New 2026 1099-K Rules: What Non-U.S. Online Sellers Need to Know
Updated: September 1, 2026
Topic: Form 1099-K, online marketplaces, foreign sellers, and U.S. tax identification
The IRS has published updated guidance explaining changes to information reporting for payments made through third-party settlement organizations, such as online marketplaces and payment platforms. Under the updated framework, backup withholding generally applies only when a payee exceeds both $20,000 in payments and 200 transactions during a calendar year. The IRS describes these rules as part of the 2026 changes and notes that proposed regulations address how the threshold applies. [1]
For non-U.S. sellers, the change does not mean that marketplace income is tax-free or that every seller will receive the same reporting treatment. It is a reporting and withholding change, not a replacement for determining tax status, documenting identity, or meeting federal and state obligations. International sellers should keep accurate sales records, review the information requested by their platform, and use the correct taxpayer identification information when required.
What is Form 1099-K?
Form 1099-K is an information return used to report certain payment-card and third-party network transactions. A marketplace or payment platform may provide the form to the payee and report information to the IRS when applicable.
Receiving a Form 1099-K does not automatically determine how much income is taxable. Conversely, not receiving a Form 1099-K does not automatically mean that income can be ignored. Sellers should compare platform statements with their own sales, refunds, fees, shipping, and expense records.
The 2026 guidance is particularly relevant for online businesses that receive payments through platforms rather than directly from customers. It can affect how payment processors collect tax information, apply backup withholding, and prepare year-end statements.
What is the 2026 threshold change?
The IRS business guidance states that backup withholding for third-party network transactions generally applies when both of these conditions are met in a calendar year:
| Condition | 2026 threshold described by the IRS |
|---|---|
| Total payments to the payee | More than $20,000 |
| Number of transactions | More than 200 |
This replaces the lower $600 threshold that had been scheduled under prior law, according to the IRS’s explanation of the updated rules. [1]
The word “both” matters. Exceeding only the payment amount or only the transaction count does not, by itself, satisfy both conditions described in the IRS guidance. Sellers should still read the platform’s current tax-information notices because a platform may request documentation for reasons other than the federal 1099-K threshold.
Does the change eliminate tax obligations for foreign sellers?
No. A reporting threshold is not the same as a tax exemption.
A non-U.S. seller may still have U.S. tax, withholding, information-reporting, state-tax, or marketplace obligations depending on the seller’s activities, income source, entity structure, treaty position, and the platform’s requirements. The correct tax result cannot be determined from the number of transactions alone.
The IRS also explains that individuals must use the taxpayer identification number requested by the applicable form and must determine whether they are eligible for an SSN or need another taxpayer identification number. An ITIN is issued by the IRS for federal tax purposes to an individual who needs a U.S. taxpayer identification number but is not eligible for an SSN. [2]
An ITIN does not authorize employment, establish immigration status, or replace a business EIN. It also does not automatically determine whether a seller owes tax.
Why platforms may still ask for an ITIN or EIN
Online marketplaces, payment processors, banks, and other financial platforms may request tax information during onboarding or account review. The request may be connected to identity verification, tax documentation, payment reporting, backup withholding, or the platform’s own compliance procedures.
A foreign individual and a foreign-owned business may need different identifiers for different purposes. An individual ITIN is not the same as an EIN for a company. A business may need an EIN for federal tax administration, payroll, banking, or platform onboarding, while the owner may separately need an ITIN for an individual federal tax purpose.
| Situation | Possible tax-identity question |
|---|---|
| Individual non-U.S. seller | Does the person have an SSN, or may an ITIN be appropriate for a federal tax purpose? |
| U.S. LLC owned by a non-U.S. person | Does the business need an EIN and what federal filings apply? |
| Foreign company selling into the U.S. | Which entity, withholding, information-reporting, and registration rules apply? |
| Marketplace or payment-platform onboarding | Which taxpayer information and certifications does the platform require? |
The platform may also require a Form W-8 series certification or another form based on the seller’s status. Sellers should not select a form solely because it appears to avoid withholding; the correct form depends on the seller’s facts.
What non-U.S. online sellers should do now
Keep complete platform records
Download monthly statements and preserve gross sales, refunds, chargebacks, commissions, shipping charges, currency conversions, and payment dates. A 1099-K generally reports gross payment information and may not match the amount deposited into the seller’s bank account.
Review the tax profile on each platform
Confirm that the legal name, address, entity type, country of residence, and taxpayer identification number are accurate. A mismatch between a legal name and an EIN or ITIN can create verification delays or incorrect information reporting.
Separate individual and business identities
Do not assume that an owner’s ITIN should be used wherever a business EIN is requested. Likewise, do not assume that forming an LLC automatically resolves the owner’s personal tax-identity or filing questions.
Monitor both thresholds
Track both annual payment totals and transaction counts. The IRS’s 2026 explanation refers to a combined threshold test, but platform-specific notices and future regulations may affect how the rules are implemented.
Review proposed-regulation status
The IRS describes the updated third-party-network rules as proposed regulations in its business guidance. Proposed rules are not the same as final regulations. Check current IRS guidance before relying on a threshold for a filing, withholding, or tax-position decision.
How ITIN.com can help with the related setup
ITIN.com can help eligible individuals prepare an ITIN application through Form W-7 preparation, document verification, filing support, and professional guidance. It can also help businesses prepare an EIN application and coordinate related U.S. LLC formation or banking-assistance steps when appropriate.
These services address different parts of the U.S. market-entry process. The IRS issues ITINs and EINs, state authorities form LLCs, and banking partners decide whether to approve accounts. ITIN.com prepares, verifies, files, coordinates, and guides; it does not issue the identifiers, determine a seller’s tax liability, or guarantee approval by a government agency, marketplace, or bank.
Bottom line for international sellers
The IRS’s 2026 1099-K guidance may change how certain third-party payment transactions are reported and when backup withholding applies. It does not eliminate the need for accurate records, correct tax forms, or appropriate U.S. tax identification. Non-U.S. sellers should evaluate the individual, business, platform, and state-level questions separately instead of treating the $20,000-and-200 threshold as a blanket exemption.
Important: This article is general information based on IRS materials available on September 1, 2026. It is not tax, legal, or accounting advice. The IRS guidance includes proposed regulations, and rules or platform requirements may change. Consult the current IRS materials or a qualified professional for your circumstances.
