The 1099-K Rollback and the Data Payment Apps Kept
Congress reset the 1099-K threshold to $20,000 in July 2025, but the SSN and financial data payment apps collected during years of uncertainty remains.
For freelancers and gig workers who receive payments through PayPal, Venmo, or Cash App, the past four years brought a rolling series of IRS announcements about when, and whether, those platforms would start reporting their income to the government at much lower dollar amounts than before. Each announcement triggered new requests from the apps for personal identifying information, including Social Security numbers. Then in July 2025, Congress permanently reversed course and reset the reporting threshold back to $20,000. The announcements stopped. The data that had been collected didn’t go anywhere.
The threshold history
The 1099-K is the form that third-party payment processors send to the IRS when they’ve processed payments above a reporting threshold. Before 2021, that threshold was $20,000 in gross payments and at least 200 separate transactions in a year. A freelancer receiving $15,000 through PayPal wouldn’t generate a 1099-K at all. Payment platforms didn’t need to identify most users for tax reporting purposes because most users were below the threshold.
The American Rescue Plan Act of 2021 changed that by lowering the threshold to $600, with no transaction minimum. Under that rule, a freelancer receiving even a few hundred dollars through Venmo for a small gig would trigger a 1099-K filing. For platforms to comply, they’d need to know who their users were: legal name, address, and taxpayer identification number. That meant asking a lot more users to verify their identity.
The $600 rule was scheduled to take effect for tax year 2022. The IRS, citing administrative complexity, delayed it. Then delayed it again for 2023. Set a transitional threshold of $5,000 for tax year 2024. Planned $2,500 for tax year 2025. Throughout all of this, payment platforms operated under genuine uncertainty about which users would need 1099-Ks and at what dollar level. The cautious approach was to collect tax identification information from anyone who might clear any of the anticipated thresholds, because the alternative was a compliance failure if the threshold dropped further than expected.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law. Section 70432 of that act reinstated the original $20,000 and 200-transaction reporting threshold, retroactive to 2022, as the IRS confirmed in updated FAQs published on its newsroom. The IRS and tax law firms including Littler and Avalara confirmed the change in their analyses. For freelancers receiving payments in 2025, the operative threshold is $20,000. Most won’t generate a 1099-K at all.
How platforms collected your information
The mechanics of how payment apps request tax information are worth understanding because they’re designed around compliance pressure.
PayPal and Venmo, both operated by PayPal Holdings, ask users to provide a taxpayer identification number (SSN, EIN, or ITIN) when their payments approach the platform’s anticipated reporting threshold. This is documented in PayPal’s and Venmo’s current help pages, which specify that users who approach the threshold will receive requests to confirm their tax identity. This isn’t optional from the platform’s standpoint: if a user doesn’t provide a tax ID and their payments exceed the threshold, the platform is required to withhold 24% of those payments for backup withholding and send that amount directly to the IRS.
Backup withholding is the mechanism that makes identity verification hard to refuse. A freelancer earning $8,000 through PayPal in a year, uncertain about whether the IRS threshold would drop to $2,500 or $600, faced a clear incentive: provide the SSN now or risk having PayPal hold nearly a quarter of every payment once the threshold was crossed. Most users who received these prompts provided their SSN.
Under the $20,000 threshold that the One Big Beautiful Bill reinstated, many of those users were never going to generate a 1099-K anyway. But the identity verification process played out before the threshold was settled. PayPal’s and Venmo’s own documentation confirms that tax identification information provided by users is stored in their accounts. Platforms don’t automatically purge tax records when regulatory thresholds change. The data persists.
Zelle occupies a different position. Because Zelle operates as a direct bank-to-bank transfer network rather than a third-party settlement organization, it’s exempt from the 1099-K reporting requirement entirely. A freelancer receiving any amount through Zelle won’t trigger a 1099-K. Cash App sits in an intermediate position: peer-to-peer payments tagged as personal transactions are treated differently from payments received for goods and services.
What payment apps do with your data beyond 1099-K reporting
The 1099-K question concerns IRS reporting. What payment platforms know about you and what they do with it are separate questions.
These platforms have detailed records of your full transaction history, the people who sent you money and received it from you, the notes attached to those payments, your device identifiers, and in some cases your location at the time of transactions. This data is valuable for fraud detection, internal credit scoring models, and targeted financial product offers. PayPal’s privacy policy permits using transaction and behavioral data to create personalized product experiences, offer additional financial services, and share information with business partners in contexts the policy specifies.
Venmo’s social transaction feed adds another layer. By default, Venmo transactions are visible to the sender’s and recipient’s contacts. Many users don’t realize this setting exists, let alone that it exposes their payment activity. Turning it off requires navigating to privacy settings and changing the default from “Friends” to “Private” for past and future transactions. The social design of the product means that transaction data flows beyond just the two parties involved unless users actively intervene.
The 2022-to-2025 period of threshold uncertainty is particularly worth noting. During the months when $600 seemed like it might actually become the rule, many freelancers received in-app prompts to confirm their tax identity on platforms they used for ordinary expenses alongside business payments. The apps couldn’t cleanly separate personal from commercial use without user input, and the compliance pressure led to broader identity data collection than the current $20,000 threshold would require.
What to do with the data these apps already have
The most straightforward step is checking your privacy settings on each payment app you use. PayPal’s privacy center allows you to review what data is collected, request a copy of your data, opt out of certain marketing uses, and in some cases request deletion. Venmo has similar settings, though they’re less prominently surfaced. Cash App’s privacy settings are available under the account menu.
These settings don’t erase your transaction history, and they don’t affect the tax-related data platforms retain for legal compliance purposes. What they can do is limit how your history is used for marketing, third-party sharing for financial product offers, and behavioral profiling. If you haven’t reviewed these settings since creating your account, it’s worth spending 10 minutes doing so now.
For managing which transactions generate compliance obligations going forward, keeping business payments and personal payments on separate platforms, or at least in separate accounts where the platform allows it, makes it easier to track what counts toward the $20,000 threshold and what doesn’t. A freelancer who uses Venmo for splitting dinner and for receiving client payments is creating a situation where both categories of activity are visible to the same compliance machinery.
The W-9 question sits adjacent to all of this. When a client asks you to provide a W-9 for direct payments outside of any app platform, they’re asking for a document containing your full SSN and signature. The One Big Beautiful Bill also raised the 1099-NEC and 1099-MISC reporting thresholds from $600 to $2,000, starting with payments made in calendar year 2026. That change means fewer clients will be required to file 1099-NECs for smaller contractor payments, but clients who request a W-9 upfront often retain the form regardless of whether the annual total reaches the threshold.
A W-9 sent by email travels as an unencrypted attachment containing your Social Security number. That’s worth thinking carefully about. For clients who use document portals or e-signature workflows, the question is what those platforms do with the signed form after it’s submitted. For W-9s and other tax forms you fill out and sign, using a tool that processes the document locally means the signed copy doesn’t pass through a separate service’s servers before reaching your client. Signegy handles that locally in the browser; macOS Preview and LibreOffice do the same. The signed form still travels to your client, but it doesn’t accumulate an additional copy in a signing platform’s storage.
Where things stand
The One Big Beautiful Bill’s 1099-K change is a meaningful administrative simplification for most gig workers. The $600 threshold, had it taken effect, would have generated compliance burdens for both platforms and freelancers at a scale the system wasn’t prepared for, and the years of threshold uncertainty made planning genuinely difficult.
The data question that runs alongside the tax question is less resolved. Payment platforms now hold identity and transaction data from many users who, at the current $20,000 threshold, will never generate a 1099-K. The data exists in those accounts unless a user specifically requests deletion, and even then, legal retention obligations apply to some records.
The IRS reporting threshold is now settled. Your data posture on these platforms doesn’t have to wait for the next announcement to be worth reviewing.