Episode 31: Treasury Aligns Backup Withholding with New 1099 Reporting Thresholds

The Treasury Department has released proposed regulations that would update the backup withholding rules to align with the new information reporting thresholds created by the One Big Beautiful Bill.For decades, the familiar $600 reporting threshold under Sections 6041 and 6041A remained unchanged. Beginning in 2026, that threshold increases to $2,000 and will be adjusted annually for inflation. However, Treasury regulations under Section 3406 still reference the old $600 amount for backup withholding purposes. The newly proposed regulations would fix that mismatch by tying the backup withholding trigger directly to the inflation-adjusted reporting threshold in effect each year.In this episode, Jason explains what the proposed regulations do, why they are necessary, and what they mean for accounts payable professionals. You'll also hear a practical walkthrough of when backup withholding is required, how the threshold works in real-world payment scenarios, and a common question about which payments are actually subject to withholding once a payee crosses the reporting threshold.If you handle vendor payments, W-9 compliance, or 1099 reporting, this is an important update to understand as organizations prepare for the coming changes.Key Topics Covered: The new $2,000 information reporting threshold beginning in 2026  Why Treasury needed to update the backup withholding regulations  The relationship between Sections 6041, 6041A, and 3406  When backup withholding is triggered  How to determine which payments are subject to withholding  Practical examples for accounts payable departments Resources: Proposed Treasury Regulations under IRC Section 3406  IRC Sections 6041 and 6041A  One Big Beautiful Bill Act reporting threshold changes Information Return Intelligence is hosted by Jason Dinesen and sponsored by IOFM, the Institute of Finance & Management.