Stop the Nosy Obsession with Online Payments Act of 2023 or the SNOOP Act of 2023 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 reversion of the reporting thresholds is significant, as it reinstates higher limits that were previously set before the American Rescue Plan Act lowered them to $600, removing any minimum transaction requirement. Proponents of HB488 argue that these changes are necessary to reduce regulatory burdens on small businesses and individuals, who may have been adversely affected by the previous lower thresholds that increased the complexity of tax reporting for minimal financial activity. This bill, if enacted, will likely result in decreased reporting obligations for numerous small businesses across the nation.
House Bill 488, also known as the 'Stop the Nosy Obsession with Online Payments Act of 2023' or the SNOOP Act, seeks to amend the Internal Revenue Code of 1986 by repealing recent changes made by the American Rescue Plan Act of 2021. Specifically, it targets the reporting requirements imposed on third party settlement organizations, which are entities responsible for processing payments on behalf of participating payees. Under the proposed legislation, these organizations would only be required to file reports regarding a payee's transactions if the total value exceeds $20,000 and the number of transactions exceeds 200.
While supporters claim that HB488 simplifies compliance for small businesses and protects them from excessive scrutiny, there are critics who raise concerns about the potential implications for tax revenue. By limiting reporting requirements, this bill could hinder the government's ability to track taxable income from casual services and transactions that previously flew under the radar. This contention around transparency versus the burden of regulation is expected to be a pivotal discussion point in the legislative process as the bill progresses through committees.