This bill changes how payment companies report your business income to the IRS. Right now, if you receive payments through services like PayPal, Venmo, or Square, those companies have to report your transactions to the IRS if you make more than $600 in a year. This bill would raise that threshold significantly—you'd only have to be reported if you earn more than $20,000 AND complete more than 200 separate transactions in a year. So a freelancer who makes $5,000 from a few big projects wouldn't get reported, but someone who makes $25,000 from 300 small transactions would be. The bill essentially reverses a stricter reporting rule that was added during the pandemic. Additionally, the bill cuts funding for IRS enforcement activities, meaning the agency would have fewer resources to investigate tax issues and conduct audits.

BAD IRS Activities Act

Scott, Rick

Blocking the Adverse and Dramatic Increased Reliance on Surveillance Activities Act or the BAD IRS Activities 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 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. The bill rescinds unobligated funds for Internal Revenue Service enforcement activities and operations support.