Bill Overview
Title: SNOOP Act of 2022
Description: 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 more than $20,000 on more than 200 separate transactions in an applicable tax period. 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. This reverses a provision in the American Rescue Plan Act of 2021 that lowered the reporting threshold to $600 with no minimum on the number of transactions.
Sponsors: Rep. Steel, Michelle [R-CA-48]
Target Audience
Population: Individuals and small businesses using third-party payment networks worldwide
Estimated Size: 60000000
- The SNOOP Act of 2022 targets third party settlement organizations and their participating payees, which generally include merchants or businesses using these payment networks.
- By reversing the provision that lowered the reporting threshold to $600, the bill will primarily impact smaller-scale merchants and individual sellers who were subject to the lower threshold.
- The 200-transaction and $20,000 threshold can exclude many smaller players who do not meet these numbers within a year, thus potentially alleviating administrative burden for them.
Reasoning
- The SNOOP Act of 2022 alleviates the administrative burden primarily on small businesses and individual sellers using third-party payment networks like PayPal, Venmo, etc. It will particularly benefit those who conduct under 200 transactions per year and earn less than $20,000. As such participants previously needed to report transactions exceeding $600 as per the American Rescue Plan Act of 2021, the restoration of higher reporting thresholds will reduce time and resources spent on compliance, potentially leading to improved self-reported wellbeing among this group.
- The budget constraints suggest that the policy's implementation and enforcement should not be very resource-intensive. The primary area of possible public spending could be on administrative adjustments and communication strategies to ensure that impacted groups are accurately informed about the restored thresholds.
- The total budget over ten years implies substantial benefits and savings for those who no longer need to comply with lower thresholds, but these savings are spread over a vast number of people, meaning individual benefits will largely revolve around increased efficiency and reduced stress.
Simulated Interviews
Freelance Digital Artist (San Francisco, CA)
Age: 25 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- The lowered reporting threshold made me anxious because each small sale had to be considered for tax reporting. It added a lot of stress.
- Raising the threshold back will mean fewer headaches and worries about justifying my income sources.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
E-commerce Seller (New York, NY)
Age: 34 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I think this restores common sense to IRS reporting requirements. It was becoming a hassle with micro-transactions getting flagged for me to track.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Small Business Owner (Austin, TX)
Age: 42 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- This policy change would mean less administrative burden when I'm pulling transaction reports. Having high-volume, low-value sales was a nightmare to manage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Part-time Online Seller (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- Previously, tracking everything to avoid that low $600 threshold was too much for a part-time endeavor.
- This change is a great step to make things easier for occasional sellers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Musician (Portland, OR)
Age: 29 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 13/20
Statement of Opinion:
- Raising the cap back supports artistic entrepreneurship without over-burdening us with tax reporting nightmares.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Retired/Nanny (Denver, CO)
Age: 48 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 18/20
Statement of Opinion:
- It used to be worrying to have even small sales potentially affecting my tax bracket.
- This policy helps ensure that occasional sellers like me aren’t overwhelmed.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Consultant (Washington, D.C.)
Age: 55 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 12/20
Statement of Opinion:
- The change is more about peace of mind. Even though I made sure to comply, it frees up time for more productive activities.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Student (Miami, FL)
Age: 23 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 20/20
Statement of Opinion:
- This policy is great news! I really don’t have enough income from these sales to justify such close scrutiny.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
IT Specialist (Seattle, WA)
Age: 39 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 11/20
Statement of Opinion:
- Raising the thresholds is a valuable assurance that my micro-investments won't turn into paperwork overkill.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Retired Teacher (Raleigh, NC)
Age: 60 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 16/20
Statement of Opinion:
- Glad to hear that my occasional tutoring won't end up tangled in unnecessary red tape.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Cost Estimates
Year 1: $500000000 (Low: $450000000, High: $550000000)
Year 2: $520000000 (Low: $470000000, High: $570000000)
Year 3: $540000000 (Low: $490000000, High: $590000000)
Year 5: $580000000 (Low: $520000000, High: $640000000)
Year 10: $650000000 (Low: $580000000, High: $720000000)
Year 100: $1500000000 (Low: $1400000000, High: $1600000000)
Key Considerations
- The policy returns the tax reporting environment for third-party payment networks to pre-2021 standards, which was considered less burdensome for small businesses.
- The balance between easing administrative burdens and ensuring compliance with tax obligations is critical.
- Modifying the requirements could incentivize underreporting income under the new conditions.