This article includes information about tax holds and non-tax related payment holds. Continue reading for details about payment holds or click here to jump to Tax Holds.
Payment Holds
What are payment holds?
Payment holds are a common industry practice that Venmo implements to help ensure a safer environment for both buyers and sellers on our platform. As selling products and services online carries some inherent financial risk, these holds provide an easy path to resolution in the event of disputes on eligible payments. For business owners and sellers, this practice also makes it easier to return payments when there’s a need to refund a customer.
When a payment is on hold, businesses and sellers can expect funds to be available in their Venmo account (minus the business transaction fee or seller transaction fee) within 21 days or fewer.
What causes a payment to be on hold?
There are a few different reasons why your payment may be on hold. Here are a few common causes:
- You’re a new seller with Venmo or you’re an established seller but have opened a new account
- The payment you received may be considered unusual for your selling pattern
- Your account was inactive for a while
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You’re selling a product or service that can potentially cause dissatisfaction with customers
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Multiple customers reported problems or requested refunds
How will I know if my payment is on hold?
If you receive a payment that’s been placed on hold, you’ll be notified in the confirmation email for the payment. Payments that are on hold are also displayed with a small “On Hold” badge in your personal transactions feed under the “Me” tab, and you’ll see a held amount at the top that page.
My payment is on hold. What should I do?
When your payment is on hold, the money still belongs to you—it’s just temporarily on hold. Held payments are automatically released within 21 days, meaning that you’ll have access to the funds from any held payment once the hold period expires. When this happens, you’ll receive a notification in the Venmo app and via email explaining that your funds are available.
You can select any payment from your personal transactions feed under the “Me” tab to see whether it’s on hold and view additional payment details. This information is also available when viewing your statement from the web.
How can I avoid payment holds?
Selling products and services online carries some inherent financial risk. To account for this and to create a safer environment for buyers and sellers on Venmo, payment holds are automatically applied to eligible payments. Since these holds are automated, there isn’t a way to stop them from happening.
Tax Holds
What are tax holds?
Due to IRS reporting thresholds, you will need to provide Venmo with your tax information if you’re receiving payments for sales of goods and services.
To help ensure compliance with federal regulations, payments received for sales of goods and services in excess of the $600 reporting threshold will be placed on hold if we don't have your tax information. You will have an initial grace period to provide your tax ID after meeting the threshold, after which point your held payments will be subject to 24% backup withholding. You will continue to experience holds and monthly backup withholding until you provide your tax information.
If you haven’t received any payments for sales of goods and services, this won’t affect you. If you do receive these payments, we’ll let you know once you’re approaching the $600 threshold and whether any of your payments are on hold.
Learn more about what’s new for tax reporting in 2023 here.
I received a notification asking me to provide my taxpayer information. What should I do?
If you received this notification, it means that the total value of payments you’ve received for sales of goods and services on Venmo meets or exceeds IRS reporting thresholds for this kind of income.
You can provide your tax ID in your Venmo app – just follow the prompt from your Notifications page or look for Identity Verification under your Settings.
- If you already have payments on hold, you should also see a notification on the Me tab or your business profile home screen in the Venmo app
- Your “Payment details” pages will also have a button so you can “Provide tax info” if needed
Providing your tax ID ahead of time can help you avoid tax holds and backup withholding, so you can access your money faster.
Learn more about identity verification on Venmo.
Why is Venmo sending my money to the IRS? I didn’t send these payments.
If you see outgoing payments to the IRS from your Venmo account, those payments account for backup withholding due on the payments you received. You can tap on any of these outgoing payments to view additional details, including a link to the original payment you received.
Remember: You can provide your tax ID in the Venmo app to avoid backup withholding on your payments.
What is backup withholding? Why is this happening?
Backup withholding is when a portion of your payments is sent to the IRS to ensure that any tax due on those payments is paid. Without your tax ID, we’re required to send 24% of each payment you receive for goods & services to the IRS as backup withholding to cover any potential income tax due.
Remember: You can provide your tax ID in the Venmo app to avoid backup withholding on your payments.
Learn more about backup withholding on the IRS website.
I already provided my taxpayer info. Why is my payment on hold?
If you’ve already provided your taxpayer information, you may still experience payment holds for a few different reasons. Read more about payment holds and what can cause them.