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New IRS Rules Ease Backup Withholding for TPSOs

1/10/2026

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Summary

Story summary

The Department of the Treasury and the IRS proposed new regulations on January 8, 2026, concerning backup withholding thresholds for third-party settlement organizations (TPSOs) like PayPal and Venmo.
TPSOs will only need to backup withhold if a payee's reportable payment transactions exceed $20,000 and 200 transactions.
These changes arise from the One Big Beautiful Bill Act, which also reverted the Form 1099-K filing threshold to pre-American Rescue Plan levels.
The proposed regulations will take effect for calendar years starting after December 31, 2024, with comments due by March 10.

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Story summary

The Department of the Treasury and the IRS proposed new regulations on January 8, 2026, concerning backup withholding thresholds for third-party settlement organizations (TPSOs) like PayPal and Venmo.
TPSOs will only need to backup withhold if a payee's reportable payment transactions exceed $20,000 and 200 transactions.
These changes arise from the One Big Beautiful Bill Act, which also reverted the Form 1099-K filing threshold to pre-American Rescue Plan levels.
The proposed regulations will take effect for calendar years starting after December 31, 2024, with comments due by March 10.