PayPal to Pay $2 Million Over Botched Pandemic Tax Form Update

PayPal Holdings Inc. will pay $2 million to settle claims that it mishandled an update to its tax-reporting protocols to comply with federal pandemic-era requirements and exposed customers’ Social Security numbers, New York’s financial regulator said.

The failures at PayPal stemmed from a tax-reporting change the Biden administration put in place as part of the 2021 American Rescue Plan Act, the $1.9 trillion pandemic response measure, according to a Thursday consent order between PayPal and New York’s Department of Financial Services.

The pandemic response law changed a requirement for third-party payments platforms such as PayPal to send 1099-K forms to ...