I 
118TH CONGRESS 
1ST SESSION H. R. 3530 
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 
MAY 18, 2023 
Mr. PAPPAS (for himself and Mr. KILDEE) 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 orga-
nizations to $5,000, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Cut Red Tape For 
Online Sales Act’’. 
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SEC. 2. MODIFICATION OF EXCEPTION FOR REPORTING OF 
THIRD PARTY NETWORK TRANSACTIONS. 
(a) IN GENERAL.—Section 6050W(e) of the Internal 
Revenue Code of 1986 is amended by striking ‘‘exceed 
$600’’ and inserting ‘‘equal or exceed $5,000’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to returns for calendar years begin-
ning after December 31, 2021. 
SEC. 3. PLAIN LANGUAGE NOTICE TO PAYEES REGARDING 
FORM 1099–K. 
(a) IN GENERAL.—Section 6050W of the Internal 
Revenue Code of 1986 is amended by redesignating sub-
section (g) as subsection (h) and by inserting after sub-
section (f) the following: 
‘‘(g) PLAIN LANGUAGE DESCRIPTION REQUIRED.— 
Every person required to furnish a written statement 
under subsection (f) shall simultaneously issue to the re-
cipient of such statement a plain language notice explain-
ing the contents of such statement, either through using 
a Form or notice issued by the Internal Revenue Service 
or by providing a written explanation that is substantially 
similar in content to plain language on the Form or notice 
issued by the Internal Revenue Service.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to statements issued in taxable 
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years beginning after the date of the enactment of this 
section. 
(c) ESTABLISHMENT
OF NOTICE
TO TAXPAYERS 
WITH RESPECT TO FORM 1099–K.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of the enactment of this section, the Sec-
retary of the Treasury (or the Secretary’s delegate) 
shall amend Form 1099–K to include, in plain lan-
guage, a notice with respect to such Form which— 
(A) directs payees to refer to the instruc-
tions for such Form to determine if a tax re-
turn must be filed, 
(B) summarizes rules for taxability of in-
come reported on such Form, including as to 
under what circumstances— 
(i) income reported on such Form 
may be subject to tax, and 
(ii) income from personal items sold 
at a loss or for no gain may not be subject 
to tax, and 
(C) provides a reminder to participating 
payees that they may qualify for relevant small 
business deductions. 
Such notice shall be similar in form to the Notice to 
Employee included in Form W–2 (as in effect on the 
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date of the enactment of this Act) and shall also be 
issued as a stand-alone flier. 
(2) REGULATIONS AND GUIDANCE.—The Sec-
retary of the Treasury may prescribe such regula-
tions or other guidance as may be necessary or ap-
propriate to carry out this subsection. 
SEC. 4. APPLICATION OF BACKUP WITHOLDING WITH RE-
SPECT TO THIRD PARTY NETWORK TRANS-
ACTIONS. 
(a) IN GENERAL.—Section 3406(b) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new paragraph: 
‘‘(8) OTHER REPORTABLE PAYMENTS INCLUDE 
PAYMENTS IN SETTLEMENT OF THIRD PARTY NET-
WORK TRANSACTIONS ONLY WHERE AGGREGATE FOR 
CALENDAR YEAR IS $5,000 OR MORE.—Any payment 
in settlement of a third party network transaction 
required to be shown on a return required under sec-
tion 6050W which is made during any calendar year 
shall be treated as a reportable payment only if— 
‘‘(A) the aggregate amount of such pay-
ment and all previous such payments made by 
the third party settlement organization to the 
participating payee during such calendar year 
equals or exceeds $5,000, or 
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‘‘(B) the third party settlement organiza-
tion was required under section 6050W to file 
a return for the preceding calendar year with 
respect to payments to the participating 
payee.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
December 31, 2021. 
(c) TRANSITIONAL RULE FOR 2022.—In the case of 
payments made during calendar year 2022, section 
3406(b)(8)(A) of the Internal Revenue Code of 1986 (as 
added by this section) shall be applied by inserting ‘‘and 
the aggregate number of third party network transactions 
settled by the third party settlement organization with re-
spect to the participating payee during such calendar year 
exceeds 200’’ before the comma at the end. 
Æ 
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