet our obligations to the IRS and ensures that you will be able to continue using your account and access PayPal and Venmo features and services.” “You may notice that in the coming months we will ask you for your tax information, like a Social Security Number or Tax ID, if you haven’t provided it to us already, in order to continue using your account to accept payments for the sale of goods and services transactions and to ensure there aren’t any issues when these changes take effect in 2022,” PayPal said in a statement. So they will soon be reaching out to their customers for more information. They don’t want to do that and small businesses don’t want this to happen either. Unfortunately, these providers probably don’t have all the information they need about all the businesses they serve in order to properly file these forms, and if they don’t get that information, the rules say that they’re required to withhold 24% of the payment and remit to the IRS. They now have an enormous new tax reporting requirement. You may think this is a headache, but it’s nothing compared with the headache now faced by these payment providers.
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