Cut Red Tape For Online Sales Act
This bill modifies requirements for third party settlement organizations to eliminate their reporting requirement with respect to the transactions of their participating payees unless they have earned $5,000 or more. A third party settlement organization is the central organization that has the contractual obligation to make payments to participating payees (generally, a merchant or business) in a third party payment network.
The bill also requires entities that report income to to issue a plain-language description of the taxability of income reported on Form 1099-K.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7079 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 7079
To amend the Internal Revenue Code of 1986 to increase the de minimis
exception for third party settlement organizations to $5,000, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 15, 2022
Mr. Pappas (for himself and Mrs. Axne) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to increase the de minimis
exception for third party settlement organizations to $5,000, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Cut Red Tape For Online Sales Act''.
SEC. 2. MODIFICATION OF EXCEPTION FOR REPORTING OF THIRD PARTY NETWORK
TRANSACTIONS.
(a) In General.--Section 6050W(e) of the Internal Revenue Code of
1986 is amended by striking ``exceed $600'' and inserting ``equal or
exceed $5,000''.
(b) Effective Date.--The amendment made by this section shall apply
to returns for calendar years beginning after December 31, 2021.
SEC. 3. PLAIN LANGUAGE NOTICE TO PAYEES REGARDING FORM 1099-K.
(a) In General.--Section 6050W of the Internal Revenue Code of 1986
is amended by redesignating subsection (g) as subsection (h) and by
inserting after subsection (f) the following:
``(g) Plain Language Description Required.--Every person required
to furnish a written statement under subsection (f) shall
simultaneously issue to the recipient of such statement a plain
language notice explaining the contents of such statement, either
through using a Form or notice issued by the Internal Revenue Service
or by providing a written explanation that is substantially similar in
content to plain language on the Form or notice issued by the Internal
Revenue Service.''.
(b) Effective Date.--The amendments made by this section shall
apply to statements issued in taxable years beginning after the date of
the enactment of this section.
(c) Establishment of Notice to Taxpayers With Respect to Form 1099-
K.--
(1) In general.--Not later than 90 days after the date of
the enactment of this section, the Secretary of the Treasury
(or the Secretary's delegate) shall amend Form 1099-K to
include, in plain language, a notice with respect to such Form
which--
(A) directs payees to refer to the instructions for
such Form to determine if a tax return must be filed,
(B) summarizes rules for taxability of income
reported on such Form, including as to under what
circumstances--
(i) income reported on such Form may be
subject to tax, and
(ii) income from personal items sold at a
loss or for no gain may not be subject to tax,
and
(C) provides a reminder to participating payees
that they may qualify for relevant small business
deductions.
Such notice shall be similar in form to the Notice to Employee
included in Form W-2 (as in effect on the date of the enactment
of this Act) and shall also be issued as a stand-alone flier.
(2) Regulations and guidance.--The Secretary of the
Treasury may prescribe such regulations or other guidance as
may be necessary or appropriate to carry out this subsection.
SEC. 4. APPLICATION OF BACKUP WITHOLDING WITH RESPECT TO THIRD PARTY
NETWORK TRANSACTIONS.
(a) In General.--Section 3406(b) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(8) Other reportable payments include payments in
settlement of third party network transactions only where
aggregate for calendar year is $5,000 or more.--Any payment in
settlement of a third party network transaction required to be
shown on a return required under section 6050W which is made
during any calendar year shall be treated as a reportable
payment only if--
``(A) the aggregate amount of such payment and all
previous such payments made by the third party
settlement organization to the participating payee
during such calendar year equals or exceeds $5,000, or
``(B) the third party settlement organization was
required under section 6050W to file a return for the
preceding calendar year with respect to payments to the
participating payee.''.
(b) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2021.
(c) Transitional Rule for 2022.--In the case of payments made
during calendar year 2022, section 3406(b)(8)(A) of the Internal
Revenue Code of 1986 (as added by this section) shall be applied by
inserting ``and the aggregate number of third party network
transactions settled by the third party settlement organization with
respect to the participating payee during such calendar year exceeds
200'' before the comma at the end.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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