S-1425 : Still Just a Bill

The "Red Tape Reduction Act of 2025," designated as S. 1425, proposes amendments to the Internal Revenue Code of 1986, specifically targeting the regulations for third-party settlement organizations. The bill aims to:

• Reinstate the De Minimis Exception: It seeks to revert to the previous threshold for reporting payments made through third-party networks. This means that reporting would only be required if the gross amount of transactions exceeds $10,000 and the number of transactions exceeds 50.
• Apply the De Minimis Rule to Backup Withholding: The bill stipulates that backup withholding will only apply to third-party network transactions if the aggregate transactions exceed the reporting threshold for the calendar year. However, if transactions with a participating payee were reportable in the previous year, this exception would not apply.
• Effective Dates: The changes related to the de minimis exception apply to transactions settled after December 31, 2024, while the amendments concerning backup withholding are applicable to calendar years beginning after December 31, 2024.