I 

117TH CONGRESS 

2D SESSION H. R. 7079 

To amend the Internal Revenue Code of 1986 to increase the de minimis 

exception for third party settlement organizations to $5,000, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 15, 2022 

Mr. PAPPAS (for himself and Mrs. AXNE) introduced the following bill; which 

was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to increase 

the de minimis exception for third party settlement organizations to $5,000, and for other purposes. 

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 

5 Online Sales Act’’. 


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1 SEC. 2. MODIFICATION OF EXCEPTION FOR REPORTING OF 

2 THIRD PARTY NETWORK TRANSACTIONS. 

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

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

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

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

7 this section shall apply to returns for calendar years begin8 ning after December 31, 2021. 

9 SEC. 3. PLAIN LANGUAGE NOTICE TO PAYEES REGARDING 

10 FORM 1099–K. 

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

12 Revenue Code of 1986 is amended by redesignating sub13 section (g) as subsection (h) and by inserting after sub14 section (f) the following: 

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

16 Every person required to furnish a written statement 

17 under subsection (f) shall simultaneously issue to the re18 cipient of such statement a plain language notice explain19 ing the contents of such statement, either through using 

20 a Form or notice issued by the Internal Revenue Service 

21 or by providing a written explanation that is substantially 

22 similar in content to plain language on the Form or notice 

23 issued by the Internal Revenue Service.’’. 

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

25 this section shall apply to statements issued in taxable 


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1 years beginning after the date of the enactment of this 

2 section. 

3 (c) ESTABLISHMENT OF NOTICE TO TAXPAYERS

4 WITH RESPECT TO FORM 1099–K.— 

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

6 the date of the enactment of this section, the Sec7 retary of the Treasury (or the Secretary’s delegate) 

8 shall amend Form 1099–K to include, in plain lan9 guage, a notice with respect to such Form which— 

10 (A) directs payees to refer to the instruc11 tions for such Form to determine if a tax re12 turn must be filed, 

13 (B) summarizes rules for taxability of in14 come reported on such Form, including as to 

15 under what circumstances— 

16 (i) income reported on such Form 

17 may be subject to tax, and 

18 (ii) income from personal items sold 

19 at a loss or for no gain may not be subject 

20 to tax, and 

21 (C) provides a reminder to participating 

22 payees that they may qualify for relevant small 

23 business deductions. 

24 Such notice shall be similar in form to the Notice to 

25 Employee included in Form W–2 (as in effect on the 


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1 date of the enactment of this Act) and shall also be 

2 issued as a stand-alone flier. 

3 (2) REGULATIONS AND GUIDANCE.—The Sec4 retary of the Treasury may prescribe such regula5 tions or other guidance as may be necessary or ap6 propriate to carry out this subsection. 

7 SEC. 4. APPLICATION OF BACKUP WITHOLDING WITH RE8 SPECT TO THIRD PARTY NETWORK TRANS9 ACTIONS. 

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

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

12 the following new paragraph: 

13 ‘‘(8) OTHER REPORTABLE PAYMENTS INCLUDE

14 PAYMENTS IN SETTLEMENT OF THIRD PARTY NET15 WORK TRANSACTIONS ONLY WHERE AGGREGATE FOR

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

17 in settlement of a third party network transaction 

18 required to be shown on a return required under sec19 tion 6050W which is made during any calendar year 

20 shall be treated as a reportable payment only if— 

21 ‘‘(A) the aggregate amount of such pay22 ment and all previous such payments made by 

23 the third party settlement organization to the 

24 participating payee during such calendar year 

25 equals or exceeds $5,000, or 


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1 ‘‘(B) the third party settlement organiza2 tion was required under section 6050W to file 

3 a return for the preceding calendar year with 

4 respect to payments to the participating 

5 payee.’’. 

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

7 this section shall apply to calendar years beginning after 

8 December 31, 2021. 

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

10 payments made during calendar year 2022, section 

11 3406(b)(8)(A) of the Internal Revenue Code of 1986 (as 

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

13 the aggregate number of third party network transactions 

14 settled by the third party settlement organization with re15 spect to the participating payee during such calendar year 

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

Æ 


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