Saving Gig Economy Taxpayers Act
- Sponsor
- Rep. Miller, Carol D. [R-WV-1]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 5, 2025
Bottom line
The bill aims to reduce tax reporting burdens for small businesses and individuals engaged in the gig economy and online sales by reinstating the higher pre-2021 1099-K reporting threshold.
What it actually does
This bill amends the Internal Revenue Code to revert the 1099-K reporting threshold for third-party payment platforms (such as PayPal, Venmo, Etsy, eBay) from the current $600 to its previous level of $20,000 in gross payments AND 200 transactions. It also ensures that this higher de minimis threshold applies to backup withholding requirements for these transactions.
Proponents argue
Supporters argue that the current $600 threshold creates an undue administrative burden on millions of casual sellers, small businesses, and gig economy workers, leading to widespread confusion, incorrect tax filings, and unnecessary paperwork for both taxpayers and the IRS. They contend that the previous $20,000 and 200 transaction threshold was more appropriate for identifying actual business income while minimizing reporting for non-taxable or incidental transactions.
Opponents contend
Opponents, typically those who supported the $600 threshold, argue that the lower threshold is crucial for improving tax compliance and reducing the tax gap by ensuring that all income, regardless of source, is properly reported. They contend that raising the threshold would allow some income to go unreported, benefiting those who might otherwise evade taxes and reducing federal revenue.
The bill is concise and can be read quickly, allowing ample time for evaluation.
Section 2(a), amending Section 6050W(e) of the Internal Revenue Code of 1986.
Reinstatement of Higher 1099-K Reporting Threshold
This provision changes the rules for when third-party payment platforms (like PayPal, Venmo, Etsy, eBay) must send a Form 1099-K to the IRS and to individuals. It raises the reporting requirement back to its previous level: a platform only needs to report if a user has over $20,000 in gross payments AND more than 200 transactions in a calendar year. This replaces the current $600 threshold established by the American Rescue Plan Act.
Supporters argue
Supporters argue this change alleviates significant compliance burdens on casual sellers and small businesses, many of whom are not operating as formal businesses and are confused by the $600 threshold. They contend it prevents the IRS from being overwhelmed with forms for non-taxable transactions (e.g., selling personal items at a loss) and focuses reporting on genuine business income.
Critics contend
Opponents argue that the $600 threshold was enacted to close the tax gap by ensuring income from the gig economy and online sales is properly reported. They contend that raising the threshold will allow some taxable income to go unreported, making tax evasion easier for some individuals and businesses, and ultimately reducing federal revenue.
Tradeoffs
This provision balances the administrative burden on taxpayers and payment platforms against the government's interest in comprehensive tax compliance and reducing the tax gap.
Section 3(a), amending Section 3406(b) of the Internal Revenue Code of 1986.
Application of De Minimis Rule to Backup Withholding
This provision ensures that the new, higher reporting threshold ($20,000 and 200 transactions) also applies to backup withholding rules for third-party network transactions. This means that if a payment platform is not required to report a transaction under the new de minimis rule, they also won't be required to perform backup withholding on those payments. An exception is made if the payee was reportable in the prior year, meaning backup withholding could still apply in certain circumstances.
The amendment to reinstate the $20,000 and 200 transaction threshold for 1099-K reporting takes effect as if it were originally included in Section 9674 of the American Rescue Plan Act.
Section 2(b).
Why it matters:This is standard legislative practice for making a change retroactive to a specific prior law. It is not necessarily evasive but requires knowledge of legislative drafting and the prior law's effective date.
Case for: Proponents argue that making the change retroactive addresses the confusion and burden already experienced by taxpayers and payment platforms since the $600 threshold went into effect, potentially simplifying compliance for past tax years and preventing further complications.
Case against: Opponents might argue that retroactive tax changes can complicate tax administration and create uncertainty, especially if some taxpayers have already complied with the lower threshold. It could also imply a loss of revenue for past periods that were intended to be covered by the lower threshold.
Estimated impact: This would affect tax years covered by the American Rescue Plan Act's change, potentially requiring adjustments for reporting already done or planned by platforms and taxpayers.