Red Tape Reduction Act of 2025
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed House
- To President
- Became Law
Overview
This bill, the Red Tape Reduction Act of 2025, modifies how the Internal Revenue Code handles payments processed by third-party settlement organizations. Specifically, it reinstates a previous exception that reduces reporting requirements for these organizations, limiting reporting to transactions exceeding $10,000 or 50 transactions. It also adjusts backup withholding rules related to these transactions, providing an exception if payments made in the current year were reported in the previous year.
Key provisions
- Reinstates a de minimis reporting exception for third-party settlement organizations.
- Limits reporting to transactions exceeding $10,000 or 50 transactions.
- Adjusts backup withholding rules for payments in settlement of third-party network transactions.
- Provides an exception to reporting requirements if payments were reported in the prior year.
Who is affected
- Third-party settlement organizations
- Payers
- Payees
- Taxpayers
Notable changes
- Reverses changes made by the American Rescue Plan Act regarding reporting requirements for third-party settlement organizations.
- Introduces a threshold for reporting third-party network transactions related to backup withholding.
Bill text
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Sponsors
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2 on record
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Cosponsor
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