Sen. Hagerty Submits Bill to Undo ‘Intrusive’ Venmo, CashApp IRS-Reporting Provision

Sen. Bill Hagerty (R-Tenn.) on Capitol Hill in Washington on June 23, 2021. (Sarah Silbiger/Pool/Getty Images)

Sen. Bill Hagerty (R-Tenn.) has introduced a bill that would strike down a provision of Democrats American Rescue Plan (ARP) spending bill that requires third-party payment processors like Venmo and CashApp to report transactions of more than $600 to the IRS.

The ARP was passed just weeks after President Joe Biden took office, making it through the thinly-Democrat House and Senate under the reconciliation process, which allows legislation to get past the 60-vote filibuster threshold in the Senate. The legislation, which cost the nation $1.9 trillion, was passed with no GOP support despite its hefty price tag.

Though it was marketed by Democrats as a CCP (Chinese Communist Party) virus relief bill, the legislation went well beyond this limited scope.

One provision of the bill would significantly overhaul the IRS' enforcement mechanisms by forcing third-party payment processors like Venmo and CashApp to report all business transactions over $600 to the IRS.

Prior to the passage of the ARP, third-party payment processors were only required to report activity of accounts with more than 200 distinct transactions totaling $20,000 or more.

Hagerty’s Stop the Nosy Obsession with Online Payments, or SNOOP Act, would strike out the change made by the ARP and would return the tax code to the status quo ante, again setting the reporting threshold at 200 or more transactions totaling at least $20,000.

Hagerty noted in a statement about the legislation to The Washington Examiner that the provision would require small business owners to fill out 1099-k tax forms, which could put their information at risk in view of “the IRS' poor history of safeguarding Americans’ personal data.”

The IRS does indeed have a less than spotless history when it comes to protecting the personal information of American taxpayers.

In 2015, the IRS admitted that the personal information of upwards of 100,000 Americans had been leaked in a data breach. In 2021, Senate Finance Committee Members Mike Crapo (R-Idaho) and Chuck Grassley (R-Iowa) demanded answers in a letter to the IRS after the media outlet ProPublica said that it had gotten taxpayer information as evidence of a security breach.

“The Biden Administration is relentless in their attempt to invade the privacy of Americans’ lives and finances,” Hagerty said.

He continued: “It is regrettable that this Administration insists on advancing their perilous and oppressive political agenda to the detriment of taxpayers’ privacy, heedless of their failed track record of protecting Americans’ confidential data. It is past time we stand up for our small business owners and say ‘no more snooping’ to this administration’s egregious and unwarranted overreach.”

In the now-defunct $1.85 trillion Build Back Better (BBB) spending package, Democrats tried to include a similar change to the U.S. tax code. Under one provision of the BBB, banks would have been required to report transaction data to the IRS for all accounts with $600 or more of financial activity during a one year period.

The measure was immediately decried by GOP lawmakers.

House Minority Leader Kevin McCarthy said of the measure a “surveillance program [that crossed] a line” and “un-American.” He promised that “Republicans will do everything possible to stop it before it ever gets off the ground.”

According to several GOP leaders and banks, the proposal did not go unnoticed by everyday Americans either, and many business leaders and politicians circulated reports about significant concern over the measure from banking customers and constituents.

Ultimately, however, it was moderate Sen. Joe Manchin (D-W. Va.) who put the nail in the coffin for the program after he announced his opposition to the snooping scheme.

Given the similarity of that program to the one that Hagerty is now trying to abolish, it is possible that Manchin will join Republicans, as he has done in the past.

Still, the SNOOP Act has little chance of becoming law while Democrats maintain the majority unless several Democrats sign onto the measure, even if Manchin joins Republicans.

To get through the House, it would first have to make it to a floor vote. Since Speaker of the House Nancy Pelosi (D-Calif.) has significant control over what legislation comes to the floor, and in view of the fact that she defended the IRS measure in the BBB, this would be a substantial challenge for the bill.

If it did come to the floor for a vote, every single Republican would need to be on board with it in addition to a handful of Democrats for it to win a simple majority and pass.

In the Senate, the bill would also need to be accepted for a floor vote by Senate Majority Leader Chuck Schumer (D-N.Y.). If Schumer acquiesced and allowed a floor vote on the legislation, it would still need to meet the 60-vote filibuster threshold since it is not a reconciliation bill.

This would require the full support of all 50 Republicans and at least 10 Democrats, but Democrats in the 117th Congress have generally been on board with measures designed to increase IRS revenue as part of their larger effort to increase federal spending.

These challenges mean that the bill has little chance of making it to the floor in either chamber, and even less of a chance to become law while Republicans remain in the minority.

Hagerty’s office could not be immediately reached for comment.