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: Sen. Hagerty, Bill [R-TN]
Target Audience
Population: Individuals using third-party settlement organizations worldwide
Estimated Size: 20000000
- Third party settlement organizations facilitate payments between customers and merchants and have been impacted by the previous lowered threshold.
- The reversal to require reporting only for those earning over $20,000 or with more than 200 transactions would affect individuals or small businesses who use platforms like PayPal or Venmo for smaller-scale transactions.
- Lowering the burden on smaller transactions may encourage more peer-to-peer and small business usage of these payment platforms.
- According to industry data, there are millions of small merchants and users worldwide who rely on third-party organizations for payments.
- The American Rescue Plan had previously expanded the reporting which impacted sellers making over $600; the reversal means fewer individuals and businesses need to meet the reporting requirements.
Reasoning
- The target population for this policy includes individuals and small businesses using third-party payment services to conduct transactions, especially those earning below $20,000 or with less than 200 transactions. They would benefit from the removal of the cumbersome reporting requirements.
- The SNOOP Act affects a large demographic of relatively small online sellers and individuals, estimated at 20 million in the U.S., who are likely to see a decrease in administrative burdens, potentially impacting their wellbeing positively.
- A certain segment of the population, such as hobbyists and part-time sellers, would see a reduction in fear of unintended tax liabilities or complexities, which might boost their engagement in small-scale trading or online selling.
- This sampling aims to reflect the diversity in age, geography, occupation, and transactional activity, with people experiencing varying levels of impact based on how integral online transactions are to their livelihoods.
Simulated Interviews
Freelance Graphic Designer (Austin, Texas)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 9.0 years
Commonness: 8/20
Statement of Opinion:
- The previous reporting requirement at $600 made filing taxes more complicated and stressful. I had to pay more attention to each transaction, which was a bit overbearing.
- The SNOOP Act is a relief. I no longer have to worry about crossing the $600 mark and managing extra paperwork or unexpected taxes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 5 |
| Year 20 | 9 | 5 |
Full-Time Uber Driver (New York, New York)
Age: 49 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 6.0 years
Commonness: 7/20
Statement of Opinion:
- I'm on the edge with these services, and having to report made it awkward and a bit taxing as a side hassle. It's a bit of a weight off my mind now.
- This reform should just make it easier for me to handle taxes and focus on my primary job.
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 |
Full-Time Employee and Weekend Hobbyist (Detroit, Michigan)
Age: 26 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- The $600 rule was a bit absurd for a small-time operation like mine focused on things like refurbished goods.
- With the SNOOP Act, I can sell at my pace without the anxiety of additional tax dues.
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 |
Retired, Ebay Seller (Miami, Florida)
Age: 62 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- The extra financial paperwork was a risk of frustration in every tax cycle.
- Now, I can spend more time crafting instead of number crunching.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Social Media Influencer (Columbus, Ohio)
Age: 38 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 7.0 years
Commonness: 12/20
Statement of Opinion:
- The SNOOP Act simplifies tax scenarios for small outfits like mine.
- I can stay under the radar and manage earnings easier without increased bureaucratic requirements.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
College Student (Portland, Oregon)
Age: 22 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 18/20
Statement of Opinion:
- Even though the $600 limit was unlikely to affect me, it was always in the back of my mind.
- The SNOOP adjustment gives me clearer way on how to manage occasional sells.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Tech Consultant (San Francisco, California)
Age: 45 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- The new exceptions don't quite address my scenario as I still exceed the income limits.
- But less demand for filling forms out could shift some operational weight off as the general tide lowers.
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 |
Non-profit worker (Chicago, Illinois)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- The reporting was quite detailed for such small amounts and added to stress during tax season.
- I'm glad to have it rearranged so non-profits aren't burdened with unnecessary reporting just because we sell fundraiser tickets.
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 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Small Business Owner (Phoenix, Arizona)
Age: 40 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- Big businesses like mine still have to report, but I think some new systems under the lower limit might reduce my overall administration.
- The principle of it matters – fair to have some form of threshold.
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 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Part-Timer and Occasional Reseller (Denver, Colorado)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 13/20
Statement of Opinion:
- Reselling isn't a primary income but offered fun and bit extra cash-flow, and the threshold was worrisome.
- The SNOOP Act helps me keep it low-key, with less pressure to pull out complicated tax ensures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Cost Estimates
Year 1: $10000000 (Low: $7000000, High: $15000000)
Year 2: $10200000 (Low: $7140000, High: $15300000)
Year 3: $10404000 (Low: $7282800, High: $15606000)
Year 5: $10824300 (Low: $7568010, High: $16234500)
Year 10: $11813124 (Low: $8269187, High: $17719686)
Year 100: $35162062 (Low: $24613443, High: $52743093)
Key Considerations
- Reversal of a policy introduced a year prior may cause adjustments in tax compliance strategies.
- Simplifying reporting could incentivize growth in digital payment use among small merchants.
- Long-term effects on tax revenue must be considered in the context of compliance behavior.