Washington, D.C. — H.R. 3937, recently passed out of the House Ways and Means Committee on a party-line vote, undermines efforts to narrow the tax gap and would make it harder for honest tax filers to track the income that they need to report on their tax returns. The bill reverses changes to third-party settlement organization reporting requirements made by the American Rescue Plan Act of 2021 (ARPA). A new Center for American Progress column urges Congress to reject the proposed changes and, instead, provide timely and clear guidance on the changes made by ARPA and extend information reporting to the full range of entities that facilitate online transactions between buyers and sellers.
The nation’s tax code is largely based on voluntary compliance: relying on tax filers to honestly report the income they receive and the amounts they are due as credits, deductions, and other offsets. Third-party information reporting is a crucial tool that boosts compliance and accuracy, ensuring that tax filers pay the amount they legally owe. This new column reviews how this proposal to roll back information reporting would hurt honest tax filers, reward tax avoidance, and could cost the government billions of dollars in lost revenue from taxpayers underreporting their income.
“Congress should reject efforts to roll back information reporting requirements, a proven tool that taxpayers rely on to ensure they are accurately and completely accounting for their income on their tax returns,” said Jean Ross, senior fellow at CAP and author of the column.
Read the column: “House Ways and Means Proposal Would Hurt Honest Tax Filers and Reward Tax Avoidance” by Jean Ross
For more information on this topic or to speak with an expert, please contact Sarah Nadeau at firstname.lastname@example.org.