Congress quietly rolls back IRS income reporting for payment processors

What it does

This bill raises the threshold for when payment processors must report third-party transactions to the IRS. Currently, processors must report all transactions over $600; this bill reinstates a pre-2021 rule requiring reporting only when a payee receives more than $20,000 AND more than 200 transactions in a year. The effect is to reduce IRS visibility into small-business and gig-worker income, making it easier for some income to go unreported.

Why we flagged it

The bill's operative mechanism is a straightforward increase in the dollar and transaction thresholds for third-party payment reporting under IRC §6050W. It is not hidden, but the title 'SNOOP Act' is a political framing device that misdirects from the actual effect: reducing IRS reporting requirements, not protecting privacy from government surveillance.

What the text implies

• The $20,000/$200-transaction threshold creates a structural incentive for high-income earners and businesses to fragment transactions or use multiple payment processors to stay below reporting thresholds, effectively legalizing income-hiding strategies.
• Gig workers, freelancers, and small-business owners with income between $600 and $20,000 will face reduced IRS oversight but also reduced ability to prove legitimate income for loans, mortgages, and other credit applications — a hidden cost to the working poor.

The full analysis lists 4 implications of this text.

Who stands to gain

payment processors and third-party settlement organizations; high-income earners and businesses able to structure transactions below thresholds; insurance and financial services companies (mapped stocks: AIG, FBK, FMAO, PFG, PRU)