S.1375 - Stop the Nosy Obsession with Online Payments Act of 2025; SNOOP Act of 2025 (119th Congress)
Summary
S.1375, the Stop the Nosy Obsession with Online Payments Act of 2025 (SNOOP Act of 2025), aims to amend the Internal Revenue Code of 1986. It seeks to reinstate the exception for de minimis payments by third-party settlement organizations, specifically regarding returns related to payment card and third-party network transactions. This exception was in effect before the enactment of the American Rescue Plan Act.
The bill proposes that third-party settlement organizations only report information if the amount exceeds $20,000 and the number of transactions exceeds 200. It also addresses the application of this de minimis rule to backup withholding, ensuring that payments are treated as reportable only when the aggregate transactions exceed the specified thresholds.
The bill was introduced in the Senate on April 9, 2025, by Mr. Hagerty and referred to the Committee on Finance.
Expected Effects
The primary effect of this bill would be to revert the reporting requirements for third-party payment processors back to pre-American Rescue Plan Act levels. This means fewer individuals and businesses would receive 1099-K forms for online transactions.
This change could reduce the administrative burden on both payment processors and taxpayers. It could also decrease the number of individuals who need to report small online earnings to the IRS.
Potential Benefits
- Reduced Reporting Burden: Fewer individuals and small businesses will be required to report small online transactions, simplifying tax filing.
- Decreased Administrative Costs: Payment processors will have reduced compliance costs due to the higher reporting thresholds.
- Increased Privacy: Less data will be automatically reported to the IRS, enhancing the privacy of small online transactions.
- Economic Activity: May encourage more online transactions by reducing the perceived burden of tax reporting.
- Simpler Tax Compliance: Makes it easier for individuals with occasional online sales to comply with tax laws.
Most Benefited Areas:
Potential Disadvantages
- Potential for Tax Evasion: Higher reporting thresholds could create opportunities for individuals to underreport income from online transactions.
- Reduced Tax Revenue: The IRS may collect less tax revenue due to decreased reporting of smaller transactions.
- Complexity in Enforcement: It may become more difficult for the IRS to track and audit online income, potentially leading to increased non-compliance.
- Fairness Concerns: Some may argue that it creates an uneven playing field, where small online sellers have less stringent reporting requirements compared to traditional businesses.
- Unintended Consequences: The change could lead to unforeseen issues in tax administration and compliance.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the US Constitution, particularly Article I, Section 8, which grants Congress the power to lay and collect taxes. The specific adjustments to the tax code fall within the scope of congressional authority.
There are no apparent infringements on individual rights or liberties as defined by the Bill of Rights. The changes primarily concern the administrative aspects of tax reporting, rather than fundamental constitutional principles.
However, the potential impact on tax revenue and fairness could raise questions about the government's ability to "promote the general Welfare," as stated in the Preamble of the Constitution.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).