IPA Argues On-Demand Pay Tax Proposal is Unfair to Businesses

The Innovative Payments Association (IPA) is writing to the Department of the Treasury to comment on the President's 2025 Budget Proposal regarding on-demand pay (ODP). The IPA argues that the Proposal's definition of ODP is inaccurate and that the Proposal would create a significant administrative burden for businesses. The IPA also argues that the Proposal would not have a significant impact on tax revenues.

The IPA recommends that the Treasury Department revise the Proposal to reflect a more accurate description of the current ODP marketplace and to acknowledge that the vast majority of ODP arrangements are offered by third-party providers. The IPA also recommends that the Treasury Department clarify that disbursements made via a third-party ODP provider should be excluded for tax purposes at the time of their disbursement.
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Overall, the IPA is concerned that the Proposal would make it more difficult for businesses to offer ODP to their employees. The IPA believes that ODP is a valuable tool that can help employees manage their finances and avoid costly payday loans.

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