A tax reporting change will affect how payment apps like Paypal must report their user’s business transactions.

The American Rescue Plan, signed into law earlier this year, implemented a tax reporting change that affects these apps, which will go into effect on Jan. 1, 2022.

According to PayPal, the rule change means that “PayPal and Venmo will be required to provide customers with a 1099-K form if they receive $600 or more in goods and services transactions during the 2022 tax year.”

If a user’s business transactions, in aggregate, total $600 or more for the year, the payment apps will have to report the user’s business transactions to the IRS. If people are paying anyone $600 or more a year for a good or service, that is now taxable income.

A previous rule only mandated that apps like Venmo and Paypal had to send the IRS a 1099-K form if an individual account had 200 transactions a year and if those transactions resulted in combined gross payments that totaled $20,000.

The new rule does not change anyone’s current tax responsibilities as an employee or an employer as far as payments for goods and services go. Friends sending friends money to cover a night out, which is how people often use these apps, will not be taxable under the new rule.

Ideally, anyone using apps in this manner should already be reporting their taxable income even if they make them on these apps, but that is not the case for everyone. Scott Talbott, a spokesman for the Electronic Transaction Association, told CNN that the new rule applies to “those who are tax evaders, who violated the self-reporting rules and utilized the old thresholds to avoid paying taxes.”

Now, Paypal, which recently acquired Venmo, and similar apps must decide how they want to proceed under the new guidelines and how they will go about making sure they and their users adhere to these new rules.