Some small businesses see Zelle as a tax haven from the government’s updated tax rule

The news: Some gig workers and small business owners are reportedly using Zelle to dodge a tax rule that requires Cash App, PayPal, and Venmo to report users’ business payments that exceed $600 in a calendar year to the Internal Revenue Service (IRS) and provide these users with a 1099-K tax form, per Bloomberg.

Key context: A Zelle spokesperson told Bloomberg that Zelle payments are not subject to the rule because it’s a network that doesn’t hold any funds. The spokesperson noted that small businesses use Zelle because it’s attached to their bank accounts, which simplifies money management. They declined to comment on other reasons why some might use Zelle over other services.

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