Updated October 29, 2026. Quick answer: For payments in 2026, a third party settlement organization (a payment app or online marketplace) has to send a Form 1099-K for third party network transactions only if the amount is over $20,000 and the number of transactions is over 200. Public Law 119-21 section 70432 restored that rule, section 6050W(e), after the lower $600 figure. Both tests have to be met, and the dollar amounts are written in the statute rather than adjusted each year.
The 2026 test
| Period | Third party network transactions | Where it is written |
|---|---|---|
| Before the Act (2024 edition) | Not more than $600 was not reported | 26 U.S.C. 6050W(e) |
| Now, dollar test | Over $20,000 | Section 6050W(e)(1), as amended |
| Now, transaction test | Over 200 transactions as well as over $20,000 | Section 6050W(e)(2), as amended |
| Backup withholding | Follows the same two tests, unless the payee had reportable payments the year before | Section 3406(b)(8) |
The statute says an organization “shall be required to report any information under subsection (a) with respect to third party network transactions of any participating payee only if” both of these are true: “the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions exceeds $20,000, and” “the aggregate number of such transactions exceeds 200.” Section 70432(a) reinstates the earlier de minimis exception, and the Act says it “shall take effect as if included in section 9674 of the American Rescue Plan Act”.
What the law said before
The 2024 edition of the Code reads that the organization “shall not be required to report any information under subsection (a) with respect to third party network transactions of any participating payee if the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions does not exceed $600.” That is the threshold the Act replaced.
What does not change
The threshold is for third party network transactions, such as a payment app or marketplace. The statute names the reporting party for a card sale separately: “in the case of a payment card transaction, the merchant acquiring entity”, and the threshold sentence above is written only for third party network transactions. The payee statement is due on a fixed date: “on or before January 31 of the year following the calendar year for which the return under subsection (a) was required to be made”.
Backup withholding follows the same tests
The Act also ties backup withholding to the threshold: a payment is a reportable payment only if “the aggregate number of transactions with respect to the participating payee during such calendar year exceeds the number of transactions specified in section 6050W(e)(2)” and “the aggregate amount of transactions with respect to the participating payee during such calendar year exceeds the dollar amount specified in section 6050W(e)(1) at the time of such payment”. Section 3406(b)(8)(B) then adds an exception: “Subparagraph (A) shall not apply with respect to payments to any participating payee during any calendar year if one or more payments in settlement of third party network transactions made by the payor to the participating payee during the preceding calendar year were reportable payments.”
What this means for your return
Section 6050W is a reporting rule; it is titled “Returns relating to payments made in settlement of payment card and third party network transactions”. Falling under the threshold decides whether the organization files a return, and the section does not address whether the income is taxable. Box-by-box detail is on the Form 1099-K box 1a page.
Common mistakes
- Reading the threshold as either test. The statute requires both over $20,000 and over 200 transactions.
- Believing income under the threshold is untaxed. The threshold is a reporting rule for the payer.
- Assuming card sales share the third party network threshold. This rule is for third party network transactions.
- Still planning around $600. The Act restored the earlier rule as if the $600 figure had never taken effect.
Related: the 2027 1099-K threshold, the 1099-K threshold, Form 1099-K box 1a, Form 1099-K boxes 1b to 3, Form 1099-K box 4 backup withholding, and the 2026 tax brackets.
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Answer againSources
- Public Law 119-21 (One Big Beautiful Bill Act), July 4, 2025, enacted text (U.S. Government Publishing Office): www.govinfo.gov
- 26 U.S.C. 6050W, Returns relating to payments made in settlement of payment card and third party network transactions (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
Read from the primary documents linked above on October 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.