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 main implication of SB26 is a return to higher reporting thresholds, where third-party network transaction reports will only be required when a participating payee earns more than $20,000 across over 200 transactions within a tax year. This repeal is expected to ease the compliance burden on small businesses and solo entrepreneurs, who may have been impacted by the stringent reporting requirements introduced by the American Rescue Plan. By rolling back these requirements, the bill also seeks to protect the privacy of individual earners by reducing unnecessary reporting for smaller transactions.
Senate Bill 26, titled the 'Stop the Nosy Obsession with Online Payments Act of 2023' or the 'SNOOP Act of 2023', proposes modifications to the Internal Revenue Code of 1986 regarding the reporting of third-party network transaction activities. This bill aims to repeal recent changes brought about by the American Rescue Plan Act of 2021, which significantly reduced the reporting threshold for third-party settlement organizations. The previously established threshold required payment reporting for transactions exceeding $600 without a specified number of transactions, which raised concerns among business owners and financial service providers regarding the burdensome requirements for small payments.
Notably, while proponents of the SNOOP Act advocate for the bill as a means to reduce regulatory overload on small businesses, critics argue that repealing these protections could hinder the government's ability to track potential tax evasion and low-income earners inaccurately reporting income. This has led to a contentious debate over balancing regulatory oversight with the need to facilitate ease of doing business. Some lawmakers express concerns that the rollback might primarily benefit larger platforms at the expense of broader compliance needs, igniting discussions on fairness and accountability in financial reporting.