Congress quietly raises the bar for IRS to track gig-economy income

What it does

This bill raises the threshold for when payment processors (like PayPal, Square, Stripe) must report third-party transactions to the IRS. Instead of reporting all transactions, they only report when a person receives both more than $20,000 AND more than 200 transactions in a year—reverting to pre-2021 rules. It also exempts these transactions from backup withholding unless the threshold is crossed, and grandfathers in anyone who was reported in the prior year.

Why we flagged it

The bill's operative mechanism is a de minimis exception to third-party payment reporting—it does not change tax liability, only IRS visibility. The title frames it as taxpayer relief, but the functional effect is a reporting loophole that reduces tax compliance monitoring for a specific income category.

What the text implies

• The $20,000/$200-transaction threshold creates a 'sweet spot' for tax avoidance: a gig worker earning $19,999 across 199 transactions avoids all IRS reporting, even if they owe taxes. This is not a relief measure for compliant workers—it is a compliance-evasion corridor.
• Payment processors (PayPal, Square, Stripe, etc.) gain reduced compliance burden and liability exposure, as they report fewer transactions and face lower audit risk for their merchant base. This is a private-sector benefit disguised as worker relief.

The full analysis lists 5 implications of this text.

Who stands to gain

payment processors and third-party settlement organizations (PayPal, Square, Stripe, etc.); gig-economy workers and self-employed individuals earning $20,000–$50,000 annually who wish to under; insurance and financial-services companies facing reduced regulatory scrutiny on merchant transactio