This bill aims to reduce the reporting requirements for small businesses and individuals who make money through online sales. It would eliminate the need for third-party payment processors to report sales under $5,000, and require them to provide a plain-language explanation of how that income should be reported on tax forms.
Latest Action
Referred to the House Committee on Ways and Means.
AI Summary
Plain-English explanation of this bill
This bill aims to reduce the reporting requirements for small businesses and individuals who make money through online sales. It would eliminate the need for third-party payment processors to report sales under $5,000, and require them to provide a plain-language explanation of how that income should be reported on tax forms.
Last updated: 12/29/2025
Official Summary
Congressional Research Service summary
<p><strong>Cut Red Tape For Online Sales Act</strong></p> <p>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 $5,000 or more. A <em>third party settlement organization</em> 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. </p> <p>The bill also requires entities that report income to to issue a plain-language description of the taxability of income reported on Form 1099-K.</p>
Key Points
Main provisions of the bill
Eliminates the reporting requirement for third-party payment processors (like PayPal) on transactions under $5,000 for their participating merchants and businesses.
Requires third-party payment processors to provide a clear, easy-to-understand description of how the income they report on Form 1099-K should be filed on tax returns.
The goal is to reduce the administrative burden and red tape for small businesses and individuals who earn income through online sales and transactions.
How This Impacts Americans
Potential effects on citizens and communities
This bill would primarily benefit small businesses, freelancers, and individuals who earn income through online sales, auctions, or other third-party payment platforms. By eliminating reporting requirements for smaller transactions, it would reduce the paperwork and potential confusion around properly filing taxes on that income. However, the IRS would likely receive less tax information overall on these types of earnings.
Policy Areas
Primary Policy Area
Taxation
Scope & Jurisdiction
Jurisdiction Level
federal
Congressional Session
119th Congress
Citation Reference
3530, 119th Congress (2025). "Flight Education Access Act". Source: Voter's Right Platform. https://votersright.org/bills/118-hr-3530
