# 2026-00254: IRS Targets Backup Withholding on Your Third-Party Online Purchases

2026-00254, Backup Withholding on Third Party Network Transactions, is a Federal Register proposed rule from Treasury Department, Internal Revenue Service published 2026-01-09, effective 2025-01-01 (as of 2026-06-11).

- Canonical: https://policyrisk.com/federal-register/2026-00254
- As of: 2026-06-11
- Plain-text twin of the page above; the HTML and this file carry the same facts.

## Facts
- Document number: 2026-00254
- Title: Backup Withholding on Third Party Network Transactions
- Type: Proposed Rule
- Agencies: Treasury Department; Internal Revenue Service
- Citation: 91 FR 934
- Published: 2026-01-09
- Effective: 2025-01-01
- Comments close: not stated
- Significant: no
- Touches household money: no
- Regulation identifier numbers: 1545-BR80
- Last updated: 2026-06-11

## In one line

IRS Targets Backup Withholding on Your Third-Party Online Purchases

## Summary

Starting soon, companies that handle payments for online sales and services will have new rules about backup withholding—basically, a way to hold back some money for taxes if needed. These changes affect third party payment networks and aim to keep tax collection smooth and fair. If you’re involved in these transactions, watch out for the March 10, 2026 deadline to share your thoughts!

## Abstract

This document contains proposed amendments to the regulations governing backup withholding. The proposed regulations reflect recent changes to the statutory law. These changes will affect third party settlement organizations who make payments in settlement of third party network transactions.

## Effects PRIA read

- 1099‑K Reporting Threshold Reverted: benefit, medium. The rule reverts the Form 1099-K reporting threshold for third party settlement organizations to $20,000 in gross payments and 200 transactions in a calendar year (the pre-2021 standard). This change applies to payments in calendar years beginning after December 31, 2024.
- Whole Transaction Subject to Withholding Once Thresholds Hit: cost, high. For third party network transactions, once a participating payee during a calendar year exceeds the 200-transaction threshold or the $20,000 aggregate threshold, the entire amount of the transaction that causes the threshold to be exceeded (and any subsequent transactions that year) is subject to b…
- Prior‑Year Reportable Payments Trigger Current‑Year Withholding: cost, medium. If a payor made one or more reportable third party network payments to a participating payee during the preceding calendar year, the exception for de minimis payments does not apply and the payor must backup withhold on payments to that payee during the current calendar year even if current-year to…

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- [2026-20026](https://policyrisk.com/federal-register/2026-20026): Trump Accounts, 2026-09-30
- [2026-20027](https://policyrisk.com/federal-register/2026-20027): Trump Accounts, 2026-09-30
- [2026-18219](https://policyrisk.com/federal-register/2026-18219): Car Loan Interest Deduction, 2026-09-08
- [2026-17622](https://policyrisk.com/federal-register/2026-17622): Federal Independent Dispute Resolution Operations; Correction, 2026-08-28

## Sources
- [2026-00254 on federalregister.gov](https://www.federalregister.gov/documents/2026/01/09/2026-00254/backup-withholding-on-third-party-network-transactions)
- [2026-00254 as published (PDF)](https://www.govinfo.gov/content/pkg/FR-2026-01-09/pdf/2026-00254.pdf)

## Related
- [Previous: 2026-00247, Airworthiness Directives; Airbus Helicopters](https://policyrisk.com/federal-register/2026-00247)
- [Next: 2026-00258, Air Plan Approval; Ohio; Ohio Permit Rules Revisions](https://policyrisk.com/federal-register/2026-00258)
- [All Federal Register documents](https://policyrisk.com/federal-register)

Source: PRIA, https://policyrisk.com/federal-register/2026-00254 (as of 2026-06-11).