HR-1882-119
Referred to the House Committee on Ways and Means.
Sponsored by Carol Miller (R-WV)
What it does
This bill would reverse a change made by the 2021 American Rescue Plan Act that lowered the threshold at which payment platforms (such as PayPal, Venmo, Cash App, and eBay) must report user transactions to the IRS. It would restore the prior rule requiring reporting only when a user receives more than $20,000 and conducts more than 200 transactions in a year. The bill would also align backup withholding rules so that platforms are only required to withhold taxes on payments that meet this same higher threshold.
Who benefits
Gig economy workers (freelancers, rideshare drivers, delivery workers, online sellers) who receive payments through third-party platforms and earn below $20,000 annually. Casual sellers on platforms like eBay, Etsy, or Facebook Marketplace who sell personal items at a loss and would otherwise receive IRS forms. Small business owners who use payment apps. Payment platforms such as PayPal, Venmo, and Cash App, which would face reduced compliance and administrative costs. Tax preparers who serve lower-income clients confused by new 1099-K forms.
Who is hurt
The federal government would forgo tax revenue from income that goes unreported when the threshold is higher. Taxpayers who fully comply with current law may bear a relatively larger share of the overall tax burden. IRS enforcement efforts targeting underreported gig economy income would be weakened. Tax software companies that built systems around the lower threshold may face adjustment costs.
Supporters argue
Supporters argue that the American Rescue Plan's $600 threshold created widespread confusion and compliance burdens for millions of Americans who are not actually evading taxes — including people who sold used personal items at a loss, split bills with friends, or earned modest side income. They contend that the IRS itself delayed enforcement of the new rule multiple times, acknowledging the administrative chaos it caused, and that restoring the $20,000/200-transaction threshold targets reporting at those most likely to have significant unreported income rather than burdening casual users with unnecessary paperwork.
Opponents argue
Opponents argue that the $600 threshold was specifically designed to close a well-documented tax gap in the gig economy, where underreporting of self-employment income is estimated by the IRS to cost billions in lost revenue annually. They contend that the $20,000/200-transaction threshold is so high that it exempts the majority of gig workers from any reporting requirement, effectively allowing a large category of taxable income to go unverified — and that the compliance burden argument could apply equally to any tax reporting requirement.
Constitutional context
This bill amends existing tax reporting requirements under the Internal Revenue Code. No significant constitutional issues are raised — Congress has broad authority to set tax reporting thresholds under the Taxing and Spending Clause (Art. I, §8, cl. 1), and the bill originates in the House consistent with the Origination Clause (Art. I, §7, cl. 1).
Checks and balances
Congress sets the reporting threshold through statute; the IRS implements and enforces the rules administratively; taxpayers may challenge specific IRS enforcement actions through the Tax Court system.
Historical precedent
The $20,000/200-transaction threshold was the original standard established under the Housing Assistance Tax Act of 2008, which first created the third-party payment reporting requirement under IRC §6050W; this bill would restore that original framework.