New TPPP Tax Rules in Effect in 2022

Note: This summary is not a substitute for professional tax advice. Contact your lawyer or accountant with any questions!

The America Rescue Plan legislation which Congress passed earlier this year includes changes regarding reporting taxable income when that money is received using PayPal, Venmo, or other similar third-party payment processors (TPPPs). 

Why might this matter to you?

Because disc golf tournament winnings are taxable income… and more and more often, money is changing hands via TPPPs.

In summary:

1. Beginning in 2022, if you receive more than $600 in business transactions for the year, you’ll be receiving a 1099-K form from your TPPP app to account for those transactions.
2. Receiving money for reimbursements - for example, if a friend sends you money for a split bill at a restaurant - are still nontaxable transactions. But, since TPPPs may not know the specifics of your transactions, it will be possible to receive a 1099 that includes nontaxable events. In this case, you’ll need to provide an appropriate explanation when filing your taxes.
3. Similarly, it is possible to receive two 1099s for a single taxable business transaction - one from the entity that paid you, and one from the TPPP that processed the transaction. For example, you could receive a 1099 from a tournament director that covers your winnings, and one from your TPPP app at year end, both referencing the same money. Again, you’ll need to provide an appropriate explanation when filing your taxes.

The bottom line is, assuming tournament directors and players have already been properly documenting payouts for taxation purposes, nothing changes… except the possible complication of receiving additional tax documents from TPPPs, which may require some extra work next tax season.