Treasury and IRS issue final regulations on backup withholding on third party network transactions

Modern office facade geometric window patternModern office facade geometric window pattern

Treasury and IRS issue final regulations on backup withholding on third party network transactions

August 11, 2026

United States
United States
United States
The Department of the Treasury and Internal Revenue Service have issued final regulations (TD 10053) that revise the threshold for backup withholding on payments made by third party settlement organizations in settlement of third-party network transactions to align the threshold with the de minimis reporting threshold under section 6050W(e). The final regulations adopt, without change, the proposed regulations that were published on January 9, 2026.

As discussed more fully in our prior alert, the One Big Beautiful Bill Act (OBBBA) amended section 3406 to align the backup withholding provisions applicable to third party network transactions with the de minims exemption under section 6050W(e) (i.e., no Form 1099-K reporting required with respect to a third party network transaction if payments to a payee do not exceed $20,000 and 200 transactions in a calendar year). Specifically, a payment made pursuant to a third party network transaction would be treated as a reportable payment for purposes of section 3406 only if the payments to the payee exceed $20,000 and 200 transactions in a calendar year. Consistent with the proposed regulations, the final regulations revise the regulations under section 3406 to be in conformity with the OBBBA amendment. 

The final regulations apply with respect to payments made in calendar years beginning after December 31, 2024.

__________

If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

The materials on the Eversheds Sutherland website are for general information purposes only and do not constitute legal advice. While reasonable care is taken to ensure accuracy, the materials may not reflect the most current legal developments. Eversheds Sutherland disclaims liability for actions taken based on the materials. Always consult a qualified lawyer for specific legal matters. To view the full disclaimer, see our Terms and Conditions or Disclaimer section in the footer. Eversheds Sutherland is a provider of legal and other services operating through various separate and distinct legal entities. For further information about these entities and Eversheds Sutherlands' structure please see the Legal Notice page of this website.

Services

Key contacts

marymonahan@eversheds-sutherland1

Mary E. Monahan

Partner

Washington, DC, United States

briantschosik@eversheds-sutherland.com

Brian Tschosik

Partner

Washington, DC, United States

jericabanks@eversheds-sutherland.com

Jerica Banks

Associate

Atlanta, United States

Latest Insights

Latest News

Latest Events

Modern office building glass facade exterior

legal updates

September 16, 2026

Commercially Connected shorts - 16 September 2026

Modern city high‑rise buildings glass exterior

legal updates

September 15, 2026

CMA places public procurement at the centre of its growth agenda

nature

legal updates

September 14, 2026

Global Sustainability & ESG Insights - August 2026

Coding in Action

legal updates

September 10, 2026

Hong Kong: PCPD issues further guidance on best practices in the use of age...

© Eversheds Sutherland 2026. All rights reserved. Eversheds Sutherland is a provider of legal and other services operating through various separate and distinct legal entities. For further information about these entities and Eversheds Sutherlands' structure please see the Legal Notice page of this website.

Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client. For further information about these Eversheds Sutherland Entities and Eversheds Sutherlands’ structure please see the Legal Notices page of this website. For information on Konexo please also see the Legal Notices page of this