Also loans between private individuals, or even between family members, must be traced to protect themselves in the eyes of the IRS: PEC solves the problem
In everyday life it may happen to be in economic difficulties and a relative or a friend may offer to help you. In order not to incur penalties or audits by the IRS, even loans between private individuals must be traced or certified through a private writing that can be validated through PEC.
One of the measures of the tax reform came into force as of July 1, 2020 and sets at 2,000 euros the maximum threshold for the use of cash. So if a parent wants to lend money to their child to buy a new car, or to a friend to start a business, these transactions will have to be tracked to avoid problems with the Inland Revenue. The simplest solution is to draw up a private contract in which the parties establish the amount and the modalities of the loan or donation.
The document, however, must be certified with a date and there are many ways to validate it in the eyes of the IRS. Among the simplest, we find the sending of a registered letter or even better the use of certified mail, which has the same legal value and can be used by the parties to protect themselves in case of tax audits emerged from the Redditometro.
For example, opening an address of Certified Electronic Mail with Libero Family PEC you pay only 14.99 euros per year and you have 1GB to save e-mails and all attachments sent and received.
Loan between individuals, what is it and how it works
With the new regulations on loans, even the exchange of money between individuals can attract the attention of the IRS. In order to avoid nasty surprises and penalties, it becomes necessary to perform the transaction in the manner prescribed by law: the limit of cash is set at 2,000 euros, while for higher amounts it is necessary to use transfer or non-transferable check. In addition, no matter if the loan is between family members or friends, it is still necessary to draw up a private agreement that establishes how much money is granted and how, what are the reasons for the loan and how it will eventually be returned to the creditor.
A private agreement is therefore a real contract between the two parties, which can protect them especially in case of verification by the Inland Revenue. Even if the money is not lent but donated, it is always necessary to trace the transaction to avoid problems with the IRS, which could investigate a possible illegal activity of money laundering.
PEC, how to protect yourself in a loan between individuals
The first thing to do when making a loan between family members or between individuals, is to respect the limit of 2,000 euros in case of cash transaction, or to use a form of payment that is traceable. In the case of a bank transfer rather than a check, it is advisable to include in the reason for the transaction, such as “loan for economic difficulties” or “car loan”. Or even using the wording “non-interest bearing loan” if there is no interest on the amount paid.
The second step to follow is the drafting of a private agreement that will then be validated in different ways, including registration at the Revenue Office, in case of large amounts. Or by going in person to the post office to ask for the date to be affixed to the document or send a registered letter with return receipt.
The validation can also be done from home through special paid online services, or more simply by sending a PEC between the two parties, for example using the service Libero Family PEC. The Certified Electronic Mail, is on the other hand the digital version of a registered letter, and can be used not only in the case of loans between family members, but on any occasion where you need to certify the date of a document or send an official communication that has legal value. Once the validation has been carried out in one of these ways, you will be able to provide the loan between individuals or the donation without the risk of incurring penalties or audits by the IRS.