Bill Overview
Title: A bill to delay the implementation of the modifications of exceptions for reporting of third party network transactions.
Description: This bill delays the implementation of a de minimis exception to the tax reporting requirements of third party network transactions for transactions not exceeding $600.
Sponsors: Sen. Capito, Shelley Moore [R-WV]
Target Audience
Population: People engaged in small business and casual sales using third-party network transactions
Estimated Size: 60000000
- Third-party payment processors are entities like PayPal, Venmo, or Stripe, which facilitate transactions between buyers and sellers.
- The existing (2023) rule is that transactions above $600 via third-party networks are reportable to the IRS, impacting taxation and financial reporting.
- The bill's delay would temporarily maintain higher thresholds from pre-existing laws, which require fewer transaction reports from small business owners and casual sellers.
- Many small business owners, independent contractors, freelancers, and individuals who engage in casual sales or gig work often use third-party payment processors.
- Delaying the implementation will affect individuals who frequently have transactions close to or exceeding $600 as it postpones their obligation for detailed reporting.
Reasoning
- The policy is targeted at individuals who participate in the gig economy or casual sales where transactions often occur through third-party payment applications such as PayPal or Venmo.
- This population is extremely common in the U.S., with millions engaged in gig work or small business activities, potentially needing to report numerous smaller transactions if the existing $600 threshold was implemented.
- The primary goal of the policy delay is to reduce the administrative and financial burden on these individuals, particularly those who are near the $600 threshold but often earn just enough from many sources to require significant paperwork under the current threshold.
- The budget limitation suggests a need for the policy to have a measurable impact without exceeding financial resources allocated, favoring solutions that bring significant relief to the majority of affected users over an extended period.
- Different profiles within this population will react differently based on their business size, transaction volume, and current financial stability; ensuring that even the least impacted groups are acknowledged provides a balanced view.
Simulated Interviews
freelance graphic designer (Austin, TX)
Age: 34 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- The delay is great because it means less hassle with taxes at the moment, giving me more time to focus on building my business without worrying about IRS notices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
rideshare driver (San Francisco, CA)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 18/20
Statement of Opinion:
- It's a relief, honestly. I'm not organized enough for more paperwork right now. It would add a lot of stress, especially around tax season.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 6 | 3 |
| Year 5 | 6 | 3 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 2 |
online boutique owner (Miami, FL)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- Any delay helps, though eventually managing those transactions will be an inevitable challenge. Still, fewer reports mean more focus on my business growth for now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
student (Detroit, MI)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 14/20
Statement of Opinion:
- The delay is great because I don’t have the skills or time to manage more tax work on top of studying and my part-time job.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 3 |
| Year 20 | 3 | 3 |
farmer (Rural community, KS)
Age: 56 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- I'm glad for the delay; it helps keep the focus on improving my farm operations instead of financial reporting intricacies.
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 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
voice-over artist (Los Angeles, CA)
Age: 48 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 16/20
Statement of Opinion:
- The delay is positive but I'm aware that the problem will resurface in a few years. Nevertheless, having fewer forms to deal with next year is a gift.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 5 | 3 |
| Year 5 | 5 | 3 |
| Year 10 | 4 | 3 |
| Year 20 | 3 | 2 |
content creator (New York, NY)
Age: 37 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- It's helpful as it stands, but I know I'll have to eventually deal with the stringent tax measures as my income increases. But a delay allows me to plan.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
software developer (Seattle, WA)
Age: 30 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 17/20
Statement of Opinion:
- This policy relief is helpful. It's demanding enough managing my main job and freelance work without the administrative burden of extra tax filings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
handyman (Norfolk, VA)
Age: 41 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 17/20
Statement of Opinion:
- It delays the inevitable but is definitely useful right now. It allows me to focus on finding new clients instead of worrying over tax forms.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
retired (Portland, OR)
Age: 60 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- For me, this delay makes ongoing sales less intimidating and maintains the simplicity of my new business venture.
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 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Cost Estimates
Year 1: $220000000 (Low: $150000000, High: $300000000)
Year 2: $220000000 (Low: $150000000, High: $300000000)
Year 3: $220000000 (Low: $150000000, High: $300000000)
Year 5: $220000000 (Low: $150000000, High: $300000000)
Year 10: $220000000 (Low: $150000000, High: $300000000)
Year 100: $22000000000 (Low: $15000000000, High: $30000000000)
Key Considerations
- Impact on IRS reporting and enforcement capabilities.
- Relief for small businesses and casual sellers from administrative burdens.
- Potential behavioral changes leading to enhanced economic activity in the gig sector.
- Historical compliance rates with previous thresholds.