Treasury, IRS issue proposed regulations reflecting changes from the One, Big, Beautiful Bill to the threshold for backup withholding on certain payments made through third parties

WASHINGTON – The Department of the Treasury and the Internal Revenue Service today issued proposed regulations that would revise the threshold for when certain third-party settlement organizations are required to perform backup withholding to comply with changes made in the One, Big, Beautiful Bill.

The proposed regulations provide clarity on backup withholding and would provide that third party settlement organizations generally are not required to backup withhold on payments settled through third party payment networks unless the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.

Treasury and IRS are seeking comments on the proposed regulations from interested parties who may use regulations.gov to record those comments.

The IRS reminds businesses that under changes enacted in the OBBB, the threshold for filing Form 1099-K reverted to the reporting threshold in effect prior to the enactment of the American Rescue Plan Act of 2021, and that reporting on payments settled through third party payment networks is only required where the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.

The IRS reminds taxpayers that backup withholding and reporting thresholds do not affect whether income is taxable.

For more information, please see One, Big, Beautiful Bill Provisions on IRS.gov.