If you have kids in youth sports, you may want to touch base with the treasurer. We’re in the midst of tax year 2024, so it’s best to understand the ramifications of the IRS’s new Form 1099-K reporting threshold for third-party platform payments before the next filing.
Some organizations look to save money by avoiding fees, and many of them deploy a trick that carries tax liabilities. This occurs when an organization takes advantage of payment apps like Venmo, CashApp, etc. Too often, an administrator will attach the organization’s bank account to his or her personal account on the payment app. If the treasurer is using this to collect registration fees, that’s a lot of money going through a personal account. This bad advice is often shared on social media and in message forums.
Personal payment app accounts are often set up with an individual’s SSN (social security number) and not the organization’s EIN (employer identification number). This means the IRS may pursue tax liabilities on the individual for a substantial sum.
One Pop Warner league has been diligent in getting ahead of this issue; they are advising:
- Revisit Payment Application: Conduct a thorough review of all payment apps associated with your program.
- Detach Personal SSNs: If a personal SSN is linked to any app used for association transactions, remove it without delay.
- Consult Your Bank: Engage with your financial institution to transition into a business account linked to the organization’s EIN. Zelle is one such service that facilitates this connection with many banks.
These precautions may prove critical to ensure the integrity and accountability of your organization.