II 

117TH CONGRESS 

2D SESSION S. 3840 

To amend the Internal Revenue Code of 1986 to increase the threshold 

for the de minimis exception for information reporting by third party 

settlement organizations. 

IN THE SENATE OF THE UNITED STATES 

MARCH 15, 2022 

Ms. HASSAN (for herself and Ms. SINEMA) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to increase 

the threshold for the de minimis exception for information reporting by third party settlement organizations. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Cut Red Tape for On5 line Sales Act’’. 


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•S 3840 IS

1 SEC. 2. MODIFICATION OF DE MINIMIS THRESHOLD FOR 

2 INFORMATION REPORTING BY THIRD PARTY 

3 SETTLEMENT ORGANIZATIONS. 

4 (a) IN GENERAL.—Section 6050W(e) of the Internal 

5 Revenue Code of 1986 is amended by striking ‘‘exceed 

6 $600’’ and inserting ‘‘equal or exceed $5,000’’. 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to returns for calendar years begin9 ning after December 31, 2021. 

10 SEC. 3. APPLICATION OF BACKUP WITHHOLDING WITH RE11 SPECT TO THIRD PARTY NETWORK TRANS12 ACTIONS. 

13 (a) IN GENERAL.—Section 3406(b) of the Internal 

14 Revenue Code of 1986 is amended by adding at the end 

15 the following new paragraph: 

16 ‘‘(8) OTHER REPORTABLE PAYMENTS INCLUDE

17 PAYMENTS IN SETTLEMENT OF THIRD PARTY NET18 WORK TRANSACTIONS ONLY WHERE AGGREGATE FOR

19 CALENDAR YEAR IS $5,000 OR MORE.—Any payment 

20 in settlement of a third party network transaction 

21 required to be shown on a return required under sec22 tion 6050W which is made during any calendar year 

23 shall be treated as a reportable payment only if— 

24 ‘‘(A) the aggregate amount of such pay25 ment and all previous such payments made by 

26 the third party settlement organization to the 


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1 participating payee during such calendar year 

2 equals or exceeds $5,000, or 

3 ‘‘(B) the third party settlement organiza4 tion was required under section 6050W to file 

5 a return for the preceding calendar year with 

6 respect to payments to the participating 

7 payee.’’. 

8 (b) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to calendar years beginning after 

10 December 31, 2021. 

11 (c) TRANSITIONAL RULE FOR 2022.—In the case of 

12 payments made during calendar year 2022, section 

13 3406(b)(8)(A) of the Internal Revenue Code of 1986 (as 

14 added by this section) shall be applied by inserting ‘‘and 

15 the aggregate number of third party network transactions 

16 settled by the third party settlement organization with re17 spect to the participating payee during such calendar year 

18 exceeds 200’’ before the comma at the end. 

19 SEC. 4. PLAIN LANGUAGE NOTICE TO PAYEES REGARDING 

20 FORM 1099–K. 

21 (a) IN GENERAL.—Section 6050W of the Internal 

22 Revenue Code of 1986 is amended by redesignating sub23 section (g) as subsection (h) and by inserting after sub24 section (f) the following: 


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1 ‘‘(g) PLAIN LANGUAGE DESCRIPTION REQUIRED.— 

2 Every person required to furnish a written statement 

3 under subsection (f) shall simultaneously issue to the re4 cipient of such statement a plain language notice explain5 ing the contents of such statement using a Form or notice 

6 issued by the Internal Revenue Service.’’. 

7 (b) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to statements issued in taxable 

9 years beginning after the date of the enactment of this 

10 section. 

11 (c) ESTABLISHMENT OF NOTICE TO TAXPAYERS

12 WITH RESPECT TO FORM 1099–K.— 

13 (1) IN GENERAL.—Not later than 90 days after 

14 the date of the enactment of this section, the Sec15 retary of the Treasury (or the Secretary’s delegate) 

16 shall amend Form 1099–K to include, in plain lan17 guage, a notice with respect to such Form. 

18 (2) REGULATIONS AND GUIDANCE.—The Sec19 retary of the Treasury may prescribe such regula20 tions or other guidance as may be necessary or ap21 propriate to carry out this subsection. 

Æ 


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